According to reports from the Commercial Times, the PC chip supply chain has seen a surge in activity as government subsidies in mainland China have expanded to cover major cities. This has prompted brands to increase their orders, boosting short-term demand for the current quarter. Related IC design companies are expected to benefit from this trend.

The report reveals that the supply chain is responding to the rollout of home appliance subsidies in China, which initially covered only select cities. As other regions follow suit, demand for replacement and upgrades has surged, prompting brands to increase their stock, leading to more orders for IC suppliers.

However, some IC companies remain cautious, believing that the current demand surge may simply be pulling forward orders that would have been placed in the first quarter of next year. Since the subsidies end by the close of this year, they fear this could lead to a short-lived boom.

On the other hand, more optimistic players believe that as major IC manufacturers like AMD, Qualcomm, and Intel roll out NPUs with over 40 TOPS of computing power, combined with post-pandemic replacement demand, the market will see a significant boost. These companies are also expected to launch products at various price points, making AI-powered PCs more affordable in the coming year.

The report also noted that the PC market is expected to become more competitive as both x86 and Arm architectures begin supporting new AI applications. It is understood that some companies will start purchasing Arm-based PCs next year, signifying that Arm-based PCs have successfully entered the commercial sector, which will have a positive impact on building a complete ecosystem in the future.

Industry sources cited by the Commercial Times believe Qualcomm will be the first to benefit, while MediaTek is gearing up, with its chips expected to debut in the second quarter of next year and enter mass production in the third quarter.

(Photo credit: Samsung)

In recent years, influenced by shifts in the international landscape, the issue of global semiconductor supply chain security has garnered increasing attention. Driven by policies like chip subsidies, various regions are strengthening their semiconductor industry chains, with Europe and the United States being prime examples. Both aim to attract large chip manufacturers to set up factories locally. However, will they succeed in altering the current global semiconductor production landscape dominated by Asia?

Even with Increased Capacity in Europe and the US, Will Asia Remain the Semiconductor Hub?

Christophe Fouquet, President and CEO of ASML, recently provided his perspective on this question.

In a media interview, Fouquet mentioned his attendance at TSMC’s groundbreaking ceremony in Dresden, Germany. He believes that Europe and the United States need to not only establish subsidized chip factories but also genuinely impact the industry’s structure. Addressing long-term cost and resilience issues is crucial for developing a true ecosystem.

Fouquet argues that for Europe and the US to succeed, they must improve the economic model of semiconductor manufacturing. Producing components at a significantly higher cost is not sustainable. Subsidies are a temporary solution to cultivate time and space; the real challenge lies in tackling more structural issues. Europe’s primary advantages in semiconductors lie in its skilled workforce and renewable energy resources.

Fouquet believes that increased chip production capacity in Western countries is unlikely to shift the balance of power in the semiconductor industry. Even with subsidized new semiconductor plants, he anticipates a slowdown in chip production capacity growth, with Asia remaining the dominant manufacturing leader for many years to come.

Industry insiders reveal that expanding wafer fabrication capacity often leads to significant cost challenges. The cost structure of a wafer fab includes land and facility construction, equipment procurement, technology R&D and intellectual property, operation and maintenance, etc. A modern wafer fab can cost hundreds of billions of dollars. Construction costs also vary across regions. In Europe and the US, the need to import technology, cultivate talent, and enhance the industrial chain could lead to higher wafer fab construction costs.

Comparatively, the Asian market benefits from a mature supply chain, a vast talent pool, and supportive policies, resulting in relatively lower wafer fab construction costs.

Asian Chip Factories are Flourishing

Driven by recovering market demand and favorable chip subsidy policies worldwide, the global semiconductor market value continues to grow in 2024.

TrendForce indicated in a September survey that driven by AI deployments and improved supply chain inventory, the foundry market value is projected to grow by 20% in 2025, surpassing the 16% growth in 2024.

Industry sources also reveal that Asia stands out in terms of regional semiconductor capacity layout. Major markets like mainland China, Taiwan, South Korea, and Japan boast leading monthly production capacities, followed by Europe and the United States.

