According to a report by TechNews citing an article from the international column Project Syndicate, Burn Lin, former R&D Vice President of TSMC, Chintay Shih, former President of the Industrial Technology Research Institute, and Chang-Tai Hsieh, an Academia Sinica member and economics professor at the University of Chicago Booth School of Business, collaborated on an article titled “How America’s CHIPS Act Hurts Taiwan.”

In the article, they collectively elucidated how US semiconductor subsidies weaken TSMC’s strength, rendering the entire semiconductor industry more vulnerable. Additionally, they expressed concern that if China were to blockade or invade Taiwan, the supply chain would become compromised.

The US CHIPS and Science Act, aiming to address this issue with a USD 52 billion subsidy, seeks to encourage semiconductor manufacturers to relocate to the United States. However, according to the report addressing on the design of the bill, its objectives may not be achievable and could even weaken Taiwan’s most crucial industry, posing a threat to Taiwan’s security.

Concerns Arise Over Chip Act Threatening Taiwan’s Security

Currently, the semiconductor industry is dominated by specialized companies distributed globally. TSMC specializes in contract manufacturing, focusing primarily on high-end chips. Other important companies include AMD, NVIDIA, Qualcomm, ASML, Tokyo Electron, and Arm.

Specialization in the industry offers two major benefits.

Firstly, each part of the global supply chain can concentrate on its core expertise and advance further, benefiting other supply chains. Secondly, the production capacity of each link in the global supply chain increases, enhancing resilience against demand shocks.

The cost of specialization is that the industry becomes vulnerable to supply shocks. This issue is not unique to Taiwan; all segments of the supply chain face potential bottlenecks.

However, unlike other segments, Taiwan is reportedly confronted with territorial claims from China. Therefore, the United States and Japan have offered substantial subsidies for TSMC’s relocation. TSMC is constructing new factories in Kumamoto, Japan, and Phoenix, Arizona, in the United States.

Currently, Fab 1 in Kumamoto has been completed according to plan, and many of TSMC’s suppliers have also set up shop there. However, the Arizona plant is substantially behind schedule, and fewer TSMC suppliers have followed suit to establish operations in the United States.

Moreover, TSMC’s experience at its Portland plant in Washington state over the past 25 years has raised doubts about the prospects of the Arizona plant. TSMC struggled to find competitive workers there; even with identical training and equipment, production costs in the U.S. were still 50% higher than in Taiwan. Therefore, TSMC chose not to expand its Portland plant further.

Still, the fundamental issue lies in the fact that while American workers are skilled in chip design technology, they lack the skills required for chip manufacturing, which is crucial in this field.

The article further mentions that TSMC’s Phoenix plant will continue to struggle because there is a shortage of American workers with the skills necessary for semiconductor manufacturing.

As warned by TSMC’s founder, Morris Chang, in 2022, seeking economic security by relocating semiconductor manufacturing to the United States is an expensive exercise in futility. Furthermore, while the USD 52 billion subsidy from the United States may seem substantial, it is insufficient to establish a self-sufficient semiconductor ecosystem in Phoenix.

Additionally, the article points out that Taiwan’s industrial planners have deliberately chosen a niche market built upon existing manufacturing advantages, without attempting to replicate the model of the leading Intel at that time, due to the scarcity of Taiwanese workers with the necessary design skills. Similarly, Japan’s subsidies for TSMC are likely to succeed because Japan already possesses an ample supply of skilled manufacturing workers.

The article also highlights three major risks brought about by the US chip act at the end:

Firstly, if TSMC shifts its focus and loses its investment in innovation, the biggest losses will be incurred by its customers and suppliers, most of which are American companies.

Moreover, it may hinder AI development, as this field largely relies on TSMC-manufactured advanced chips. Consequently, TSMC may reduce its investment in production capacity in Taiwan, reducing the entire semiconductor industry’s ability to withstand demand shocks.

Lastly, TSMC may lose its way and risk being replaced by other companies, losing its leadership position in the field of advanced semiconductor manufacturing.

Well-Intentioned US Chip Act with Poor Design May Ultimately Harm Taiwan’s Economy

The commentary suggests that despite the well-intentioned nature of the US chip act, its design is flawed. Instead of establishing a sustainable semiconductor manufacturing cluster in the United States, it may result in long-term damage to TSMC and ultimately harm Taiwan’s economy.

A better approach for the United States, per the report, would be to protect its own economic security while strengthening Taiwan’s, committing to defend Taiwan, and building production capacity in countries like Japan. This strategy may be more prudent in the long run.

Read more

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(Photo credit: TSMC)

TSMC has announced the latest appointment of Senior Vice President of R&D Dr. Y.J. Mii and Senior Vice President of Operations Mr. Y.P. Chyn as Executive Vice Presidents and Co-Chief Operating Officers of TSMC today, per TSMC’s earlier press release.

According to the press release, following these appointments, the two Executive VPs and Co-COOs, as well as TSMC’s HR, Finance, Legal and Corporate Planning organizations, will report directly to Chief Executive Officer Dr. C.C.Wei. All other organizations will report to the two Executive VPs and Co-COOs. The new organizational structure will take effect on March 1, 2024.

