To turn adversity around, Intel launched its latest AI accelerator, Gaudi 3, in late September. However, a report by the Economic Daily News indicates that the struggling giant has significantly slashed the chip’s shipment targets by over 30% for next year, which may severely impact orders for its Taiwanese supply chain.

According to the report, the move could be attributed to the Intel’s internal strategy adjustments and the fluctuation of customer demand, which prompts it to cut orders on Taiwanese companies such as TSMC, ASE Technology, and ASIC firm Alchip.

According to industrial sources cited by the report, Intel originally projected to ship 300K to 350K units of Gaudi 3 in 2025. However, the target has now been revised to 200K to 250K units, marking a reduction of more than 30%.

According to the report, after acquiring Israel-based AI chip company Habana Labs in 2019, Intel seems to be relatively conservative about their co-development of the next-gen AI accelerators. Intel’s cautious attitude is evident from its recent moves, such as expediting the conclusion of previous projects like Gaudi 2, as well as lowering the shipment target for Gaudi 3 next year.

Intel declined to comment on the matter, the report notes.

According to industrial sources cited by the report, the adjustment will pose limited impact to TSMC, which manufactures Intel’s Gaudi 3 with its 5nm node. While the demand for the foundry leader’s advanced nodes remains robust, other customers are expected to quickly fill the gap left by Intel.

In terms of IC packaging and testing services provider ASE and its subsidiary SPIL, as they also have a diversified client portfolio, with major tech companies placing orders, the capacity can be swiftly reallocated to minimize the impact, the report suggests.

Nevertheless, for those with smaller scales and a higher client concentration, the impact may be more significant. Taiwanese ASIC firm Alchip, which provides ASIC design services for Intel’s Gaudi 2 and Gaudi 3, therefore, may be more vulnerable to Intel’s potential shipment reduction, according to the report.

Unimicron, which serves as the primary supplier of substrates for Intel’s chips, may also be impacted by the fluctuation of Intel’s orders, the report notes. However, when asked about the potential impact, the company reaffirms its optimistic outlook regarding the second half of 2024, as it expects the demand for AI accelerators and optical modules to be stronger than the first half.

Currently, NVIDIA still holds the throne in the global AI chip market, with rivals such as AMD and Intel eagerly trying to catch up.

Intel’s latest effort, Gaudi 3, boasts 64 Tensor processor cores (TPCs) and eight matrix multiplication engines (MMEs) to accelerate deep neural network computations, and is specifically optimized for large-scale generative AI, according to its press release. It even claims to offer double the performance at the same cost compared to NVIDIA’s H100, the report says.

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(Photo credit: Intel)

South Korea’s two major memory chip manufacturers, Samsung Electronics and SK Hynix, are set to release their Q3 earnings reports (July to September) at the end of the month, with Samsung Electronics also announcing its financial forecast on October 8.

According to The Korea Times, the market expects SK Hynix to see a significant surge in operating profit driven by strong demand for high-bandwidth memory (HBM), potentially outperforming Samsung’s semiconductor division.

The Korea Times reports that SK Hynix’s Q3 operating profit is forecast to hit 6.76 trillion won (around $5 billion), with total revenue projected at 17.99 trillion won. If these estimates hold, SK Hynix may set a new record for quarterly operating profit, despite the broader challenges facing the global memory chip market.

On the other hand, Samsung Electronics does not break down individual business units in its earnings forecasts. However, the company’s Device Solutions (DS) division, which handles the memory chip business, is expected to contribute more than half of Samsung’s overall operating profit.

The market anticipates that Samsung Electronics will report an overall Q3 operating profit of 10.77 trillion won, with its DS division’s profit ranging between 5.2 trillion and 6.3 trillion won.

The Korea Times points out that SK Hynix could potentially surpass Samsung in operating profit by 400 billion to 1.5 trillion won, dealing a blow to Samsung’s long-standing dominance as the world’s top memory chipmaker.

There is growing speculation that SK Hynix may overtake Samsung in annual operating profit.

According to Business Korea, SK Hynix has begun mass production of the world’s first 12-layer HBM3E, following its earlier shipment of 8-layer HBM3E to Nvidia, the leading semiconductor company. The company plans to start supplying the 12-layer HBM3E within this year, further strengthening its market position.

TrendForce forecasts that by next year, HBM will account for 10% of total DRAM bit production and contribute more than 30% of DRAM market revenue. Moreover, HBM3E is expected to make up over 80% of the total HBM demand.

(Photo credit: SK Hynix)

Samsung Electronics announced that it has begun mass producing PM9E1, a PCle 5.0 SSD with the industry’s highest performance and largest capacity.

According to Samsung’s press release, the PM9E1, which is built on its in-house 5nm-based controller and eighth-generation V-NAND (V8) technology, will provide powerful performance and enhanced power efficiency, making it an optimal solution for on-device AI PCs.

Key attributes in SSDs, including performance, storage capacity, power efficiency and security, have all been improved compared to its predecessor (PM9A1a), Samsung notes.

According to Samsung, thanks to the eight-channel PCIe 5.0 interface, the sequential read and write speeds of the new SSD have more than doubled compared to the previous generation, reaching up to 14.5 gigabytes-per-second (GB/s) and 13GB/s, respectively.

This powerful performance enables faster data transfer even with data-intensive AI applications, allowing a 14GB large language model (LLM) to be transferred from the SSD to DRAM in less than a second, Samsung states.

