Under the pressure to speed up AI development, the White House, on October 24^th, announced the nation’s first-ever strategy for leveraging the power of AI while managing its risks to enhance national security, according to a report by the Washington Post, citing the remarks by national security adviser Jake Sullivan.

The memorandum, in which the roles of China and Taiwan have been highlighted, is instructing the Pentagon and intelligence agencies to boost their use of artificial intelligence, while prohibiting agencies from utilizing the technology in ways that “do not align with democratic values, the report noted.

Sullivan also emphasized that the country needs to accelerate the deployment of AI within the national security framework faster than its rivals, according to another report by Reuters. He stated that if the U.S. fails to implement AI more swiftly and thoroughly to enhance its national security, the nation risks wasting the advantage it has worked so hard to achieve.

It is worth noting that in the memo, the government is instructed to assist U.S. companies in safeguarding their AI technologies from foreign espionage and to continue efforts to diversify the supply chain for high-end computer chips essential for advanced AI initiatives, the majority of which are manufactured in Taiwan, the report suggests.

To hinder advancements in supercomputing and AI that could support the Chinese military, the U.S. implemented export controls on advanced chips and chip making equipment for China in 2022 and 2023, limiting shipments from companies such as AI accelerator giant NVIDIA.

The latest announcement, according to the Washington Post, following an executive order on AI signed by President Joe Biden in October 2023, reinforces the administration’s initiatives to counter technological competition from China and other adversaries.

In addition, this memo reportedly reflects the administration’s ongoing efforts to address concerns regarding the potential risks of AI while simultaneously promoting its use within the government and fostering continued innovation among Big Techs in the U.S.

According to the report, the military has historically been an early adopter of various AI applications, such as image-recognition algorithms that analyze satellite images to identify potential targets and autonomous cruise missiles that navigate complex terrains.

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TSMC has halted shipments to Chinese chip designer Sophgo after a chip it manufactured was reportedly found in a Huawei AI processor, according to Reuters, which cited two sources familiar with the situation.

The Reuters report noted that Sophgo had ordered chips from TSMC identical to the one detected in Huawei’s Ascend 910B processor. Huawei, restricted from acquiring certain technology to protect U.S. national security, is under stringent export controls. However, Reuters reported that it remains unclear how the chip ended up in Huawei’s product.

On Sunday, Sophgo posted a statement on its website asserting it has never engaged in any direct or indirect business relationship with Huawei and conducts its operations in strict compliance with all applicable laws, including U.S. export control regulations. The company affirmed it has never breached any of these laws or regulations.

Sophgo, which is affiliated with cryptocurrency mining equipment maker Bitmain, also noted it had submitted a detailed investigation report to TSMC to confirm its non-involvement with Huawei.

TSMC declined to comment, according to Reuters, while Huawei has not yet responded to requests for comment. The U.S. Department of Commerce acknowledged awareness of potential export control violations but declined to comment on any active investigations.

(Photo credit: Sophgo)

Rapidus is building a factory in Chitose City, Hokkaido, aiming to mass-produce 2 nm wafers in 2027. According to a report from MoneyDJ, Japan’s Minister of Economy, Trade and Industry visited Rapidus’s factory under construction on October 24th, considering to offer additional assistance to Rapidus.

The president of Rapidus claimed that if the mass production of 2 nm goes smoothly, the second factory plans to mass produce 1.4 nm, according to the report from MoneyDJ.

The report from MoneyDJ, citing sources from Kyodo News, stated that Japanese Minister of Economy, Trade and Industry Muto Yoji, following the visit, announced at a press conference that the government is considering providing additional support to Rapidus. This includes exploring private sector investments and loans, as well as the possibility of submitting a bill to Congress for loans and funding for Rapidus.

According to Kyodo News, Rapidus President Atsuyoshi Koike stated that construction is progressing smoothly and is 80% complete. He also emphasized that if mass production of the 2 nm process goes well, they plan to build another plant aimed at producing 1.4 nm chips.

Regarding clients for the 2 nm process, Rapidus President Atsuyoshi Koike mentioned in a press conference on October 3rd that, in addition to the already disclosed companies, they are negotiating with 40 others, with potential announcements expected next year.

According to a report from Nippon news, on October 18th, Toyota Motor Corp. and Denso Corp. are considering making additional investments in Rapidus. The news pointed out that Rapidus has been asking shareholders and others for investments reaching 100 billion yen.

According to the report from MoneyDJ, Rapidus aims to mass-produce 2-nm chips in 2027. This mass production plan is estimated to require approximately 5 trillion yen. Currently, the Japanese government has decided to assist Rapidus with 920 billion yen, but there is still a funding gap about 4 trillion yen.

According to a report from Nikkei, the Japanese government has considered to transferring government-subsidized plants and equipment to Rapidus in exchange for company shares.

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(Photo credit: Rapidus)

Recent reports reveal that German automotive parts supplier ZF Friedrichshafen AG (ZF) plans to withdraw from a 3 billion USD joint project with U.S. chipmaker Wolfspeed to build the world’s largest 8-inch SiC chip manufacturing plant. Industry speculation suggests the reasons behind ZF’s decision are Wolfspeed’s financial struggles, repeated construction delays, and the failure of the European Union to deliver on promised subsidies.

