According to sources cited by the American news outlet Business Insider, Microsoft plans to double its inventory of GPUs to 1.8 million, primarily sourced from NVIDIA. Having more chips on hand will enable Microsoft to launch AI products that are more efficient, faster, and more cost-effective.

The source does not detail specific future applications for these chips, but acquiring a large quantity of chips means that Microsoft can extensively deploy them across its own products, including cloud services and consumer electronics.

The sources cited by the same report further revealed that Microsoft plans to invest USD 100 billion in GPUs and data centers by 2027 to strengthen its existing infrastructure.

Microsoft’s significant stockpiling of AI chips underscores the company’s efforts to maintain a competitive edge in the AI field, where having robust computing power is crucial for innovation.

On the other hand, NVIDIA recently stated that the AI computer they are collaborating on with Microsoft will operate on Microsoft’s Azure cloud platform and will utilize tens of thousands of NVIDIA GPUs, including their H100 and A100 chips.

NVIDIA declined to disclose the contract value of this collaboration. However, industry sources cited by the report estimate that the price of each A100 chip ranges from USD 10,000 to 12,000, while the price of the H100 is significantly higher than this range.

Additionally, Microsoft is also in the process of designing the next generation of the chip. Not only is Microsoft striving to reduce its reliance on NVIDIA, but other companies including OpenAI, Tesla, Google, Amazon, and Meta are also investing in developing their own AI accelerator chips. These companies are expected to compete with NVIDIA’s flagship H100 AI accelerator chips.

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• [News] TSMC Q1 2024 Earnings Call Highlighted Two Major Revisions
• [News] Taiwan Hit by 7.2 Magnitude Earthquake: TSMC and Other Semiconductor, Panel Supply Chain Updates

(Photo credit: NVIDIA)

South Korean memory giant SK Hynix announced today that it has recently signed a memorandum of understanding with TSMC for collaboration to produce next-generation HBM and enhance logic and HBM integration through advanced packaging technology. The company plans to proceed with the development of HBM4, or the sixth generation of the HBM family, slated to be mass produced from 2026, through this initiative.

SK Hynix said the collaboration between the global leader in the AI memory space and TSMC, a top global logic foundry, will lead to more innovations in HBM technology. The collaboration is also expected to enable breakthroughs in memory performance through trilateral collaboration between product design, foundry, and memory provider.

The two companies will first focus on improving the performance of the base die that is mounted at the very bottom of the HBM package. HBM is made by stacking a core DRAM die on top of a base die that features TSV technology, and vertically connecting a fixed number of layers in the DRAM stack to the core die with TSV into an HBM package. The base die located at the bottom is connected to the GPU, which controls the HBM.

SK Hynix has used a proprietary technology to make base dies up to HBM3E, but plans to adopt TSMC’s advanced logic process for HBM4’s base die so additional functionality can be packed into limited space. That also helps SK hynix produce customized HBM that meets a wide range of customer demand for performance and power efficiency.

SK Hynix and TSMC also agreed to collaborate to optimize the integration of SK Hynix’s HBM and TSMC’s CoWoS technology, while cooperating in responding to common customers’ requests related to HBM.

“We expect a strong partnership with TSMC to help accelerate our efforts for open collaboration with our customers and develop the industry’s best-performing HBM4,” said Justin Kim, President and the Head of AI Infra, at SK Hynix. “With this cooperation in place, we will strengthen our market leadership as the total AI memory provider further by beefing up competitiveness in the space of the custom memory platform.” 

“TSMC and SK Hynix have already established a strong partnership over the years. We’ve worked together in integrating the most advanced logic and state-of-the art HBM in providing the world’s leading AI solutions,” said Dr. Kevin Zhang, Senior Vice President of TSMC’s Business Development and Overseas Operations Office, and Deputy Co-Chief Operating Officer. “Looking ahead to the next-generation HBM4, we’re confident that we will continue to work closely in delivering the best-integrated solutions to unlock new AI innovations for our common customers.”

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• [News] TSMC Q1 2024 Earnings Call Highlighted Two Major Revisions
• [News] SK Hynix Reportedly Invests USD 1 Billion in Advanced Packaging to Strengthen HBM Chip Leadership

(Photo credit: SK Hynix)

Following the magnitude 7.2 earthquake in Taiwan on April 3rd, all of TSMC’s fabs resumed normal operations within three days. According to a report from Commercial Times, TSMC expects to recognize earthquake-related losses of approximately NTD 3 billion (roughly USD 92.1 million) in the second quarter after deducting insurance claims.

During its earnings call on April 18th, TSMC President C.C. Wei expressed gratitude for the dedication and hard work of all employees and supplier partners. He also thanked customers for their understanding and support, stating that TSMC would compensate for production losses in the second quarter.

