Ahead of the upcoming U.S. presidential election, U.S. semiconductor equipment giants Applied Materials and Lam Research are already working out to exclude Chinese firms from supply chains, driven by Washington’s directives to limit China’s role in sensitive leading-edge technologies, according to a report by The Wall Street Journal.

According to the report, major chip toolmakers, including Applied Materials and Lam Research, are notifying suppliers that they must source alternatives for certain Chinese components or risk their vendor status. Suppliers have also been informed that they must not have Chinese investors or shareholders, according to sources cited by the report.

The move would potentially drive up costs, as finding non-Chinese alternatives at comparable prices will be challenging, noted industry executives interviewed by The Wall Street Journal.

China is now reportedly the largest market by revenue for top global chip equipment suppliers. The latest quarterly financial reports from companies such as Applied Materials, Lam Research, and KLA show that China contributes approximately 40% of their sales.

When asked about whether the act of finding alternatives to Chinese-made components has been initiated, Lam Research stated it complies with U.S. export controls within the chip-manufacturing supply chain, while Applied Materials indicated it seeks alternative component sources to ensure consistent availability, according to the report.

It is worth noting that as the U.S.-China Chip War escalates, both presidential candidates, Donald Trump and Kamala Devi Harris, promise a firmer stance on trade with China, and the semiconductor industry is particularly targeted due to its national security significance recently.

Earlier in September, the Biden administration has introduced new export controls targeting critical technologies, including quantum computing, advanced chip making tools, specific components and software tied to metals and alloys, and high-bandwidth chips essential for AI applications, according to a previous report by CNBC.

While these restrictions apply globally, concerns have been raised on major semiconductor equipment companies, such as Dutch giant ASML and U.S. heavyweights Applied Materials and Lam Research.

The Wall Street Journal report also mentions that last year, the Commerce Department already introduced regulations requiring U.S. toolmakers to secure licenses before sharing technical details with Chinese suppliers. They received a temporary license to maintain current suppliers, set to expire at the end of 2025. This summer, the department clarified that suppliers outside China must also comply if their parent company is based in China.

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• [News] US Reportedly Expands Investigation into Applied Materials, Possibly due to Concerns of Shipments to SMIC
• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls

(Photo credit: Applied Materials)

According to a report from TechNews, citing the Reuters, Silver Lake, Bain Capital and other potential acquirers are planning to acquire a minority stake in Altera, Intel’s programmable chips division.

Altera, a market leader in FPGAs, was acquired by Intel in 2015 for nearly USD 17 billion, with the initial goal of expanding Intel’s presence in the Internet of Things market. However, given Intel’s current financial pressures, Altera has become a business that can be spun off and sold.

Sources indicate that Intel hopes to sell Altera for a price similar to what it paid when acquiring the company in 2015. While it is unclear how much of Altera’s stake Intel plans to sell, any potential deal is expected to be valued at several billion dollars, according to the Reuters.

The Reuters report, citing industry sources, revealed that Intel has started the process of spinning off Altera as a separate company and has begun preliminary steps to sell Altera shares. Sources also noted that while negotiations are still in the early stages, Intel expects to receive initial bids from potential buyers in the coming weeks, according to the report.

In addition to Silver Lake and Bain Capital, the Reuters report mentioned that, citing industry sources, private equity firm Francisco Partners has also shown interest in acquiring a stake in Altera and is expected to be among the bidders.

According to the Reuters, for the quarter ending September 30, Intel announced that Altera’s revenue grew 14%, reaching USD 412 million. During the post-earnings conference call, Intel CEO Pat Gelsinger stated that the company is focused on selling a stake in Altera as part of its path toward an IPO in the coming years. He added that discussions with potential investors are underway, with a conclusion expected in early 2025.

The Reuters report noted that the transaction is expected to provide Intel with a much-needed cash injection. Despite announcing an optimistic revenue forecast in its latest quarterly report, Intel’s stock is down over 50% this year, as the company has missed the AI boom and is facing challenges to turn things around.

Notably, the Reuters report pointed out that before Intel acquired Altera, Altera had many of its chips manufactured by TSMC. Following the acquisition, Intel planned to shift Altera’s chip production to its own factories, while at that time, Intel was beginning to lose its manufacturing lead to TSMC.

According to the report from the Reuters, Intel’s transition of Altera’s production to its own factories proved to be lengthy and expensive. This move contributed to Altera losing market share to its main competitor, Xilinx, which was later acquired by AMD.

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• [News] Intel Reportedly Aims to Raise Billions through Sale of Minority Stake in Altera
• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera

(Photo credit: Intel)

As South Korean memory giants Samsung and SK hynix announced their third quarter financial reports, posting a 112% and 94% year-over-year revenue growth, respectively, the threat from increasing output of Chinese rivals such as CXMT, which drives prices down, has reportedly prompted them to significantly cut back on legacy memory chip production, according to the report by the Korea Economic Daily.

According to the report, China’s ChangXin Memory Technologies (CXMT) has been ramping up the production of older chips like DDR4 and LPDDR4X, resulting in severe price pressure in legacy products.

CXMT has expanded its monthly DRAM production capacity from 40,000 wafer sheets in 2020 to 160,000 sheets. This capacity is expected to reach 200,000 sheets by year-end and 300,000 by the close of 2025, the report said.

