Recent reports of breakthroughs in China’s chip manufacturing equipment have gained attention, with rumors suggesting that China’s domestically-made DUV equipment can produce chips at 8nm and below. Some companies have also applied for EUV equipment patents. However, according to a report by the Central News Agency, experts believe these claims are questionable, emphasizing that production yield is the real key.

China’s Ministry of Industry and Information Technology recently released a guidance catalog for promoting major technological equipment. Two lithography machines listed have been interpreted by some as a sign of significant technological progress, sparking claims that China can now produce 8nm and more advanced nodes.

Meanwhile, German media outlet Deutsche Welle reported that Shanghai Micro Electronics applied for a series of EUV-related patents, which may indicate the ability to manufacture chips at 7nm and below.

Huawei’s flagship Mate 60 Pro, launched last year, was reportedly equipped with SMIC’s self-made 7nm chips. Earlier this year, rumors suggested SMIC had successfully produced 5nm chips without EUV machines, which would be used in Huawei’s Mate 70 series set for release later this year. These claims have resurfaced in light of recent developments.

Talks of China breaking through U.S. tech barriers have caught the attention of both domestic and international markets, with many Chinese netizens celebrating on social media. However, while the public cheers, official responses have remained muted. Aside from the ministry’s guidance catalog, no Chinese authorities or companies have confirmed the breakthrough, nor have any real-world applications been showcased.

In reality, since the start of the U.S.-China tech war, China has often hinted at “breaking through technological blockades,” but the results have been largely inconclusive.

Take SMEE, for instance. In June 2020, it announced that it would deliver China’s first domestically-made 28nm immersion lithography machine between 2021 and 2022, model SSA/800-10W. However, the news soon faded. By May 2023, rumors resurfaced that the 28nm machine was nearing completion, and by December, Zhangjiang Group in Shanghai claimed via its official WeChat account that SMEE had successfully developed the 28nm lithography machine. The post was deleted shortly afterward.

As of now, the SSA/800-10W has yet to appear on SMEE’s official product list.

According to a report by Chinese semiconductor media IC SMART, the lithography machine specifications recently released by the Ministry of Industry and Information Technology show improvements over SMEE’s SSA600 model. However, they still fall short of the capability to produce 28nm chips, let alone 8nm or 7nm chips. The rumors likely stem from a misunderstanding of what the specifications actually mean.

Additionally, a Reuters report from September last year noted that the yield rate for SMIC’s 7nm process was below 50%, whereas the industry standard is 90% or higher. This would significantly constrain chip shipments and impact smartphone production.

(Photo credit: SMEE)

One of the most critical moves of Intel’s next step, regarded by CEO Pat Gelsinger as “the most significant transformation in over four decades,” is turning its foundry business into an independent subsidiary. Citing remarks from foreign media and analysts, a report by Taiwanese media outlet Anue notes that this is a much-needed temporary measure aimed at gaining the trust of potential customers, who may hesitate to entrust their chip designs to a competitor’s foundry division.

Following last week’s board meeting, Intel announced on September 16^th that the company will transform its foundry business into a wholly-owned subsidiary with its own board of directors.

It is worth noting that in the meantime, Intel signed a multi-billion-dollar, multi-year agreement with Amazon to produce certain chips for Amazon Web Services’ (AWS) AI data centers.

The Two tech giants will co-develop AWS’ next-gen AI fabric chips on Intel 18A, which signals a good start for Intel. Additionally, Intel is developing customized Xeon 6 server chips for AWS.

Regarding Intel’s plan on carving out its foundry business, citing comments from foreign analysts, the report by Anue states that the move could help Intel in having a better chance of attracting tech heavyweights, such as Apple, Qualcomm, Broadcom, and even AMD.

Here is why: if the new company appears as an independent entity and if it has the right board members, the foundry business could progress more smoothly, the report suggests. This move should help alleviate concerns from potential customers, but its effectiveness will yet be proven through execution.

The report added that if Intel’s collaboration with Amazon goes well, it could potentially manufacture other Amazon chips in the future, such as AWS Graviton processors and Trainium AI training chips used for machine learning.

Intel has failed to attract a significant number of clients for its foundry business, with Microsoft being its largest customer to date, the report notes.

Two years ago, the struggling giant lost the contract to design and manufacture chips for Sony’s next-generation PlayStation 6, dealing a major blow to its efforts to establish its nascent foundry business.

