Microsoft is reportedly developing a customized network card for AI servers, as per sources cited by global media The Information. This card is expected to enhance the performance of its in-house AI chip Azure Maia 100 while reducing dependency on NVIDIA as the primary supplier of high-performance network cards.

Leading this product initiative at Microsoft is Pradeep Sindhu, co-founder of Juniper Networks. Microsoft acquired Sindhu’s data center technology startup, Fungible, last year. Sindhu has since joined Microsoft and is leading the team in developing this network card.

According to the Information, this network card is similar to NVIDIA’s ConnectX-7 interface card, which supports a maximum bandwidth of 400 Gb Ethernet and is sold alongside NVIDIA GPUs.

Developing high-speed networking equipment tailored specifically for AI workloads may take over a year. If successful, it could reduce the time required for OpenAI to train models on Microsoft AI servers and lower the costs associated with the training process.

In November last year, Microsoft unveiled the Azure Maia 100 for data centers, manufactured using TSMC’s 5-nanometer process. The Azure Maia 100, introduced at the conference, is an AI accelerator chip designed for tasks such as running OpenAI models, ChatGPT, Bing, GitHub Copilot, and other AI workloads.

Microsoft is also in the process of designing the next generation of the chip. Not only is Microsoft striving to reduce its reliance on NVIDIA, but other companies including OpenAI, Tesla, Google, Amazon, and Meta are also investing in developing their own AI accelerator chips. These companies are expected to compete with NVIDIA’s flagship H100 AI accelerator chips.

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(Photo credit: Microsoft)

Despite challenges, Samsung Semiconductor remains optimistic about the market outlook for the second half of the year. According to a report from TechNews citing sources , to compete with TSMC and enhance efficiency to meet market demands, Samsung is reportedly adjusting the expansion schedule of its fabs.

As per a report from global media outlet SamMobile, Samsung Semiconductor is adjusting the construction schedule of its Pyeongtaek Plant 4 (P4) in South Korea to prioritize the construction of the PH2 production line, temporarily halting the construction of the new production line at the semiconductor plant 5 (P5).

In addition, Samsung is said to be reallocating resources to invest in the PH2 production line at the P4 plant. Once the cleanroom is completed, it will be dedicated to contract chip manufacturing.

Pyeongtaek is a major semiconductor manufacturing center for Samsung, serving as a significant hub for its foundry business and a crucial memory plant. South Korea’s Pyeongtaek currently has the operational P1, P2, and P3 plants, with the construction of the P4 and P5 underway.

Reportedly, Samsung is expected to expand its contract manufacturing capacity to secure more clients from its competitor, TSMC. Additionally, the P4 plant will also establish the PH3 production line to produce DRAM and other components. Samsung’s adjustment in plans reflects its anticipation of rising market demand and its efforts to prepare to meet those demands.

While Samsung stated that the suspension of the P5 plant was for inspection purposes, sources cited in the SamMobile report believe that Samsung likely slowed down the progress of the P5 plant due to the previous downturn in the semiconductor market.

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(Photo credit: Samsung)

According to TrendForce’s latest release on memory spot prices, with no signs of loosening in contract market prices for DRAM and NAND Flash, spot prices are expected to remain relatively stable in the short term. Details are as follows:

DRAM Spot Market:
In the spot market, buyers and sellers are still mostly passive at this moment due to the celebration of the Lunar New Year. Therefore, spot prices of chips and modules have held relatively steady since before the holiday break. Currently, contract prices are showing no signs of weakening, so TrendForce expects spot prices of some DRAM products to stay mostly flat in the short term. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.98% from US$1.939 last week to US$1.958 this week.

NAND Flash Spot Market:
Most spot traders are still celebrating Chinese New Year, and have yet to see any significant price changes, where both wafer and SSD prices are mostly at the level prior to the holiday. With no signs of easing in contract prices, partial spot prices are also expected to be relatively sturdy in the short term. The 512Gb TLC wafer spot stayed flat this week at US$3.437.

As reported by Indian media Economic Times, India’s Tata group may collaborate with Taiwanese semiconductor foundries like UMC or PSMC to establish the first fab in India, initially producing mature process chips with a planned monthly capacity of 25,000 wafers. If successful, it would mark Taiwan’s semiconductor industry’s first venture into India.