Besides these established markets, new semiconductor manufacturing forces have emerged in Asia, represented by Singapore, Malaysia, and Vietnam.

Singapore, a semiconductor powerhouse in Southeast Asia, possesses a complete semiconductor industry chain encompassing design, manufacturing, packaging, testing, equipment, materials, and distribution.

Many semiconductor companies including Texas Instruments, STMicroelectronics, Infineon, Micron, GlobalFoundries, TSMC, UMC, VIS, and ASE, have established branches or expanded their factories in Singapore. Leading foundries like TSMC, GlobalFoundries, UMC, and VIS have set up 8-inch and 12-inch fabs there.

Malaysia plays a crucial role in the global semiconductor packaging and testing segment. DRAMeXchange estimates that approximately 50 semiconductor companies have established back-end packaging and testing plants in Malaysia, including Intel, Micron, Texas Instruments, NXP, ASE, Nexperia, Infineon, HT-Tech, Tongfu Microelectronics, Suzhou Good-Ark Electronics, Renesas, Onsemi, Amkor, and STMicroelectronics.

Vietnam has attracted foreign investments from companies such as Intel, ASE, Samsung Electronics, Amkor, Qualcomm, Onsemi, Renesas, TI, NXP, Marvell, Synaptics, Heno Microelectronics, and Amphenol etc..

Notably, the semiconductor industry is one of Vietnam’s nine national products and has been listed as a key development focus for the next 30 to 50 years. According to the plan, Vietnam aims to have at least 300 chip design companies, three semiconductor chip manufacturing plants, and 20 semiconductor packaging and testing plants by 2040-2050.

(Photo credit: Samsung)

According to TechNews, citing a report from Nikkei, the Chitose government stated that approximately 50% of the construction of the pilot production line at chipmaker Rapidus’s Hokkaido plant was completed in September. Construction for other processes, such as chip manufacturing, began in October. Notably, Rapidus is set to start receiving EUV machines in December.

According to the report from Nikkei, the economic growth generated by Rapidus is estimated to reach JPY18.8 trillion for Hokkaido. With approximately 4,000 construction workers at the new plant, new apartments and restaurants are being gradually built to accommodate the needs of Rapidus employees and those from other companies. Additionally, Rapidus aims to transform Hokkaido into a comprehensive hub for semiconductor manufacturing, research and development, and human resource development.

However, the situation remains complicated due to the substantial funding required. According to the report in Nikkei, it is estimated that massproducing 2nm chips requires JPY 5 trillion in funding. As per a report from Kyodo News on August 21st, the Japan-based chip manufacturer is expected to begin mass production of 2nm chips by 2027. To secure the necessary funds for semiconductor production, Rapidus is reportedly seeking JPY 100 billion in financing from banks. 

While Japan’s Ministry of Economy, Trade and Industry has provided subsidies totaling JPY 920 billion, there is still a shortfall of approximately JPY 4 trillion. The central government plans to submit a legislative proposal to parliament to increase subsidies for Rapidus, as noted by the report in Nikkei.

The report from Nikkei indicated that the Japanese government is also considering transferring government-subsidized plants and equipment to Rapidus in exchange for company shares. Masakazu Tokura, president of the Japan Keidanren (Japan Business Federation), stated that the government should provide long-term support to achieve Japan’s goal of revitalizing its semiconductor manufacturing capabilities.

(Photo credit: Rapidus)

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• [News] Rapidus Reportedly Pursues JPY 100 Billion in Bank Financing for Mass Production

Ex-Intel CEO Brian Krzanich was recently appointed as CEO of Cerence Inc., an automotive AI technology company. The announcement quickly sparked criticism and backlash on social media. According to a report from Tom’s Hardware, even Cerence’s LinkedIn page was flooded with disapproving comments, forcing the company to disable the comment section.

According to a press release from Cerence, Krzanich was appointed Chief Executive Officer and a member of the Board of Directors, effective immediately following the announcement on October 7th.