In its own words, the move in terms of the new subsidiary structure will provide greater separation and independence for Intel’s external foundry customers and suppliers from Intel’s other divisions. Importantly, it also gives the company the flexibility to evaluate independent funding sources in the future and optimize the capital structure of each business to maximize growth and create shareholder value.

Read more

• [News] Intel Reportedly Sought Commerce Secretary Raimondo’s Help over U.S. Reliance on TSMC
• [News] Intel to Turn Foundry Unit into Subsidiary, with Projects in Germany and Poland Delayed for 2 Years

(Photo credit: Intel)

The struggling giant seems to gradually get a turnaround, as Intel reportedly settles down plans for restructuring after the board meeting. Intel, according to a latest report by CNBC, reveals schemes to transform its foundry business into an independent unit with its own board. Moreover, the strategy will allow the foundry business to explore “independent sources of funding,” the report notes.

In a post released on September 16^th, CEO Pat Gelsinger refers to the next phase of Intel’s transformation as “the most significant transformation of Intel in over four decades. Not since the memory to microprocessor transition have we attempted something so essential.”

The plan for its foundry unit to secure outside funding would be critical, as the business has weighed heavily on Intel’s finances, with the company spending around USD 25 billion on it annually over the past two years, CNBC suggests.

It is worth noting that Intel is thinking something even bigger regarding its foundry business, as it is having the ambitious idea that in addition to possibly spinning it off, it may mull to transform the business into a separate publicly traded company, according to a source familiar with the matter cited by CNBC.

The report notes that with the establishment of an independent operating board and a streamlined corporate structure, separating the business becomes significantly easier for Intel, especially compared to the challenge of turning a fully integrated unit into a standalone company.

Along with the decision, other details of Gelsinger’s efforts have surfaced. CNBC notes that the semiconductor heavyweight would also divest a portion of its stake in Altera, according to a memo to the company’s employees.

Regarding its plan on overseas expansion, according to CNBC, citing Gelsinger’s remarks, Intel will delay its fabrication projects in Poland and Germany by roughly two years due to projected market demand. Additionally, the company will scale back its plans for its factory in Malaysia.

Intel’s decision on the delay of the two projects in Europe, partly funded through state aid, would be a heavy blow to EU, as the region tries to boost its domestic semiconductor industry to increase its resilience and independence. The EU Chips Act, in force since September 2023, aims to double Europe’s share of global semiconductor manufacturing to 20% by 2030.

According to a report by EURACTIV, Intel’s €30 billion investment in Magdeburg, Germany, is the largest project envisioned under the EU Chips Act, with one-third of the funding coming from German subsidies. In Poland, Intel’s €4.2 billion project has also been recognized as the “largest investment in Polish history,” with €1.7 billion (PLN 7.4 billion) expected to be provided through state aid.

Notably, as the company proactively pursues the support of the U.S. government, it is holding steadfast on its investments in the country. Intel’s U.S. manufacturing projects will continue as planned, according to CNBC.

Intel plans to invest USD 100 billion over the next five years in new fabs and expansions across Arizona, New Mexico, Ohio, and Oregon, creating 10,000 manufacturing jobs and 20,000 construction jobs.

The semiconductor giant’s Fab 52 and Fab 62 in Arizona are previously scheduled to be completed in 2024. However, The Register notes that the schedule may be delayed a bit, as the fabs are likely to begin operations later this year or in early 2025, targeting to manufacture chips using Intel’s next-generation Angstrom-era process technology, including the 18A node.

The company is slated to receive USD 8.5 billion in grants and USD 11 billion in loans under the 2022 Chips and Science Act, but this funding is contingent on meeting key milestones and undergoing extensive due diligence. However, an official cited by CNBC said that disbursements are anticipated by the end of the year.

(Photo credit: Intel)

Read more

• [News] Intel Reportedly Sought Commerce Secretary Raimondo’s Help over U.S. Reliance on TSMC
• [News] Uncashed Checks of the Struggling Giant: Intel’s Unfulfilled Expansion Plans in a Nutshell

(Photo credit: Intel)

Regarding the continuous struggle of its foundry business, Samsung has reportedly decided to make another move, as its semiconductor division (DS) plans to undertake a major organizational restructuring within the year, according to a report by Chosun Biz.

Through the restructuring, DS Division President (Vice Chairman) Jeon Young-hyun is said to focus on addressing major issues related to organizational culture, such as the lack of communication between departments and team self-interest, the report notes.