As per TSMC’s introduction of its executives in the official website, Mr. Y.P. Chin joined TSMC when it was founded in 1987 and has made significant contribution to the Company’s product engineering capabilities throughout his career. He was Director of Fab 1 from 1997 to 1998, and in later positions supported yield improvement in all new generations of advanced technology, including the 28nm, 16nm, and 7nm nodes.

Mr. Y.P. Chin is Senior Vice President of Operations at Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). He is responsible for the operation and management of all fabs in Taiwan and overseas. He also co-leads TSMC’s Overseas Operations Office which is responsible for supporting the company’s global expansion and accelerating the organizational effectiveness of overseas operations.

On the other hand, Dr. Y.J. Mii joined TSMC in 1994 as a manager at Fab 3 and then joined the company’s R&D organization in 2001. In 2011, Dr. Mii was appointed Vice President of Research and Development and later he was promoted to Senior Vice President in November 2016.

In more than two decades of services at TSMC, Dr. Mii has contributed greatly to the development and manufacturing of advanced CMOS technologies in both Fab Operations and R&D. He successfully managed the development of 90nm, 40nm and 28nm technologies. By spearheading the research and development of 16nm, 7nm, 5nm, and beyond, he has helped maintain TSMC’s technology leadership in the foundry segment of the global semiconductor industry.

Read more

• [News] Latest Overview on TSMC’s Global Expansion Initiatives

(Photo credit: TSMC)

Rapidus, a foundry company established through Japanese government-industry collaboration, aims to mass-produce 2-nanometer chips by 2027. According to Rapidus, Canadian artificial intelligence (AI) chip startup Tenstorrent is set to become Rapidus’ 2nm client.

On February 27th, Rapidus announced a collaboration with Tenstorrent to jointly develop and manufacture edge AI accelerators based on 2nm logic technology. Tenstorrent will be responsible for the design/development of the AI chips, while Rapidus will handle production utilizing its under-construction factory in Hokkaido.

Rapidus had announced its collaboration with Tenstorrent in November 2023 to accelerate the development of AI chips, and this collaboration now extends into the realm of manufacturing.

This marks the first public announcement by Rapidus of securing a client (contract manufacturing order) for the most advanced chips. However, Rapidus has not disclosed details such as production volume or financial terms.

Atsuyoshi Koike, President of Rapidus, stated at a press conference held on February 27th, “In the future, AI will be utilized in all products, and the ability to swiftly produce AI chips that meet customer demands is crucial for competitiveness.”

As per a report from Asahi News, Tenstorrent is currently collaborating with TSMC and Samsung. Tenstorrent’s CEO, Jim Keller, stated, “We will be producing various products. Many people are looking forward to our collaboration with Rapidus.”

Rapidus is expected to mass-produce logic chips of 2 nanometers or less by 2027. The first plant, “IIM-1,” located in Chitose City, Hokkaido, began construction in September 2023. The trial production line is scheduled to start in April 2025, with mass production slated to begin in 2027.

Per NHK’s report, At a press conference held in Chitose City on January 22nd, Junichi Koike announced that the construction of the 2-nanometer plant is proceeding smoothly, and the trial production line is scheduled to be operational by April 2025 as originally planned.

Regarding the construction of the plant, Koike stated, “There has been no delay even for a day; it is progressing according to schedule.” He also mentioned that they are also considering the construction of a second and third plant in the future.

After the groundbreaking ceremony held in September 2023, the foundation work for Rapidus’ 2-nanometer factory was mostly completed by December at the same year. Construction of the above-ground factory building commenced in January this year (2024). The framework of the factory is expected to be completed by April or May this year, with the factory anticipated to be completed by December this year (2024).

Established in August 2022, Rapidus was jointly founded by eight Japanese companies, including Toyota, Sony, NTT, NEC, Softbank, Denso, Kioxia (formerly Toshiba Memory Corporation), and Mitsubishi UFJ, who invested collectively in its establishment.

Read more

• TrendForce’s First Seminar in Japan, Spotlights TSMC, Rapidus and Japanese Semiconductor Revitalization

(Photo credit: Rapidus)

NVIDIA, the global leader in artificial intelligence (AI) chips, is set to commence pre-orders for its AI chip H20 specially designed for the Chinese market by the end of March this year in response to US export bans, according to sources cited by a report from STAR Market Daily.

However, due to consecutive reductions in specifications, the cost-performance ratio has diminished, prompting cautious attitudes among Chinese distributors.

The report further mentions that by the end of 2022, the US Department of Commerce restricted the export of NVIDIA AI chips to China due to concerns about their potential military use. In response, NVIDIA has repeatedly reduced product performance to comply with US regulations. The H20 chip, derived from the H800, is specifically designed as a ‘special edition’ for the Chinese market.

Citing industry sources, STAR Market Daily‘s report also states that H20 will be available for pre-order following NVIDIA’s GTC 2024 conference (March 18th to 21st), with deliveries possible within a month. The sources note that H20’s performance is approximately one-fourth that of H100, resulting in a less favorable cost-performance ratio. Additionally, production capacity is unable to meet demand, with mass production expected to commence in the second half of this year.

