In early September, rumors have it that TSMC’s first US fab in Arizona began producing engineering wafers using the 4nm process in April, with yields reportedly comparable to those manufactured in its Southern Taiwan Science Park facility. Now here’s the latest update: the fab has started trial production for Apple’s A16 chip, according to a report by Tim Culpan at substack, a technology columnist.

Tim Culpan notes that the mobile processors are manufactured with TSMC’s 5nm, or the so-called N4P node, which is the same as the node used in Taiwan to manufacture A16. The N4P node is actually a member of the 5nm family, as it is regarded as an enhanced version of 5nm, the report explains.

It is worth noting that Apple’s A16 SoC, though launched two years ago with iPhone 14 Pro, is considered as one of the most advanced mobile chips for the company, as the chip is also be seen in iPhone 15 and iPhone 15 Plus models. Culpan indicates that the move marks a milestone that instead of beginning with some less critical chips, Apple and TSMC intend to aim high from the start.

According to Culpan, Apple’s A16 is currently being trial-produced at TSMC Arizona’s “Fab 21” Phase 1 facility, with a small production volume. However, once the second stage of the Phase 1 fab is completed, the output will significantly increase.

TSMC plans to build three plants in Arizona, each with cleanroom spaces twice the size of typical logic fabs in the industry. The first fab is expected to begin mass production in the first half of 2025.

TSMC’s second fab in Arizona will use 2nm process technology to meet strong AI-related demand, with production expected to begin in 2028. The third fab will employ 2nm or even more advanced process.

However, the situation for Samsung’s investment in the U.S. would be a different story. A previous report from Korean media outlet Business Korea noted that persistent issues with its 2nm yield rate have led Samsung to decide to withdraw personnel from its Taylor, Texas plant, signaling another setback for its advanced wafer foundry business.

As for Intel, which proactively pursues the support of the U.S. government, it is holding steadfast on its investments in the country despite recent announcements to spin-off its foundry business and delaying the projects in Germany and Poland for two years.

Intel plans to invest USD 100 billion over the next five years in new fabs and expansions across Arizona, New Mexico, Ohio, and Oregon, creating 10,000 manufacturing jobs and 20,000 construction jobs.

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• [News] Showing Positive Progress, TSMC’s Arizona Fab Reportedly Reaches Production Yields on Par with Taiwan
• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab

(Photo credit: Apple)

ByteDance, the parent company of TikTok, is said to be collaborating with TSMC, eyeing for the mass production of two self-developed AI chips by 2026, according to reports by Economic Daily News and The Information.

ByteDance’s AI chips are expected to be made with TSMC’s 5nm node, which would be one generation behind the foundry giant’s most advanced process, the reports suggest, making the move comply with the U.S. export regulations to China. The chips are similar to NVIDIA’s next-generation flagship AI chip, Blackwell, which are manufactured with TSMC’s 4NP node.

Citing sources familiar with the matter, the reports note that the tech giant in China aims to reduce its reliance on NVIDIA for AI model development. Though the chips are still in the design phase and the plan is subject to change, ByteDance’s self-designed chips could save billions of dollars compared to purchasing NVIDIA’s products, according to the reports.

The Information estimates that ByteDance’s spending on developing generative AI models has been increasing, and it is rumored that the company has ordered over 200,000 NVIDIA H20 chips this year, costing it over USD 2 billion, with some orders still pending delivery.

In response to US export bans, NVIDIA launched AI chip H20, L20 and L2, specially designed for the Chinese market earlier this year. According to a previous report by Wccftech, H20 GPU has 41% fewer Cores and 28% lower performance versus H100. Still, the product is reportedly seeing strong demand for AI servers among Chinese Cloud Service Providers (CSPs) and enterprises, including Huawei and Tencent.

However, due to its lower computing power, Chinese companies need to purchase more H20 chips to build clusters with equivalent computing capacity, which raises costs, Economic Daily News notes.

According to TSMC’s financial report in the second quarter, North American clients contributed 65% of its total revenue. While China, the second-largest market, contributed 16% of its quarterly revenue, with a significant jump from 9% in the first quarter and 12% during the same period last year.

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• [News] China Plans to Set at Least 50 AI Standards by 2026, from Language Models to Semiconductors
• [News] Broadcom Reportedly Developing 5nm AI Chip with ByteDance, Manufactured by TSMC

(Photo credit: ByteDance)

According to a recent Financial Times report, the US and Japan are nearing an agreement to restrict tech exports to China’s chip industry, despite Tokyo’s concerns over potential retaliation from Beijing. The White House aims to introduce new export controls ahead of the November presidential election, including rules requiring non-US companies to obtain licenses before selling products that could bolster China’s tech sector.

Citing the Financial Times, US officials have been engaged in extensive discussions with Japan and the Netherlands to align export control policies, aiming to prevent Japanese and Dutch companies from being affected by the US “foreign direct product rule.” While sources in Washington and Tokyo indicate that a breakthrough is near, a Japanese official expressed caution, noting that the situation remains delicate due to concerns over potential Chinese retaliation.

To mitigate the impact of any retaliatory measures, Japan and the US are discussing strategies, as Washington and its allies attempt to curb China’s technological advancements. The Biden administration’s export controls are designed to close loopholes and address China’s rapid progress, particularly from companies like Huawei, in chip manufacturing over the past two years.

The new restrictions are intended to make it more difficult for China to access critical chipmaking equipment, which would heavily affect companies like ASML in the Netherlands and Tokyo Electron in Japan. Washington is also pushing for restrictions on servicing these tools, including software updates and maintenance, which would further harm China’s chip ambitions. These measures would mirror those already imposed on US firms and citizens.