SK hynix to Reduce DDR4 Production to 20% of Total DRAM Output

Industry sources cited by the report noted that in a recent investor relations session with Goldman Sachs, SK hynix suggested that it plans to reduce DDR4 DRAM production to 20% of its total DRAM output by the end of the year, down from 30% in September and 40% in June.

On the other hand, according to the report, in an earnings call with analysts on last week, Kim Jae-joon, executive vice president of Samsung’s device solutions (DS) division, confirmed plans to reduce production of legacy DRAM and NAND flash chips, aligning with industry expectations that chipmakers are scaling back on conventional memory output.

HBM and eSSD Emerge as the New Focus

Instead, both memory giants highlighted in their earnings call that they would shift their focus to highly profitable premium products like HBM and enterprise solid-drivers (eSSDs).

These adjustments by Samsung and SK hynix align with strong server DRAM demand driven by major tech firms like Google and China’s Baidu investing in server infrastructure, while PC DRAM sales have remained stagnant, according to the Korea Economic Daily.

According to SK hynix, as generative AI is developing into a multi-modal1 form and global big tech companies continue to invest to develop artificial general intelligence (AGI), the demand of memory for AI servers such as HBM and eSSD has grown noticeably this year. SK hynix predicts that this trend will continue next year.

According to the Korea Economic Daily, anticipating a prolonged global over supply, SK is accelerating the upgrade of its older DRAM lines in Wuxi, China, to advanced lines for producing fourth-generation 10-nanometer 1a DRAM.

While maintaining steady NAND flash production, in the meantime, SK is increasing the operation rate at its eSSD facility in Dalian, China, to nearly full capacity, according to sources cited by the report.

On the other hand, Samsung noted that in 2025, the company plans to expand the sales of HBM3E and the portion of high-end products such as DDR5 modules with 128GB density or higher for servers and LPDDR5X for mobile, PC, servers, and so on.

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• [News] SK hynix and Samsung Reportedly Step up Focus on HBM4 and CXL amid Rising Chinese Competition

(Photo credit: SK hynix)

Following recent downward revisions in annual financial targets by semiconductor lithography equipment manufacturers ASML and Canon, Nikon has also announced a cut to its forecast.

According to a press release from Nikon, the company expects its 2024 performance to fall short of initial plans due to delays in the recovery of market conditions within its Precision Equipment Business and Components Business, resulting in lower-than-expected demand and postponed sales of certain products.

Nikon has also revised its consolidated financial forecast for the year ending March 31, 2025, citing a delayed recovery in semiconductor-related markets as the reason for adjusting its sales plans in the lithography system sector. However, sales in the Imaging Products Business are anticipated to align with projections.

Notably, IC Smart reported that ASML revealed its Q3 financial results on October 15, reporting sales and gross margins in line with expectations. However, new orders plummeted by 53% quarter-over-quarter, falling short of half the market’s expectations. ASML has also lowered its 2025 sales target from a previously estimated range of €30 to €40 billion down to €30 to €35 billion, attributing the slowdown to a lagging recovery in most markets, with certain fabs delaying their demand for lithography systems, particularly EUV systems, despite strong demand in the AI sector.

The same IC Smart report noted that on October 24, Canon announced record high revenues for Q3 2024 (July to September) but also lowered its full-year performance expectations. Revenue was revised down from an initial estimate of ¥4.6 trillion to ¥4.54 trillion, while operating profit was adjusted from ¥465 billion to ¥455.5 billion. The net income target was cut from ¥335 billion to ¥325 billion, with Canon attributing this to an increase in the yen’s exchange rate. Additionally, the company has reduced its sales target for semiconductor lithography machines from 244 units to 239 units for the current fiscal year.

(Photo credit: ASML)

According to a report from Wccftech, citing information from Semafor, the US Commerce Department is reportedly exploring ways to assist Intel, which may include a potential merger deal.

The report from Wccftech highlighted that Intel is the only US-based company with “mature” processes and facilities, making it a crucial component of the U.S. aim to achieve self-sufficiency in semiconductor production.

Previous rumors indicated that Intel might be acquired by companies such as ARM or Qualcomm. Regarding this potential acquisition, Qualcomm’s CEO Cristiano Amon stated that the company is exploring its options, with a decision anticipated after the US elections, according to the report from Wccftech.

The report highlighted that U.S. policymakers are also considering a merger deal, viewing it as acceptable for Intel to merge with native companies such as AMD or Marvell.

However, the report also noted that as the U.S. places significant importance on the foundry division, the potential sale of the chip business is still considered a viable option, which could involve companies such as Qualcomm, ARM, or even AMD.

Notably, Intel is expected to receive USD 8.5 billion in grants and USD 11 billion in low-interest loans from the U.S. government under the CHIPS Act. However, the funding has been delayed, as the report mentioned.

According to the report from Semafor, Intel’s outlook for the fourth quarter is better than expected, and on its earnings call last week, CEO Pat Gelsinger stated that the company is on schedule to start producing its most advanced chips, referred to as 18A, next year.

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• [News] Intel Impresses the Market with Upbeat Q4 Guidance; 18A to Begin High-Volume Production in 2H25

(Photo credit: Intel)