C.C. Wei stated that during this earthquake, the maximum intensity experienced at TSMC’s fabs was level 5. Immediately following the earthquake, TSMC activated safety measures and occupational health systems at the fabs. All personnel were safe, and through everyone’s tireless efforts, plant operations were swiftly restored.

Due to TSMC’s extensive experience and capabilities in earthquake response and disaster prevention, coupled with regular safety drills, the overall equipment recovery rate of TSMC’s fabs exceeded 70% within 10 hours of the earthquake and was fully restored before the end of the third day following the earthquake. There were no power outages or structural damages at TSMC’s fabs, including critical equipment such as extreme ultraviolet (EUV) exposure machines, all of which remained undamaged.

During this earthquake, although TSMC experienced a certain quantity of wafers in production that were affected and had to be scrapped, it is anticipated that most of the production losses will be recovered in the second quarter, resulting in minimal impact on second-quarter revenues.

TSMC expects the overall impact of the earthquake to decrease its second-quarter gross margin by approximately 50 basis points, primarily due to losses related to wafer scrap and material consumption.

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• [News] TSMC Q1 2024 Earnings Call Highlighted Two Major Revisions
• [News] Taiwan Hit by 7.2 Magnitude Earthquake: TSMC and Other Semiconductor, Panel Supply Chain Updates

(Photo credit: TSMC)

TSMC held an earnings call on April 18, where it highlighted two significant revisions. The company revised down its annual growth expectations for the global foundry industry and shifted its outlook on automotive growth from positive to declining.

When asked about the outlook for end applications and the differences from three months ago, C.C. Wei stated that the differences appear minimal. However, while the previous forecast anticipated growth in automotive for the full year, it is now expected to decline.

In the previous earnings call in January, C.C. Wei mentioned that TSMC was expected to achieve healthy growth in 2024, with revenue growth surpassing the global foundry industry’s average of 20%, projected to range from approximately 21% to 26%.

In the latest earnings call, TSMC adjusted the forecast for the 2024 semiconductor market (excluding memory) to increase by about 10% year-over-year, with the foundry industry growth expected to be in the mid-to-high teens percent range. These adjustments follow a steep inventory correction and low base in 2023. Despite this, TSMC believes that 2024 is still anticipated to be a strong growth year for them.

Industry sources cited by Economic Daily News believe that the main reasons for these forecasts are the slower recovery of mature process applications and automotive demand.

Regarding the challenges faced by mature processes in competition, C.C. Wei mentioned that collaboration with customers on mature processes focuses on developing special processes. He expressed confidence that such collaboration can continue to thrive even in the face of industry oversupply.

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• [News] TSMC Q1 Earnings Beat Expectations, While Eying Up to 8% Revenue Growth in Q2
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(Photo credit: TSMC)

Micron, the largest memory manufacturer in the United States, is expected to receive over USD 6 billion in funding from the Department of Commerce to assist with the costs of local factory projects, as part of efforts to bring semiconductor production back to U.S. soil.

According to a report from Bloomberg, sources revealed that the funding has not been finalized yet and could be announced as soon as next week. It is still unclear whether Micron plans to seek further loans through the “Chip Act” in addition to direct funding.

Micron Technology, the U.S. Department of Commerce, and representatives from the White House all declined to comment on the reported funding.

The U.S. “Chip Act” provides semiconductor companies with USD 39 billion in direct funding and USD 75 billion in loans and loan guarantees to revitalize the U.S. semiconductor manufacturing industry, which has shifted production to Asia over the past few decades. U.S. Commerce Secretary Gina Raimondo stated that approximately USD 28 billion of this funding will be allocated towards advanced manufacturing processes.

So far, the Department of Commerce has announced six grants, with three provided to established semiconductor companies. Specifically, TSMC received USD 6.6 billion USD, Samsung received USD 6.4 billion, and Intel received USD 8.5 billion.

As per the same report from Bloomberg, Micron has committed to building up to four factories in New York and one in Idaho. However, Micron CEO Sanjay Mehrotra emphasized in March that these plans require Micron to obtain sufficient chip subsidies, investment tax credits, and incentives to address the cost differentials compared to expanding overseas.

Raimondo previously stated that the Department of Commerce will prioritize funding projects that commence before 2030. Per to previous documents from Micron cited by Bloomberg, among the four planned factories in New York, only two new factories may meet this requirement, with the other two not expected to start operations until 2041. Insiders suggest that this could mean that Micron’s subsidies may only support the first two factories in New York.

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• [News] The US Administration Rumored to Announce USD 7 Billion Grant for Samsung to Boost Chip Capacity
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