According to a report by Economic Daily News, Supermicro’s ongoing financial crisis has reportedly led to the suspension of its planned expansion at its Malaysia facility, which was set to double its production capacity. This disruption has prompted Supermicro’s major client, Malaysia’s largest conglomerate and a top NVIDIA AI server buyer, YTL Group, to shift its substantial AI data center order.

The same report indicates that YTL Group is now turning to Wistron Group’s Malaysian subsidiary, Wiwynn, for nearby support to fulfill the order, which involves substantial deliveries of NVIDIA’s high-end GB200 NVL72 full-rack servers.

Industry insiders cited by Economic Daily News previously speculated that NVIDIA would lead any order reallocation; however, this shift originates from Supermicro’s client, YTL Group, whose choice of Wiwynn is strategic. Wiwynn’s plant is situated near Supermicro’s new facility in Malaysia, offering a geographical advantage and boasting robust AI server capabilities.

YTL Group has strong ties with NVIDIA. In March, YTL Power, a subsidiary of YTL Group, announced a partnership with NVIDIA to install DGX GB200 NVL72 AI server systems, aiming to establish a green AI data center in Johor, Malaysia.

Originally, YTL’s sizable AI data center project was to be shared between Supermicro and Wiwynn. Supermicro’s Johor plant was expected to double capacity with a new line in Q4, but this plan has been delayed due to financial issues. Wiwynn’s nearby plant has also been expanding, enhancing its one-stop manufacturing services and adding advanced cooling technologies such as direct liquid cooling and immersion cooling to handle the redirected order.

Supermicro CEO Charles Liang, speaking at COMPUTEX 2024, previously unveiled the company’s ambitious Malaysia expansion, aiming to double its output to 10,000 server racks per month by Q4. With the expansion now halted, orders have shifted to Wiwynn.

Wiwynn’s new plant in Johor began assembling server racks last October, and a second phase focusing on motherboard production is expected to go online later this year, with potential plans for a third plant.

Economic Daily News reports that Johor, Malaysia’s largest data center investment hub and the ninth-largest in the Asia-Pacific, currently hosts 13 data centers, with four more under construction. The region’s affordable land, water, and power resources, along with its proximity to Singapore, have drawn multinational companies such as Australia’s AirTrunk and Microsoft, which recently acquired land in Johor for a new data center.

(Photo credit: YTL Power)

According to Liberty Times, citing Wccftech, while initial expectations suggested that Huawei’s new Mate 70 smartphone would feature a next-generation flagship SoC, like the Kirin 9100, recent rumors indicate that Huawei may instead equip the standard Mate 70 model with a different Kirin chip. Only the high-end models, such as the Pro, Pro+, and RS Ultimate, are likely to receive the advanced Kirin 9100 chip.

Wccftech reports that this decision highlights Huawei’s ongoing challenges with chip yield rates, which have limited its ability to produce the new high-performance chips at scale. Consequently, Huawei has been compelled to reserve these advanced chips for higher-priced models.

Leaked information previously indicated that the Kirin 9100 is manufactured by SMIC using a 6nm process, according to Wccftech. However, since SMIC is limited to using older DUV equipment, production costs remain high, and yields are still constrained, preventing Huawei from producing these chipsets in large quantities. As a result, Huawei can only use this chip in a limited number of high-end models, as the report noted.

As for the standard version of the Mate 70, the report indicated that it may feature a different Kirin chip that’s slightly less powerful than the high-end processor. Some speculate that the standard model might adopt the previous generation Kirin 9000s or 9010, and at this stage it is still uncertain whether the Kirin 9100 will appear in the top-tier versions of the Mate 70 series, as the report from Liberty Times pointed out.

Read more

• [News] Huawei Expected to Unveil Mate70 and Foldable Device Following Apple’s iPhone 16 Release
• [News] Huawei’s Mate 70 Will Reportedly Use a Kirin SoC Made with SMIC’s 7nm Node instead of 5nm

(Photo credit: Huawei)

Vanguard International Semiconductor Corporation (VIS) today announced that its Fab 3 in Taoyuan experienced a power supply issue at 12:10 PM, leading to a power outage.

VIS stated that as a precaution, the cleanroom was promptly evacuated, and all personnel were confirmed to be safe. Power was restored at 12:34 PM, and the company has taken steps to fully resume operations, with all facility systems now back to normal.

The company is currently conducting standard checks on the equipment and evaluating any potential impact on products. VIS has immediately informed the affected customers of the situation, and the impact on operations is still under assessment.

(Photo credit: VIS)

Following previous controversies of supplying 7nm chips to Huawei through proxies, TSMC is rumored to be requested by the U.S. Department of Commerce to suspend shipments of all its 7nm or more advanced chips to the AI/GPU clients in China, starting from today (November 11), according to the reports by the Financial Times and Reuters.

Though the information has yet to be confirmed, neither does TSMC make a clear statement to its clients, market sources seems to increase the credibility of the matter. A report by TechNews, therefore, compiles the development and the possible impact of the incident, providing further insights into the current situation. Please read below for the report’s analysis on four key aspects:

Why Now?

According to Reuters, the Department of Commerce sent an “informed” letter to TSMC to make the request, enabling the U.S. to bypass lengthy rule-making procedures and swiftly impose new licensing requirements on specific companies. The action comes shortly after TSMC told the Department that one of its chips had been found in a Huawei AI processor.