Should the new restrictions come into effect, Japanese equipment manufacturers could face significant repercussions. Tokyo Electron, for instance, derived nearly 50% of its revenue in Q1 of its 2025 fiscal year from China, up from 39.3% in the same period a year earlier.

Other major equipment suppliers have also seen a surge in revenue from China. In Q2 2024, ASML reported that China was its largest market, accounting for 49% of lithography unit sales, surpassing South Korea (28%) and Taiwan (11%). Applied Materials recorded 43% of its sales from China in Q2, up 22 percentage points year-over-year. Meanwhile, China contributed 39% of Lam Research’s Q2 revenue in 2024, compared to 26% a year earlier, and 44% of KLA’s revenue in the same quarter.

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• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants

(Photo credit: ASML)

Recent reports of breakthroughs in China’s chip manufacturing equipment have gained attention, with rumors suggesting that China’s domestically-made DUV equipment can produce chips at 8nm and below. Some companies have also applied for EUV equipment patents. However, according to a report by the Central News Agency, experts believe these claims are questionable, emphasizing that production yield is the real key.

China’s Ministry of Industry and Information Technology recently released a guidance catalog for promoting major technological equipment. Two lithography machines listed have been interpreted by some as a sign of significant technological progress, sparking claims that China can now produce 8nm and more advanced nodes.

Meanwhile, German media outlet Deutsche Welle reported that Shanghai Micro Electronics applied for a series of EUV-related patents, which may indicate the ability to manufacture chips at 7nm and below.

Huawei’s flagship Mate 60 Pro, launched last year, was reportedly equipped with SMIC’s self-made 7nm chips. Earlier this year, rumors suggested SMIC had successfully produced 5nm chips without EUV machines, which would be used in Huawei’s Mate 70 series set for release later this year. These claims have resurfaced in light of recent developments.

Talks of China breaking through U.S. tech barriers have caught the attention of both domestic and international markets, with many Chinese netizens celebrating on social media. However, while the public cheers, official responses have remained muted. Aside from the ministry’s guidance catalog, no Chinese authorities or companies have confirmed the breakthrough, nor have any real-world applications been showcased.

In reality, since the start of the U.S.-China tech war, China has often hinted at “breaking through technological blockades,” but the results have been largely inconclusive.

Take SMEE, for instance. In June 2020, it announced that it would deliver China’s first domestically-made 28nm immersion lithography machine between 2021 and 2022, model SSA/800-10W. However, the news soon faded. By May 2023, rumors resurfaced that the 28nm machine was nearing completion, and by December, Zhangjiang Group in Shanghai claimed via its official WeChat account that SMEE had successfully developed the 28nm lithography machine. The post was deleted shortly afterward.

As of now, the SSA/800-10W has yet to appear on SMEE’s official product list.

According to a report by Chinese semiconductor media IC SMART, the lithography machine specifications recently released by the Ministry of Industry and Information Technology show improvements over SMEE’s SSA600 model. However, they still fall short of the capability to produce 28nm chips, let alone 8nm or 7nm chips. The rumors likely stem from a misunderstanding of what the specifications actually mean.

Additionally, a Reuters report from September last year noted that the yield rate for SMIC’s 7nm process was below 50%, whereas the industry standard is 90% or higher. This would significantly constrain chip shipments and impact smartphone production.

(Photo credit: SMEE)

One of the most critical moves of Intel’s next step, regarded by CEO Pat Gelsinger as “the most significant transformation in over four decades,” is turning its foundry business into an independent subsidiary. Citing remarks from foreign media and analysts, a report by Taiwanese media outlet Anue notes that this is a much-needed temporary measure aimed at gaining the trust of potential customers, who may hesitate to entrust their chip designs to a competitor’s foundry division.

Following last week’s board meeting, Intel announced on September 16^th that the company will transform its foundry business into a wholly-owned subsidiary with its own board of directors.

It is worth noting that in the meantime, Intel signed a multi-billion-dollar, multi-year agreement with Amazon to produce certain chips for Amazon Web Services’ (AWS) AI data centers.

The Two tech giants will co-develop AWS’ next-gen AI fabric chips on Intel 18A, which signals a good start for Intel. Additionally, Intel is developing customized Xeon 6 server chips for AWS.

Regarding Intel’s plan on carving out its foundry business, citing comments from foreign analysts, the report by Anue states that the move could help Intel in having a better chance of attracting tech heavyweights, such as Apple, Qualcomm, Broadcom, and even AMD.

Here is why: if the new company appears as an independent entity and if it has the right board members, the foundry business could progress more smoothly, the report suggests. This move should help alleviate concerns from potential customers, but its effectiveness will yet be proven through execution.

The report added that if Intel’s collaboration with Amazon goes well, it could potentially manufacture other Amazon chips in the future, such as AWS Graviton processors and Trainium AI training chips used for machine learning.

Intel has failed to attract a significant number of clients for its foundry business, with Microsoft being its largest customer to date, the report notes.

Two years ago, the struggling giant lost the contract to design and manufacture chips for Sony’s next-generation PlayStation 6, dealing a major blow to its efforts to establish its nascent foundry business.

In its own words, the move in terms of the new subsidiary structure will provide greater separation and independence for Intel’s external foundry customers and suppliers from Intel’s other divisions. Importantly, it also gives the company the flexibility to evaluate independent funding sources in the future and optimize the capital structure of each business to maximize growth and create shareholder value.

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• [News] Intel Reportedly Sought Commerce Secretary Raimondo’s Help over U.S. Reliance on TSMC
• [News] Intel to Turn Foundry Unit into Subsidiary, with Projects in Germany and Poland Delayed for 2 Years

(Photo credit: Intel)