The report addresses the recent escalation of geopolitical tensions, which has led to India’s issues in local chip manufacturing. Thus, India is reportedly looking for major foundries to establish fabs in India, given its substantial demand for semiconductors.

Although neither UMC nor PSMC has formally announced investments in India, as per the Economic Times of India, Tata Group may collaborate with Taiwanese foundries like UMC or PSMC to establish a semiconductor fab in Dholera, Gujarat, India.

Initially targeting the 65-nanometer mature process, the aforementioned fab is expected a monthly capacity of 25,000 wafers, with plans for future upgrades to 48-nanometer and 28-nanometer processes, supporting the production of GPUs, consumer electronics, and Internet of Things (IoT) applications in the coming years.

According to sources cited by the Economic Times of India, Tata Group has finalized the details of the land for this factory and groundbreaking may occur soon. However, Tata Group’s entry into the 28-nanometer process may take some time as it needs to ensure sufficient orders for mature processes in the Indian market.

PSMC Chairman Frank Huang revealed in early 2023 that he had received an invitation to assist in setting up a plant in India, but he did not disclose the details or the inviting party at that time.

PSMC has yet to announce any investments in India.

Instead, they have partnered with the Japanese company SBI Holdings, Inc. to establish a joint venture for a 12-inch fab in Japan. This venture will be located in the Second Northern Sendai Central Industrial Park in Ohira Village, Kurokawa District, Miyagi Prefecture. It is planned to produce chips ranging from 28 to 55 nanometers, with an initial monthly capacity of 10,000 wafers and an ultimate goal of 40,000 wafers, focusing on the automotive chip market.

UMC has also been reportedly sending representatives to India for inspections and discussions regarding the opportunity to establish facilities there, as disclosed by Indian media in recent years.

However, UMC has yet to take any action to invest in India. Instead, in 2022, the company initiated its strategy to establish a new 22-nanometer fab in Singapore, with plans for completion by the end of the second quarter of this year and mass production slated to begin in early 2025, with an initial monthly capacity of 20,000 to 30,000 wafers.

UMC and PSMC didn’t comment on the matter on February 20th. “UMC does not comment on market speculations.” a spokesperson for UMC said, cited by Economic Times.

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(Photo credit: Tata Group)

Last year’s AI boom propelled NVIDIA into the spotlight, yet the company finds itself at a challenging crossroads.

According to a report from TechNews, on one hand, NVIDIA dominates in high-performance computing and artificial intelligence, continuously expanding with its latest GPU products. On the other hand, global supply chain instability, rapid emergence of competitors, and uncertainties in technological innovation are exerting unprecedented pressure on NVIDIA.

NVIDIA’s stock price surged by 246% last year, driving its market value past USD 1 trillion and making it the first chip company to achieve this milestone. According to the Bloomberg Billionaires Index, NVIDIA CEO Jensen Huang’s personal wealth has soared to USD 55.7 billion.

However, despite the seemingly radiant outlook for the NVIDIA, as per a report from TechNews, it still faces uncontrollable internal and external challenges.

• Internal Concern 1: CoWoS, HBM Capacity Bottlenecks

The most apparent issue lies in capacity constraints.

Currently, NVIDIA’s A100 and H100 GPUs are manufactured using TSMC’s CoWoS packaging technology. However, with the surge in demand for generative AI, TSMC’s CoWoS capacity is severely strained. Consequently, NVIDIA has certified other CoWoS packaging suppliers such as UMC, ASE, and American OSAT manufacturer Amkor as backup options.

Meanwhile, TSMC has relocated its InFo production capacity from Longtan to Southern Taiwan Science Park. The vacated Longtan fab is being repurposed to expand CoWoS capacity, while the Zhunan and Taichung fabs are also contributing to the expansion of CoWoS production to alleviate capacity constraints.

However, during the earnings call, TSMC also stated that despite a doubling of capacity in 2024, it still may not be sufficient to meet all customer demands.

In addition to TSMC’s CoWoS capacity, industry rumors suggest that NVIDIA has made significant upfront payments to Micron, SK Hynix, to secure HBM3 memory, ensuring a stable supply of HBM memory. However, the entire HBM capacity of Samsung, SK Hynix, and Micron for this year has already been allocated. Therefore, whether the capacity can meet market demand will be a significant challenge for NVIDIA.

