For Intel, last week was like a roller coaster. On Monday, the company settled down plans for restructuring after the board meeting. On Friday, however, according to reports by The Wall Street Journal and Bloomberg, it turns out that Qualcomm has reportedly reached out to Intel regarding a potential acquisition offer, which would rank as one of the largest-ever technology mergers if the deal were to take place.

Should Qualcomm take over Intel, the mega deal may have limited impact on TSMC, the world’s largest foundry. However, Taiwanese smartphone chip giant MediaTek would be more heavily impacted, according to Taiwanese media the Economic Daily News and Commercial Times.

Citing domestic and foreign institutional investors, the Economic Daily News notes that regarding that the Broadcom-Qualcomm saga came to an abrupt end in 2018, the likelihood of the Qualcomm-Intel deal to realize might be low. However, if the acquisition does go through, it could create certain impact on Taiwanese manufacturers.

Citing remarks from Hong Kong-based and foreign semiconductor analysts, the report by the Economic Daily News points out that Intel’s weakness in its foundry unit would be its fatal flaw. With Intel’s yield rates and performance in the advanced nodes lagging behind TSMC, even if Qualcomm successfully acquires Intel, it is expected that Qualcomm would not reclaim the orders currently outsourced to TSMC, indicating the impact to the Taiwan-based foundry giant would be minimal.

Furthermore, the report suggests that from Qualcomm’s perspective, the more logical scenario would be to acquire only Intel’s chip design business. However, from Intel’s standpoint, they would prefer to sell the entire company as a package. Thus, the analysts cited by the report project that Qualcomm is more likely to spin off Intel’s chip manufacturing business and sell it to a U.S. private equity firm after the acquisition.

Actually, in early September, a report by Reuters suggests that Qualcomm, known for its Snapdragon processors used in smartphones, had investigated the possibility of acquiring parts of Intel’s design business to enhance its product portfolio, and was particularly interested in Intel’s PC business.

On the other hand, the story may be different for Taiwanese chip makers. A report by the Commercial Times notes that the acquisition could create pressure on MediaTek, which is Qualcomm’s main rival, as it may face even fiercer competition in sectors like AI PCs and automotive platforms, of which the Taiwanese smartphone chip giant is expected to launch new products next year.

In addition, the takeover would also have negative impact on AMD’s supply chain in Taiwan, including companies like ASMedia, which specializes in high-speed Switch IC, USB, PCIe and SATA controllers, Commercial Times indicates.

It is worth noting that the potential deal would face significant challenges, particularly with antitrust and national security concerns, a report by CNBC notes. For instance, Intel’s recent attempt to acquire Tower Semiconductor and Qualcomm’s bid for NXP Semiconductor were both blocked by Chinese authorities, the report says.

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• [News] Qualcomm Rumored to Consider Acquiring Parts of Intel’s Chip Design Business, with a Focus on PC Segment
• [News] Intel to Turn Foundry Unit into Subsidiary, with Projects in Germany and Poland Delayed for 2 Years

(Photo credit: Qualcomm)

By announcing a two-year delay in its plan to build chip factories worth €30 billion (USD 33 billion) in Magdeburg, Intel seems to find a way to temporarily alleviate its financial burden. However, a report by German media outlet DW News warns that the chances of the US chipmaker eventually moving forward with its Magdeburg plans are “no higher than 50%,” indicating the withdrawal may deal a heavy blow to Germany’s economic outlook.

Citing Alexander Schiersch from the Institute for Economic Research (DIW) in Berlin, the report notes that Intel’s ambitious plans have “fallen short.” Three key challenges for Intel has been highlighted: attracting more customers for its chips, improving its AI strategy, and ensuring that cost-cutting measures are effective.

Given the circumstances, Schiersch estimates the likelihood of Intel fully executing its Magdeburg plans at “no more than 50%,” the report suggests.

The report also states that Intel’s move underscores the failure of Germany’s three-party coalition government to drive new investments, with debates on the allocation of the nearly €10 billion set aside for subsidies reignited.

According to DW News, following Intel’s announcement, Finance Minister Christian Lindner proposed redirecting the unspent funds to address a significant shortfall in the German budget. However, the Greens, part of the coalition government, opposed this idea, advocating instead for the funds to be used for climate initiatives. Chancellor Olaf Scholz of the Social Democrats has yet to take a definitive stance.

According to Intel, the German mega-fab is expected to create 3,000 high-tech jobs. During the construction phase, around 7,000 workers will also be employed in the construction industry. In addition, tens of thousands of additional jobs are expected to be created by suppliers and partners.

The German government has pledged €9.9 billion in state aid in terms of the project, as the investment is seen crucial in reducing Germany’s reliance on Asian semiconductors, particularly for its key automotive industry.

However, Volkswagen, one of the largest automaker in Europe for decades, has also been struggling, warning about potential job cuts and production line closures in Germany for the first time in its 87-year history, which may also prompt Intel’s decision. The weak market demand, particularly for its electric vehicles (EVs), is said to be the main reason for this move.

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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)

On September 9, 2024, China’s Ministry of Industry and Information Technology (MIIT) released the “Guiding Catalog for the Promotion and Application of Major Technical Equipment (2024 Edition),” listing 286 domestically manufactured equipment items. Among these, the KrF and ArF lithography machine, categorized under electronic specialty equipment, have attracted significant market attention.

According to TrendForce’s analysis, the catalog aims to promote the adoption of domestic equipment in key manufacturing sectors. This is achieved through subsidies for domestic equipment to lower the threshold for companies adopting these tools. The catalog will be updated every 2-3 years to align with the latest policy and industry developments.

With the Netherlands expanding its restrictions on ASML’s exposure equipment exports, the disclosure of two domestic lithography machines by China’s Ministry of Industry and Information Technology carries symbolic significance. The KrF Lithography Machine (model 2.1.5) is designed for 12-inch wafers, with a working wavelength of 248nm, resolution ≤ 110nm, and overlay accuracy ≤ 25nm. The ArF Lithography Machine (model 2.1.6) is also for 12-inch wafers, with a working wavelength of 193nm, resolution ≤ 65nm, and overlay accuracy ≤ 8nm. Both machines fall under the category of deep ultraviolet (DUV) lithography equipment.

Despite initial market speculation that the ArF lithography machine might be suitable for 8nm processes, TrendForce’s latest market analysis suggests otherwise. The machine’s overlay accuracy of ≤ 8nm is inadequate for advanced processes, which require ≤ 3nm for 10nm processes and ≤ 2nm for 7nm processes. Additionally, for advanced processes, the resolution must be ≤ 38nm, while this machine’s resolution is ≤ 65nm, making it challenging to handle even 40nm processes.

Although the ArF lithography machine could potentially be used for 55nm or more advanced processes with multiple exposures, its insufficient overlay accuracy would lead to unmanageable yield issues, significantly impacting production efficiency.

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• [News] Breakthrough in China’s Domestic DUV Equipment to 8nm? Experts Call It a Misunderstanding
• [News] China’s DUV Breakthrough: Capable of Producing 8-Nanometer Chips

(Photo credit: SMIC)

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)