Previously, Huawei claimed its second-generation AI chip “Ascend 910B” could compete with NVIDIA’s A100 and was working to replace NVIDIA, which holds over 90% of the market share in China. However, Huawei is now facing significant obstacles in expanding its production capacity. According to a report from ChosunBiz, the chip is being manufactured by China’s leading semiconductor foundry, SMIC, and has been in mass production for over half a year, yet the yield rate remains around 20%. Frequent equipment failures have severely limited production capacity.

The report on June 27 states that despite being in mass production for over half a year, SMIC’s manufacturing of the Ascend 910B is still facing challenges, as four out of five chips still have defects. Meanwhile, due to increased U.S. export restrictions, the supply of equipment parts has been disrupted, causing production output to fall far short of targets.

SMIC initially projected an annual production of 500,000 units for the Ascend 910B, but due to continuous equipment failures, this goal has not been met. Currently, SMIC is unable to introduce new equipment and has to retrofit low-performance Deep Ultraviolet (DUV) equipment to replace advanced Extreme Ultraviolet (EUV) equipment for etching the 7nm circuits of the AI chips.

Dutch photolithography giant ASML stated that using EUV equipment for 7nm processes requires only nine steps, whereas using DUV equipment requires 34 steps. More steps lead to higher production costs, higher defect rates, and more frequent equipment failures. Additionally, the U.S. has further restricted global equipment manufacturers from providing maintenance services within China.

Industry sources cited by the same report reveal that SMIC lacks engineers for maintaining and managing chip manufacturing equipment, and global equipment suppliers are hesitant to provide services to China due to U.S. sanctions. SMIC is currently using equipment and parts purchased before the U.S. sanctions to maintain its 7nm production line.

According to a previous report by The Information, major tech companies such as Alibaba, Baidu, ByteDance, and Tencent have also been instructed to reduce their spending on foreign-made chips like NVIDIA’s. The Chinese government, which is aggressively promoting its own data center projects, is said to be boosting demand for Huawei’s AI chips as well.

Previously, the Wall Street Journal reported in January that Huawei received pre-orders for at least 5,000 Ascend 910B chips from Chinese tech giants last year, with delivery expected this year.

Read more

• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei
• [News] Huawei’s HarmonyOS Project Ready to Hit the Road with Increasing Participation from Chinese Enterprises

(Photo credit: Huawei)

In recent years, global semiconductor market has seen cut-throat competition. Amid complicated international environment, countries and regions such as South Korea, the United States, Japan, and Europe have launched chip subsidy measures to strengthen the development of their domestic semiconductor industries.

To revive semiconductor production, the United States officially passed the CHIPS and Science Act in 2022, which includes a fund of approximately USD 52.7 billion for supporting the semiconductor industry and an investment tax credits worth USD 24 billion to companies.

• Subsidy Application System for Semiconductor Manufacturing Fab Closed

Since December 2023, several semiconductor companies have received subsidies from the U.S. government under the CHIPS and Manufacturing Act. Preliminary statistics showed subsidy amounts reached billions of dollars, including Intel (USD 8.5 billion), Micron (USD 6.14 billion), Samsung (USD 6.4 billion), TSMC (USD 6.6 billion), GlobalFoundries (USD 1.5 billion), and Microchip Technology (USD 162 million).

From this it can be seen that early U.S. subsidies in the semiconductor sector mainly focused on semiconductor chip manufacturing. However, due to limited funds and the large number of applications, the CHIPS program office previously announced plans to close funding application system for semiconductor manufacturing plants until “further notice.”

And it’s worth noting that lately, another semiconductor company announced it had received U.S. chip subsidies, indicating the government’s target has shifted to the semiconductor materials sector.

• Entegris Received a Subsidy of USD 75 Million

On June 26, the U.S. Department of Commerce and semiconductor materials company Entegris jointly announced that Entegris would receive a USD 75 million chip subsidy from the U.S. government.

It is reported that Entegris has signed a non-binding preliminary terms memorandum (PMT) with the U.S. Department of Commerce. As per the CHIPS and Science Act, the Department of Commerce will provide Entegris with a direct fund of up to USD 75 million.

This fund will support the development of a state-of-the-art factory in Colorado Springs, supporting the company’s Advanced Materials Handling (AMH) and Microcontamination Control (MC) divisions. The aim is to produce products critical to the future of U.S. semiconductor manufacturing.

The factory is planned to put into initial commercial operation in 2025 and will be constructed in multiple phases: The first phase will support the production of front-opening unified pod (FOUP), currently entirely produced abroad, and liquid filtration membranes. The second phase will support the production of advanced liquid filters, purifiers, and fluid handling solutions.

Front-opening unified pod is an important product for transporting and protecting wafers in the semiconductor manufacturing process. The U.S. Department of Commerce press release stated that Entegris mainly supplies products for Intel, TSMC, Micron, and GlobalFoundries, holding a significant position in the global semiconductor supply chain.

Read more

• [News] A Subsidy Wave Sweeping in the US, Europe and Japan amid the Cut-Throat Chip Competition
• [News] US Allocates USD 39 Billion Subsidy to Semiconductor Industry for Establishing Plants

(Photo credit: Entegris)

According to a report from Korean media outlet Korea Economic Daily (KED), South Korean tech giant Samsung Electronics is looking to borrow up to KRW 5 trillion (approximately USD 3.6 billion) from the state-run Korea Development Bank (KDB) to finance its expansion of chip production facilities both in Korea and abroad.