The PM9E1 offers a range of storage options, including 512GB, 1 terabyte (TB), 2TB and the industry’s largest capacity of 4TB. The 4TB option is especially an optimum solution for PC users in need of high-capacity storage for large-sized files such as AI-generated contents, data-heavy programs and high-resolution videos, as well as tasks that require intensive workloads such as gaming.

Additionally, the significantly improved power efficiency of over 50% allows for longer battery life which is ideal for on-device AI applications, according to Samsung.

For stronger security measures, Samsung has applied Security Protocol and Data Model (SPDM) v1.2 to the product. The SPDM specification provides ‘Secure Channel,’ ‘Device Authentication’ and ‘Firmware Tampering Attestation’ technologies that can help prevent supply chain attacks involving forgery or manipulation of stored data in the product during production or distribution processes.

Starting with PM9E1, Samsung plans to expand its advanced SSD offerings to global PC makers and expects to launch PCIe 5.0-based consumer products in the future to solidify its leadership in the on-device AI market.

(Photo credit: Samsung)

While TSMC is making advancements on its 2nm at full throttle, an unexpected risk may be emerging, which might be more severe than most could imagine: power supply. Citing a report by S&P, a report by Wccftech highlights that compared with 2023, the foundry giant’s electricity consumption could nearly triple by 2030, accounting for about 24% of the island’s total electricity usage.

Another report by the Economic Daily News warns that the slow growth in Taiwan’s power generation may pose challenges to TSMC’s chip production, which requires high energy consumption.

Citing the data compiled by a S&P’s report titled “Power Is Increasingly A Credit Risk for TSMC,” Wccftech notes that in 2023, TSMC’s electricity consumption had reached nearly 250 GW, accounting 8% of Taiwan’s total electricity use and almost 16% of the industrial sector’s demand. However, by 2030, TSMC’s share of electricity consumption could soar significantly, contributing 23.7% of the island’s total power usage.

S&P’s calculation is based on the assumption that the TSMC’s wafer shipments will increase by 90% compared to 2023 levels, leading electricity consumption to soar to 794 GW in 2030, Wccftech notes.

It is worth noting that the S&P report, cited by Wccftech, also highlights that extreme ultraviolet (EUV) lithography systems, which are required for processes below 7nm, consume significantly more power than the older deep ultraviolet lithography systems (DUV).

The scenario would weigh heavily on semiconductor heavyweights as they are eagerly pursuing for more advanced nodes. TSMC’s move to 3nm chip production is fueling S&P’s projections of the company’s skyrocketing electricity consumption, Wccftech says.

To put things in context, the report also cites data from Taiwan’s state-owned electricity provider, TaiPower, to show that the island’s electricity reserve margin continues to fall short of the government’s 15% target. While the household electricity consumption continues to decline, TSMC’s power needs, in contrast, keeps growing.

Moreover, according to the Economic Daily News, which also cites S&P’s report, when the electricity reserve margin drops below 10%, the stability of the power supply can be affected.

Citing S&P’s report, the Economic Daily News states that the growth of Taiwan’s power supply is relatively limited. In addition, Taiwan’s policy of replacing cheaper coal and nuclear energy with natural gas and renewable energy will put more pressure on future electricity prices, which may also influence the stability of power supply.

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(Photo credit: TSMC)

Though still be struggling with low yield rates in 3nm, Samsung is reportedly ramping up its efforts to prepare for the mass production of 2nm and 1.4nm to compete with its longtime rival, TSMC. Citing industrial sources on Oct. 3^rd, Business Korea reveals that the South Korean foundry giant is introducing equipment at the Hwaseong plant to establish a 2nm production line, while it also plans to set up a 1.4nm line in its Pyeongtaek 2 plant next year.

According to the report, this initiative is in line with Samsung’s goal to mass produce 2nm in 2025 and 1.4nm by 2027.

In terms of the capacity expansion of 2nm, Samsung aims to install a capacity of 7,000 wafers per month by the first quarter of next year in its S3 foundry line at Hwaseong, Business Korea states. It is worth noting that the existing 3nm line at S3 is expected to be fully converted to a 2nm line by the end of next year.

Then, starting in the second quarter of next year, Samsung plans to set up a 1.4nm production line at the S5 facility in its Pyeongtaek 2 plant, with a capacity of approximately 2,000 to 3,000 wafers per month, according to the report.

Unlike the aggressive expansion for its advanced nodes in South Korea, Samsung’s foundry project in Taylor, Texas, seems to be in stagnant. The company had reportedly planned to begin mass production of below-4nm nodes there by the end of 2024, but this has somehow been pushed back to 2026, which reflects the possible yield issues regarding 3nm node with GAA architecture Samsung has been eager to solve, the report suggests.

Due to a decline in client orders, Samsung’s management has decided to convert the foundry line at its Pyeongtaek 4 plant into DRAM facilities, the report points out. Additionally, the Pyeongtaek 3 plant, which features a 4nm line, has decreased its scale of operation for the same reason.

Analysts cited by the report estimate that Samsung Foundry might incur a deficit of several hundred billion won in the third quarter of this year, underscoring the financial pressures the company is experiencing.

As the delay of the 3nm Exynos seems to be irreversible, securing the success of 2nm has become a top priority for Samsung. Business Korea indicates that the testing of Samsung’s 2nm will be conducted on the next-generation Exynos chip, codenamed “Tethys.” Evaluations may also be said to extend to chips from Qualcomm, Japan’s Preferred Networks (PFN), and Ambarella.

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(Photo credit: Samsung)