Recent reports reveal that German automotive parts supplier ZF Friedrichshafen AG (ZF) plans to withdraw from a 3 billion USD joint project with U.S. chipmaker Wolfspeed to build the world’s largest 8-inch SiC chip manufacturing plant. Industry speculation suggests the reasons behind ZF’s decision are Wolfspeed’s financial struggles, repeated construction delays, and the failure of the European Union to deliver on promised subsidies.

Delays in the Construction of Wolfspeed’s 8-inch SiC Chip Factory

In January 2023, Wolfspeed and ZF announced plans to build the world’s largest and most advanced 8-inch SiC device manufacturing facility in Saarland, Germany. ZF initially intended to invest 185 million USD in the project. The factory was expected to be co-owned by ZF and Wolfspeed, but the success of the project was contingent on the EU’s subsidy commitment, which was expected to cover a quarter of the total investment.

However, in June 2023, Wolfspeed announced a delay in the plant’s construction. A company spokesperson cited the weak electric vehicle markets in both Europe and the U.S. as reasons for reducing capital expenditures. Wolfspeed said it would prioritize increasing production at its New York facility instead. Although the German project has not been canceled entirely, Wolfspeed is still seeking additional financing. The company now expects to start construction in mid-2025, two years later than originally planned.

In October, Wolfspeed announced on its website that it had signed a non-binding preliminary term sheet with the U.S. Department of Commerce. Under the CHIPS and Science Act, the Department of Commerce plans to provide Wolfspeed with up to 750 million USD in funding to support the construction of the John Palmour SiC manufacturing facility in Siler City, North Carolina, and to expand Wolfspeed’s existing plant in Marcy, New York.

Additionally, an investment consortium led by Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group has agreed to provide 750 million USD in new financing to Wolfspeed. This funding is expected to alleviate much of the financial pressure currently facing the company.

Delayed EU Chip Act Subsidies?

While the U.S. CHIPS Act subsidies have gradually started to materialize, the EU’s 2020 European Chips Act has faced significant roadblocks in securing funding. According to Reuters, the EU’s subsidy promises attracted several major companies, including Wolfspeed, Intel, TSMC, Infineon, STMicroelectronics, and GlobalFoundries, to announce plans for new plants in Europe. However, very few of these projects have actually broken ground.

In addition to the delays in Wolfspeed’s German plant, Intel has also postponed construction of its plant in Magdeburg, Germany. On September 16, Intel’s CEO informed employees that the chip factory’s construction would be delayed by two years. Over a year ago, Intel secured a 10 billion EUR subsidy commitment from the German government. Intel had initially planned to invest over 30 billion EUR to build two cutting-edge chip factories in Germany, marking the largest foreign investment in the country’s history. However, in August 2023, the German government expressed concerns about Intel’s project in Magdeburg and devised an emergency “Plan B” in case Intel pulls out.

Industry experts suggest that both Wolfspeed and Intel are under significant financial pressure, and the delay in receiving German government subsidies has only exacerbated their operational risks. Among the announced projects, even fewer have received formal EU approval. Infineon, for example, began construction on a 5 billion EUR power chip plant in Dresden in 2023, expecting completion by 2026, though it has not yet received EU funding approval. Similarly, onsemi’s 2 billion USD investment to expand its SiC operations in the Czech Republic is still awaiting EU approval.

(Photo credit: Intel)

Thanks to the momentum of dual carbon targets, global demand for solar PV installations continues to rise, leading to growing demand for encapsulation films, a key material that determines the quality and longevity of PV modules. Recently, TrendForce published the rankings for global PV encapsulation film shipments in the first half of 2024. Companies like First, Sveck, Betterial, HiUV , Sinopont, Cybrid, and Lushan made the list. With Betterial’s strong entry into the top top ranks, a new TOP 3 list for encapsulation film shipments has emerged.

New Rankings of Top3, with the Market Share Accounting for More Than 75%

According to TrendForce, the top seven companies in encapsulation film shipments in the first half of 2024 are as follows:

Top7 Companies of Global Encapsulation Film Shipment in H1 2024

Overall, competition in the global PV encapsulation film market is becoming increasingly intense, with leading companies like First, Sveck, and Betterial standing out. TrendForce estimates that based on a module production of 283 GW in the first half of 2024, the corresponding demand for encapsulation films will reach 2.57 billion square meters, a year-on-year increase of 15%, expanding the market space.

From the rankings, the combined shipments of the TOP 3 companies exceeded 1.94 billion square meters, accounting for over 75% of the market share. First maintained its leading position with the highest shipment volume, followed closely by Sveck and Betterial, both showing continued growth and strong potential.

In terms of short-term industry trends, second-tier manufacturers are rapidly capturing market share, expanding their presence swiftly. A notable change in the rankings is Betterial’s leap into the TOP 3 with robust shipment growth, trailing Sveck by only 10 million square meters, making it the standout performer in the first-half rankings.