According to sources cited in the same report, Samsung is in the final stages of negotiations with the KDB regarding the exact amount of the loan and the interest rates. Additionally, the report mentioned that Samsung’s competitor, SK Hynix, is also considering borrowing up to KRW 3 trillion from the KDB for its chip investments.

Regarding this, the bank is reportedly prepared to extend up to KRW 5 trillion to Samsung at an interest rate of about 3.5% per year. If finalized, this would be the first time in two decades that Samsung has borrowed such a large sum.

Notably, according to a previous report from the Chosun Daily, starting from July, the South Korean government will begin offering incentives and subsidies to semiconductor companies, launching a 26 trillion won (USD 19 billion) funding program to support the industry.

Initially, South Korea will start with an 18 trillion won (USD 12.94 billion) investment program, including preferential loans and investment funds. According to a statement from the Ministry of Economy and Finance, eligible companies will be able to borrow from a 17 trillion won low-interest loan program.

Read more

• [News] South Korea Reportedly Unveils USD 19 Billion Semiconductor Subsidy to Boost R&D and Infrastructure Investment
• [News] South Korea Reportedly Pushes for KRW 10 Trillion Investment Plan to Strengthen Semiconductor Industry Position

(Photo credit: Samsung)

Foxconn Chairman Young Liu has been elected as Sharp’s chairman at Sharp’s shareholders’ meeting on 27^th, according to a report from the Economic Daily News, citing an announcement by the Tokyo Stock Exchange. The report also noted that Liu will leverage the strength of the Foxconn Group to fully assist Sharp in its transformation.

According to the report, Liu has previously shared the role Foxconn plays in Sharp’s operation, stating that Foxconn is currently assisting and advising Sharp’s management team from the perspective of a major shareholder.

Ahead of its shareholders’ meeting, the Japanese electronics maker has already restructured its management with a new CEO appointed. On June 26^th, the company announced that Executive Vice President Masahiro Okitsu will succeed Wu Po-Hsuan as president and CEO.

According to a report by Technews, after Liu assumes the position of Chairman at Sharp, he will accelerate Sharp’s transformation, deepening the company’s “collaboration for medium- to long-term growth,” while establishing a trustworthy Japanese Sharp brand.

In addition to inviting Liu to serve as chairman, Sharp’s board of directors has also approved the plan for a new executive management structure, aiming to strengthen the governance system with six independent directors. Under the new scheme, Sharp hopes to advance in areas including asset rationalization and the creation of a positive cycle for branding and new businesses.

As converting LCD panel factories into semiconductor bases seems to emerge as one of the latest trends, Sharp plans to collaborate with Intel to utilize its LCD panel factory in Japan, according to a report by Nikkei. Earlier in mid-May, Sharp decided that Sakai Display Products (SDP), its 10th generation panel factory, which produces large-sized LCD panels for TVs, would cease production by the end of September. Instead, the company intends to seek collaboration with other companies and optimize its factories to improve profitability.

Sharp posted a consolidated net loss of 149.9 billion yen (USD 959 million) in fiscal 2023, which ended in March, remaining in the red for a second consecutive year.

Read more

• [News] Intel Reportedly Utilizes Sharp’s LCD Panel Factory for Semiconductor Backend Process
• Sharp Announces Closure of Sakai Gen 10 Line, Supply Cut of 5 Million TV Panels Expected in 2025, Says TrendForce

(Photo credit: Sharp)

According to a Reuters report on June 26th citing sources, with semiconductor market conditions rebounding and financial performance rapidly improving, NAND flash leader Kioxia is reportedly gearing up to file a preliminary application soon and aims to debut on the Tokyo Stock Exchange (TSE) through an initial public offering (IPO) by late October.

As per the same report citing sources, Kioxia plans to formally submit its IPO application by the end of August, aiming for a listing by late October. In order to meet the deadline, preparations are proceeding at a faster pace than usual for an IPO, although the timing may be subject to progress and could potentially be delayed until December. The sources further indicated that Bain Capital, a major shareholder of Kioxia, plans to sell part of its stake through the IPO to raise funds.

Kioxia previously obtained approval for listing on the Tokyo Stock Exchange in 2020 but postponed its IPO plans due to the US-China trade tensions and adverse market conditions. The source cited in the report mentioned that the funds raised through this IPO might be lower than its initial valuation in 2020.

Toshiba spun off its semiconductor business, which focused on NAND flash, in April 2017. The company is previously named “Toshiba Memory,” which was later renamed to “Kioxia” on October 1, 2019. Toshiba currently holds approximately 40% of Kioxia’s shares.

Previously on May 15th, the improved market environment is also reflected in Kioxia’s financial report for January to March 2024, where the company achieved a net profit of JPY 10.3 billion, ending six consecutive quarters of losses.

This turnaround was driven by improved pricing due to production cuts across various NAND Flash manufacturers, which balanced supply and demand. The consolidated operating profit improved from a loss of JPY 171.4 billion in the same period last year to a profit of JPY 43.9 billion, marking the first quarterly profit in six quarters. Notably, the demand for smartphone and personal computer chips has bottomed out and is starting to recover, while orders related to data centers have increased.

Looking ahead to market trends and future prospects, Kioxia pointed out the normalization of customer inventory levels, which is expected to drive recovery in demand for PC and smartphone applications. They anticipate future growth driven by the introduction of On-Device AI, increasing memory capacities, and potential upgrades in PC operating systems stimulating replacement demand.

Read more

• [News] With Memory Market Recovering, Kioxia Has Reportedly Ceased Production Cuts and Secured Bank Lending
• [News] Kioxia Optimistic about NAND Market Sentiment; Price Hike Expected in Q2

(Photo credit: Kioxia)