A distributor in Beijing pointed out that currently, there is not significant demand for the H20 chip, primarily due to its relatively low cost-performance ratio. Chinese-made AI chips serve as viable alternatives.

The same distributor noted that most of the foundational technology for computing power providers is still supported by NVIDIA. The advantages of adopting the H20 lie in its compliance and low migration costs. However, the trend toward self-developed AI chip in China is a long-term certainty, presenting a choice between the two options.

The distributor further emphasized that NVIDIA’s introduction of the H20 is primarily aimed at stabilizing its presence in the Chinese market. As long as the product specifications slightly surpass those of domestically produced chips, it should suffice. However, whether there is demand for this chip still requires market validation.

Another distributor from the Shenzhen cited in the report also stated that it is uncertain whether they will stock the H20 chip, as their decision depends on subsequent market demand.

Regarding the need for H20, TrendForce believes Chinese companies will continue to buy existing AI chips in the short term. NVIDIA’s GPU AI accelerator chips remain a top priority—including H20, L20, and L2—designed specifically for the Chinese market following the ban.

At the same time, major Chinese AI firms like Huawei, will continue to develop general-purpose AI chips to provide AI solutions for local businesses. Beyond developing AI chips, these companies aim to establish a domestic AI server ecosystem in China.

TrendForce recognizes that a key factor in achieving success will come from the support of the Chinese government through localized projects, such as those involving Chinese telecom operators, which encourage the adoption of domestic AI chips.

Read more

• [News] Expert Insights on NVIDIA’s AI Chip Strategy – Downgraded Version Targeted for China, High-End Versions Aimed Overseas
• NVIDIA Experiences Strong Cloud AI Demand but Faces Challenges in China, with High-End AI Server Shipments Expected to Be Below 4% in 2024, Says TrendForce

(Photo credit: NVIDIA)

The previously elusive NVIDIA data center GPU, H100, has seen a noticeable reduction in delivery lead times amid improved market supply conditions, as per a report from Tom’s Hardware. As a result, customers who previously purchased large quantities of H100 chips are reportedly starting to resell them.

The report further points out that the previously high-demand H100 data center GPU, driven by the surge in artificial intelligence applications, has seen a reduction in delivery wait times from a peak of 8-11 months to 3-4 months, indicating a relief in supply pressure.

Additionally, with major cloud providers such as AWS, Google Cloud, and Microsoft Azure offering easier access to AI computing services for customers, enterprises that previously purchased large quantities of H100 GPUs have begun further reselling these GPUs.

For instance, AWS introduced a new service allowing customers to rent GPUs for shorter periods, resolving previous chip demand issues and shortening the waiting time for artificial intelligence chips.

The report also indicates that customers are reselling these GPUs due to reduced scarcity and the high maintenance costs, leading these enterprise customers to make such decisions. This situation contrasts starkly with the market shortage a year ago.

However, even though the current difficulty in obtaining H100 GPUs has significantly decreased, the artificial intelligence market remains robust overall. The demand for large-scale artificial intelligence model computations persists for some enterprises, keeping the overall demand greater than the supply, thereby preventing a significant drop in the price of H100 GPUs.

The report emphasizes that the current ease of purchasing H100 GPUs has also brought about some changes in the market. Customers now prioritize price and practicality when leasing AI computing services from cloud service providers.

Additionally, alternatives to the H100 GPU have emerged in the current market, offering comparable performance and software support but at potentially more affordable prices, potentially contributing to a more equitable market condition.

TrendForce’s newest projections spotlight a 2024 landscape where demand for high-end AI servers—powered by NVIDIA, AMD, or other top-tier ASIC chips—will be heavily influenced by North America’s cloud service powerhouses.

Microsoft (20.2%), Google (16.6%), AWS (16%), and Meta (10.8%) are predicted to collectively command over 60% of global demand, with NVIDIA GPU-based servers leading the charge.

However, NVIDIA still faces ongoing hurdles in development as it contends with US restrictions.

TrendForce has pointed out that, despite NVIDIA’s stronghold in the data center sector—thanks to its GPU servers capturing up to 70% of the AI market—challenges continue to loom.

Three major challenges are set to limit the company’s future growth: Firstly, the US ban on technological exports has spurred China toward self-reliance in AI chips, with Huawei emerging as a noteworthy adversary. NVIDIA’s China-specific solutions, like the H20 series, might not match the cost-effectiveness of its flagship models, potentially dampening its market dominance.

Secondly, the trend toward proprietary ASIC development among US cloud behemoths, including Google, AWS, Microsoft, and Meta, is expanding annually due to scale and cost considerations.

Lastly, AMD presents competitive pressure with its cost-effective strategy, offering products at just 60–70% of the prices of comparable NVIDIA models. This allows AMD to penetrate the market more aggressively, especially with flagship clients. Microsoft is expected to be the most enthusiastic adopter of AMD’s high-end GPU MI300 solutions in 2024.

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(Photo credit: NVIDIA)