In the press release, Arun Sarin, Chairman of the Cerence Board, stated that “Brian is a proven public company CEO with a successful track record of driving large-scale business transformations, fostering innovation and achieving sustainable growth. His leadership skills and expertise in AI and cloud computing make Brian the right leader to guide Cerence through this transition.”

The press release also highlights Krzanich’s previous experience, noting that he “led Intel into emerging areas such as cloud computing, artificial intelligence, and autonomous driving, while the company scaled from  USD 52 billion to over USD 70 billion in revenue” during his tenure from 2013 to 2018.

However, the announcement of Krzanich’s appointment as CEO has sparked criticism and disapproval on social media, forcing Cerence to shut down the entire comment section.

Among Intel’s former CEOs, Krzanich is often regarded as a controversial figure. During a period of decline in the PC market, he helped shift Intel’s focus toward the Internet of Things (IoT) and cloud computing. However, because he does not believe in the economic scalability of EUV technology, he decided to forgo ASML’s first-generation EUV equipment, resulting in delays in Intel’s 10nm progress. As a result, the company fell behind competitors like TSMC and Samsung in advanced nodes and lost market share to rival AMD.

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• [News] The Semiconductor Giant Falling from Grace: Intel and the CEOs Who Changed Its Destiny

(Photo credit: Cerence Inc.)

Though has yet to disclose the actual progress on its 12-Hi HBM3e verification with AI chip giant NVIDIA, Samsung is rumored to lower its target for the maximum production capacity (CAPA) of HBM by the end of 2025, which echoes the speculation on delays of HBM3e mass production for key customers, according to Korean media outlet ZDNet.

It is worth noting that the struggling memory giant reportedly plans to lower the capacity target by over 10%, from the initial monthly goal of 200,000 units to 170,000 units by the end of next year, ZDNet suggests, as it now takes a relatively cautious approach to facility investment plans.

According to the report, as of the second quarter, in order to narrow the gap with competitors such as SK hynix, Samsung had planned to increase HBM production capacity to 140,000–150,000 units per month by the end of this year, and up to 200,000 units per month by the end of next year.

At the Q2 earnings call in late July, Samsung disclosed an ambitious roadmap for its HBM products. According to a previous report from Business Korea, Samsung expects the share of HBM3e chips within its HBMs to surpass the mid-10 percent range in the third quarter, and speedily grow to 60% by the fourth quarter. The company also projects its HBM sales to increase three to five times in the second half of 2024.

However, the scenario has changed a few months later. Citing a source familiar with the situation, the report by ZDNet notes that Samsung has decided to slow down the pace of facility investments due to the underperformance of its HBM business. Further discussions on investments will only proceed once its HBM3e supply for NVIDIA is confirmed, the source indicates.

According to the analysis by TrendForce, achieving stable yields for HBM3 and HBM3e 8-Hi products required at least two quarters of learning in previous generations. Based on this precedent, the learning curve for HBM3e 12-Hi is unlikely to shorten significantly, especially with the rapid market shift toward the 12-Hi version.

Furthermore, key products such as NVIDIA’s B200 and GB200, as well as AMD’s MI325 and MI350, will adopt HBM3e 12-Hi. The high cost of these systems will also demand strict stability, complicating mass production and adding another layer of uncertainty.

Ahead of its Q3 earnings call, Samsung already warned its profit would fall short of market expectations, while issuing an apology for the disappointing performance. Samsung’s operating profit for the third quarter is expected to reach 9.1 trillion won, which is below the expected 10 trillion won.

Another report by The Korea Times notes that the market expected SK hynix to see a substantial increase in operating profit driven by strong HBM demand, potentially outpacing Samsung’s semiconductor division.

To boost its competitiveness in the semiconductor industry, Samsung intends to assign research and development staff directly to its manufacturing facilities. This initiative seeks to enhance communication and collaboration with on-site production teams, according to a report by SmBom.

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• [News] Lagging behind SK hynix in HBM, Samsung Plans Significant Year-end Cuts to Chip Executives
• [News] Samsung Foundry Faces Yield Struggles and Client Losses, External Push for Spinoff and U.S. Listing

(Photo credit: Samsung)