The revelation follows Samsung’s reported up to 30% layoffs in overseas workforce last week, as noted by Reuters. The plan, set to be implemented by the end of this year, will affect jobs across the Americas, Europe, Asia, and Africa.

Citing industry sources, the report indicates that Samsung Electronics’ DS division plans to strengthen collaboration processes by integrating existing team-based structures into a project-centered model, with an aim to resolve issues arising from the siloed operation of departments.

As a comprehensive semiconductor company with a broad range of businesses, Samsung faces quite a few challenges, while the proliferation of business units and task forces leads to competition and friction between departments. In the development of chips or processes, differing interests among departments—such as semiconductor design, fabrication, and reliability evaluation—can cause communication problems, which may ultimately lead to business failures.

Samsung has been fighting to catch up with its rivals, not only in the foundry sector but in memory as well. Chosun Biz notes that the Korean semiconductor giant is lagging behind competitors in areas like high-bandwidth memory (HBM), cutting-edge DRAM, and foundry technology over the past 2-3 years, which may be attributed to this organizational culture.

Samsung’s foundry division has been working out to mass-produce 3-nm GAA (Gate-All-Around) technology for around three years but still struggles with customer acquisition. A report by The Korea Times states that the yield for Samsung’s 3nm process remained in the single digits until Q1 this year, and slightly improved to about 20% in Q2, though still significantly below the 60% threshold generally needed for mass production.

In terms of DRAM, Samsung seems to gradually lose the leading edge as it has started to fall behind SK hynix, especially in the HBM market. In its latest attempt, Samsung teams up with its foundry rival, TSMC, on the development of HBM4, according to Business Korea.

Moreover, Samsung is facing challenges on the DDR5 DRAM market. Chosun Biz suggests that discrepancies between the quality goals set by the development department and the actual specifications of the mass-produced product delayed Samsung’s entry into the server DDR5 DRAM market by more than 3-6 months, compared to SK hynix.

The report took its setback in the 10-nm 5th generation (1b) DDR5 server DRAM last year as an example. The product, which supplied to Intel, failed to meet the promised performance and was deemed substandard.

In early September, another report by Korean media outlet ZDNet reveals that the tech giant might be facing difficulties in its cutting-edge mobile DRAM, as Samsung’ Mobile eXperience (MX) Division reportedly raised concerns with the DS Division about delays in the delivery of 1b-based LPDDR (low-power DRAM) samples, which are intended to be used in the Galaxy S25 series.

A Samsung Electronics spokesperson cited by Chosun Biz admitted that there continues to be a disconnection between the departments developing new processes and those responsible for mass production, with serious issues arising from the shifting of blame for failures.

However, would Samsung’s latest effort work out? An industry insider cited by the report notes that Intel has attempted to make a change through the “IDM 2.0” strategy over the past three years, but solving these issues in a short period of time has proven difficult. He suggests that it is necessary to go beyond just restructuring to fundamentally change the organization.

Read more

• [News] Samsung Partners with TSMC, Its Foundry Rival, on HBM4 Development
• [News] Samsung Reportedly Buckling Under Pressure, with Plans to Cut Overseas Workforce by Up to 30%

(Photo credit: Samsung)

In 2024, the semiconductor industry has gradually emerged from its downturn and entered a phase of gradual recovery.

Observing the market situation, as downstream demand increases, a number of domestic semiconductor industry projects are accelerating.

Recently, more than 30 semiconductor-related projects have entered the stages of signing contracts, construction, topping-out, and production etc.

These projects span areas such as EDA, AI, advanced packaging, materials, equipment, third-generation semiconductors, chip design, CMOS sensors, and memory, involving companies like Huahong, Semitronix, YASC, Skyverse, Hoshine, Smartsens, Sanan Semiconductor, and CFMEE etc.

Conclusion

The industry has revealed that from this year’s market situation, the revenue of companies in the middle and upper reaches of the integrated circuit industry has generally improved, AI has become an important driving force for revenue growth, and the demand for acceleration chips such as GPU/HBM has increased. Some sub-sectors such as advanced packaging and equipment/materials related to the industrial chain have also benefited.

At the same time, as new energy vehicles drive the popularity of third-generation semiconductor materials, power devices such as silicon carbide are in high demand.

According to TrendForce, SiC is still showing an accelerated penetration trend in application markets such as automobiles and renewable energy where power density and efficiency are extremelyimportant.

The overall market demand will maintain a growth trend in the next few years, and it is estimated that the global SiC Power Device market size is expected to reach US$9.17 billion in 2028.

(Photo credit: Huahong)