The move, in some way, reportedly indicates growing concerns from both Republican and Democratic lawmakers about the effectiveness of export controls on China as well as the U.S. authority’s enforcement of these regulations.

Earlier in July, the Biden administration reportedly drafted new rules targeting chipmaking equipment exports and aimed to add around 120 Chinese companies to the restricted entity list. However, despite initial plans for an August release, the rules have not yet been issued, according to Reuters.

Current Scenario of TSMC and Its Clients in China

However, things aren’t as bad as they seem, as sources tend to indicate that TSMC is not truly halting supply of 7nm and below advanced processes to China, but is instead required to conduct individual project reviews for each customer wishing to place orders. Production will only proceed after obtaining the necessary permits, according to TechNews.

According to another report by TechNowvoice, the main focus of the current restrictions would be on AI chips, which means products such as GPUs will be closely monitored. On the other hand, mobile and automotive chips may be excluded from the restrictions.

The TechNowvoice report further suggests that within the AI chip category, those responsible for training will be the key target of the restrictions, while chips used for AI inference may have a chance of passing the review.

Criteria for Export Restrictions

According to TechNowvoice, market speculations indicate that there are four criteria for evaluation, including transistor count (exceeding 300 billion), chip size (exceeding 300mm²), HBM incorporation, and whether the chip leverages CoWoS packaging.

Given these standards, it will be increasingly difficult for AI chips based on current mainstream architectures to pass the review and obtain approval from the U.S. Department of Commerce, the report indicates.

The report further suggests that the move will likely impact the four major cloud computing companies in China, including Huawei, Baidu, Tencent, and Alibaba. While Huawei has already been included in the blacklist, the other three companies, which have been collaborating with TSMC on AI chip development, may also require further reviews in the future.

What Would the Impact Be?

TSMC’s decision would be a major blow to China’s AI ambition, as AI and GPU companies in China will no longer have access to TSMC’s advanced process, which could lead to higher costs and longer time-to-market, and significantly impact their product performance and market competitiveness.

A supply chain reshuffle is likely to follow, as Chinese chip design companies may need to seek alternative foundries, according to TechNews.

According to the latest research report by TrendForce, if the policy takes effect, it could impact TSMC’s revenue performance and utilization rates of its 7nm and below advanced process capacity, while also affecting the future development of China’s AI industry.

For the first three quarters of 2024, TSMC’s revenue distribution shows that advanced nodes accounted for 67% of its total revenue—a key revenue source. However, TrendForce highlights that the major clients for TSMC’s 7/6n, 5/4nm, and 3nm processes are primarily from the U.S., Europe, and Taiwan. Consequently, even if regulatory actions impact business some Chinese clients may be lost, TrendForce expects other customers to offset this loss, limiting the potential effect on advanced process utilization rates.

TSMC’s revenue from China has remained steady at 11% to 13% for the full year of 2023 and the first three quarters of 2024. If regulatory scrutiny of TSMC’s advanced processes intensifies, or if certain Chinese clients are added to the Entity List—particularly affecting Chinese AI-related IC design companies, IP providers, third-party design services, or other businesses that depend on TSMC’s advanced processes for project initiation, tape-outs, and mass production—TSMC could face a revenue impact of approximately 5% to 8%.

However, strong global demand for AI chips and TSMC’s planned price increases for advanced process clients are expected to help mitigate some of this impact, according to TrendForce.

Read more

• [News] TSMC Reportedly to Halt 7nm and Below Chip Shipments to China’s AI Firms Next Week
• [News] TSMC Reportedly Halts Shipments to Chinese Firm Sophgo After Chip Found in Huawei Processor

(Photo credit: TSMC)

According to Liberty Times, citing Chinese meida outlet TMTPost, as the U.S. has imposed sanctions on China’s semiconductor industry since 2019, over 22,000 Chinese chip companies have shut down as of the end of 2023.

The report pointed out that a large number of Chinese chip companies have gone out of business, mainly because many small and medium-sized companies lack the necessary core technologies and face difficulties overcoming technical barriers

Another issue is the lack of investment, particularly for smaller chip companies, as the report indicated. The U.S. restricts investment in China’s semiconductor industry, and under U.S. sanctions, European investors are also hesitant to invest in Chinese chip companies.

The report mentioned that while large companies have invested billions of dollars to secure alternative suppliers, and Huawei is said to have established a network of foundries to sustain its business, smaller chip companies lack the resources to keep up without government financial support.

On the other hand, China recorded a trade deficit in chips totaling USD 122 billion in the first seven months of 2024, highlighting its continued reliance on imported high-end chips, as the report noted.

According to the report, citing data from China’s General Administration of Customs, in the first seven months of this year, China imported 308.1 billion chips with a total value of approximately USD 212 billion, marking year-on-year increases of 14.5% in quantity and 11.5% in value compared to the same period in 2023, which suggests that Chinese companies were actively stockpiling high-end chips, such as high-bandwidth memory (HBM), ahead of U.S. export restrictions on these products.

Meanwhile, in the first seven months of this year, China exported 166.6 billion chips, mainly traditional chips used in automobiles, home appliances, and various consumer electronics, totaling USD 90 billion, with year-on-year increases of 10.3% in quantity and 22.5% in value, as the report pointed out.

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• [News] China’s Surge in Chipmaking Tool Purchases May Lead to Overcapacity Crisis of Legacy Chips
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