• Internal Concern 2: Major Customers Shifting Towards In-house Chips

While cloud service providers (CSPs) fiercely compete for GPUs, major players like Amazon, Microsoft, Google, and Meta are actively investing in in-house AI chips.

Amazon and Google have respectively introduced Trainium and TPU chips, Microsoft announced its first in-house AI chip Maia 100 along with in-house cloud computing CPU Cobalt 100, while Meta plans to unveil its first-generation in-house AI chip MTIA by 2025.

Although these hyperscale customers still rely on NVIDIA’s chips, in the long run, it may impact NVIDIA’s market share, inadvertently positioning them as competitors and affecting profits. Consequently, NVIDIA finds it challenging to depend solely on these hyperscale customers.

• External Challenge 1: Export Control Pressures Lead to Loss of Chinese Customers

Due to escalating tensions between the US and China, the US issued new regulations prohibiting NVIDIA from exporting advanced AI chips to China. Consequently, NVIDIA introduced specially tailored versions such as A800 and H800 for the Chinese market.

However, they were ultimately blocked by the US, and products including A100, A800, H100, H800, and L40S were included in the export control list.Subsequently, NVIDIA decided to introduce new AI GPUs, namely HGXH20, L20 PCIe, and L2 PCIe, in compliance with export policies.

However, with only 20% of the computing power of H100, they are planned for mass production in the second quarter. Due to the reduced performance, major Chinese companies like Alibaba, Tencent, and Baidu reportedly refused to purchase, explicitly stating significant order cuts for the year. Consequently, NVIDIA’s revenue prospects in China appear grim, with some orders even being snatched by Huawei.

Currently, NVIDIA’s sales revenue from Singapore and China accounts for 15% of its total revenue. Moreover, the company holds over 90% market share in the AI chip market in China. Therefore, the cost of abandoning the Chinese market would be substantial. NVIDIA is adamant about not easily giving up on China; however, the challenge lies in how to comply with US government policies and pressures while meeting the demands of Chinese customers.

As per NVIDIA CEO Jensen Huang during its last earnings call, he mentioned that US export control measures would have an impact. Contributions from China and other regions accounted for 20-25% of data center revenue in the last quarter, with a significant anticipated decline this quarter.

He also expressed concerns that besides losing the Chinese market, the situation would accelerate China’s efforts to manufacture its own chips and introduce proprietary GPU products, providing Chinese companies with opportunities to rise.

• External Challenge 2: Arch-Rivals Intel and AMD Begin Their Offensive

In the race to capture the AI market opportunity, arch-rivals Intel and AMD are closely after NVIDIA. As NVIDIA pioneered the adoption of TSMC’s 4-nanometer H100, AMD quickly followed suit by launching the first batch of “Instinct MI300X” for AI and HPC applications last year.

Currently, shipments of MI300X have commenced this year, with Microsoft’s data center division emerging as the largest buyer. Meta has also procured a substantial amount of Instinct MI300 series products, while LaminiAI stands as the first publicly known company to utilize MI300X.

According to official performance tests by AMD, the MI300X outperforms the existing NVIDIA H100 80GB available on the market, posing a potential threat to the upcoming H200 141GB.

Additionally, compared to the H100 chip, the MI300X offers a more competitive price for products of the same level. If NVIDIA’s production capacity continues to be restricted, some customers may switch to AMD.

Meanwhile, Intel unveiled the “Gaudi3” chip for generative AI software last year. Although there is limited information available, it is rumored that the memory capacity may increase by 50% compared to Gaudi 2’s 96GB, possibly upgrading to HBM3e memory. CEO Pat Gelsinger directly stated that “Gaudi 3 performance will surpass that of the H100.”

• External Challenge 3: Startup Underdogs Form AI Platform Alliance in Attempt to Conquer

Several global chip design companies have recently announced the formation of the “AI Platform Alliance,” aiming to promote an open AI ecosystem. The founding members of the AI Platform Alliance include Ampere, Cerebras Systems, Furiosa, Graphcore, Kalray, Kinara, Luminous, Neuchips, Rebellions, and Sapeon, among others.

Notably absent is industry giant NVIDIA, leading to speculation that startups aspire to unite and challenge NVIDIA’s dominance.

However, with NVIDIA holding a 75-90% market share in AI, it remains in a dominant position. Whether the AI Platform Alliance can disrupt NVIDIA’s leading position is still subject to observation.

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(Photo credit: NVIDIA)