Delays in the Construction of Wolfspeed’s 8-inch SiC Chip Factory

In January 2023, Wolfspeed and ZF announced plans to build the world’s largest and most advanced 8-inch SiC device manufacturing facility in Saarland, Germany. ZF initially intended to invest 185 million USD in the project. The factory was expected to be co-owned by ZF and Wolfspeed, but the success of the project was contingent on the EU’s subsidy commitment, which was expected to cover a quarter of the total investment.

However, in June 2023, Wolfspeed announced a delay in the plant’s construction. A company spokesperson cited the weak electric vehicle markets in both Europe and the U.S. as reasons for reducing capital expenditures. Wolfspeed said it would prioritize increasing production at its New York facility instead. Although the German project has not been canceled entirely, Wolfspeed is still seeking additional financing. The company now expects to start construction in mid-2025, two years later than originally planned.

In October, Wolfspeed announced on its website that it had signed a non-binding preliminary term sheet with the U.S. Department of Commerce. Under the CHIPS and Science Act, the Department of Commerce plans to provide Wolfspeed with up to 750 million USD in funding to support the construction of the John Palmour SiC manufacturing facility in Siler City, North Carolina, and to expand Wolfspeed’s existing plant in Marcy, New York.

Additionally, an investment consortium led by Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group has agreed to provide 750 million USD in new financing to Wolfspeed. This funding is expected to alleviate much of the financial pressure currently facing the company.

Delayed EU Chip Act Subsidies?

While the U.S. CHIPS Act subsidies have gradually started to materialize, the EU’s 2020 European Chips Act has faced significant roadblocks in securing funding. According to Reuters, the EU’s subsidy promises attracted several major companies, including Wolfspeed, Intel, TSMC, Infineon, STMicroelectronics, and GlobalFoundries, to announce plans for new plants in Europe. However, very few of these projects have actually broken ground.

In addition to the delays in Wolfspeed’s German plant, Intel has also postponed construction of its plant in Magdeburg, Germany. On September 16, Intel’s CEO informed employees that the chip factory’s construction would be delayed by two years. Over a year ago, Intel secured a 10 billion EUR subsidy commitment from the German government. Intel had initially planned to invest over 30 billion EUR to build two cutting-edge chip factories in Germany, marking the largest foreign investment in the country’s history. However, in August 2023, the German government expressed concerns about Intel’s project in Magdeburg and devised an emergency “Plan B” in case Intel pulls out.

Industry experts suggest that both Wolfspeed and Intel are under significant financial pressure, and the delay in receiving German government subsidies has only exacerbated their operational risks. Among the announced projects, even fewer have received formal EU approval. Infineon, for example, began construction on a 5 billion EUR power chip plant in Dresden in 2023, expecting completion by 2026, though it has not yet received EU funding approval. Similarly, onsemi’s 2 billion USD investment to expand its SiC operations in the Czech Republic is still awaiting EU approval.

(Photo credit: Intel)

According to a report from Bloomberg, TSMC’s first wafer fab built in Arizona, USA, has achieved a major breakthrough in early production yield, surpassing that of similar factories in Taiwan.

The report in Bloomberg indicates that, citing the words from TSMC’s U.S. division president Rick Cassidy, the yield of chips produced at TSMC’s facility in Phoenix is about 4 percentage points higher than that of comparable facilities in Taiwan.

The recent yield improvements are significant for TSMC, which has traditionally maintained its most advanced and efficient facilities in Taiwan. According to Bloomberg, TSMC’s Arizona plant faced early challenges due to a shortage of skilled workers for advanced equipment installation and issues related to safety and management. However, TSMC resolved these setbacks by reaching an agreement with construction labor unions late last year.

Cassidy further pointed out that TSMC may intend to further expand its presence in the United States, partly depending on whether the government will provide more subsidies, referring to the early conversations in Washington about a second CHIPS Act. He mentioned that there is space for at least six total fabs at the Phoenix complex, according to the report in Bloomberg.

Earlier this year, the U.S. government has officially announced that it will provide subsidy about USD 6.6 billion to TSMC, and TSMC will build its third fab in Arizona.

According to the press release from TSMC, Arizona’s first fab is on track to begin production using 4nm technology in the first half of 2025. The second fab will produce the world’s most advanced 2nm process technology with next-generation nanosheet transistors in addition to the previously announced 3nm technology, with production beginning in 2028.

The press release further states that the third fab will produce chips using 2nm or more advanced processes, with production beginning by the end of the decade.

The report in Bloomberg pointed out that, citing the words of Chief Executive Officer C.C. Wei, TSMC expects volume production of its first fab in Arizona to start in the beginning of 2025, and are confident to deliver the same level of manufacturing quality and reliability  in Arizona as from fabs in Taiwan.

On the other hand, according to the report in Bloomberg, Samsung’s investment in the U.S. is facing challenges. Meanwhile, Intel, despite being a major beneficiary of the CHIPS Act, is experiencing financial difficulties due to delays in global projects and may consider selling off assets.

According to a report from MoneyDJ, TSMC previously has announced that its first US fab in Arizona has begun producing engineering wafers using the 4nm process in April but did not provide additional details about the yield. Investors are concerned about the yield and expect that the company’s gross profit to maintain stable.

Addressing this issue, according to the report from MoneyDJ, TSMC mentioned that the gross profit rate will remain 53% or even higher, and the net profit margin has maintained above 36% in the last four years.

(Photo credit: TSMC)