Diversified Encapsulation Requirements Boost the Differentiated Market Competition

In the first half of 2024, global demand for PV encapsulation films continued to grow. As the industry marches forward, two key characteristics of the global PV encapsulation film market stand out:

1. Looking ahead, encapsulation film shipments will maintain a steady growth trend. On one hand, the market continues to expand. But at the same time, due to declining prices in the supply chain and fluctuations in raw material prices, the industry is experiencing a scenario where production increases but prices decrease.

2. There are continuously breakthroughs in various PV module technologies, and the current popular technologies in the market are imposing higher and more diverse packaging requirements on encapsulation film products. This requires film manufacturers to have the ability to continuously collaborate with downstream module manufacturers in technology iteration and product verification, gradually forming a differentiated competition pattern.

Global Layout Expands Further, Overseas Capacity Advantage

Based on a deep understanding of the global PV market, and to enhance global delivery capabilities and flexibility. Leading companies like First and Betterial are accelerating their expansion, setting up production bases domestically while steadily deploying to regions such as Southeast Asia, further advancing their global footprint.

Overseas Layout of Major Encapsulant Manufacturers

As for the overseas capacity, with the construction of new encapsulation film production lines and technological upgrades, companies have significantly expanded their capacity. First was one of the first companies in the PV encapsulation film industry to establish overseas capacity, having set up a wholly-owned subsidiary in Thailand as early as 2016.

Additionally, Betterial, which has experienced explosive growth in recent years, has laid out clear plans to expand capacity in overseas bases such as in Vietnam and Indonesia. Its Vietnam base has already surpassed 30 GW in planned encapsulation film capacity, making it the first company to invest and mass-produce encapsulation films in Vietnam. With the imminent launch of its Indonesian encapsulation film project, Betterial is set to secure a significant advantage in expanding its overseas market.

A more comprehensive global layout means that these companies are equipped with stronger global supply and localized sales capabilities. In this new phase of technological iteration, which company will leverage higher-quality products and more comprehensive services to stride forward globally? Let’s wait and see. The time for diverse, differentiated competition is coming.

(Photo credit: Betterial)

What if the struggling giant, Intel, has not be left out of the AI wave? What if it is able to team up with NVIDIA, the world’s second-largest company by market capital currently? Surprisingly, it used to have the chance. According to a report from the New York Times, former Intel CEO Paul Otellini proposed to acquire NVIDIA for USD 20 billion in 2005, but the board ultimately rejected the idea.

The New York Times report, citing sources familiar with Intel’s boardroom discussions, noted that even at that time some executives believed NVIDIA’s designs could become essential for data centers, which has proven true with the recent boom in AI.

However, the plan to acquire NVIDIA did not materialize, as it would have been Intel’s most expensive acquisition, and there were concerns regarding the purchase.

The report noted that after the board rejected the idea of acquiring NVIDIA, Intel opted to pursue an internal graphics project called Larrabee, led by Pat Gelsinger, Intel’s current CEO. Larrabee was a hybrid that combined graphics with Intel’s PC-style chip design. However, Intel discontinued the development of Larrabee in 2009

In subsequent years, after missing the chance to acquire NVIDIA, Intel purchased other AI companies, including Nervana Systems and Movidius in 2016, as well as Habana Labs in 2019, according to the report. However, none of these acquisitions have come close to matching NVIDIA, which now has a market cap exceeding USD 3 trillion.

The missed opportunity to acquire NVIDIA is not the only instance where Intel struggled to make the right decision in the AI market. According to a Reuters report citing sources, Intel had the chance to invest in OpenAI several years ago, but the investment was ultimately rejected by company executives.

Reportedly, Intel and OpenAI discussed collaboration several times between 2017 and 2018. At that time, OpenAI was still a nascent nonprofit research organization focused on developing relatively unknown generative AI technologies, according to the report in the Reuters.

Recently, according to a report from Wccftech, Intel has stepped away from competing with NVIDIA in AI computing power and the market of training large-scale AI models. Instead, the company is now entering a less saturated segment of the AI market, focusing on its new cost-effective AI accelerator, Gaudi 3.

Read more

• [News] Intel Reportedly Rejected OpenAI Investment, Missing Out on AI Opportunity
• [News] Intel Steps Back from AI Race with NVIDIA, Shifts Focus to Cost-Effective Solutions with Gaudi 3

(Photo credit: Intel)

U.S. economic activity remained stable across most regions, according to the Beige Book released by the Federal Reserve on October 23, and it lowered market expectations for further rate cuts.

A survey conducted by the 12 Federal Reserve Banks showed that economic activity was flat in most regions, with only two districts reporting slight growth. Overall employment saw modest increases, with more than half of the regions reporting slight or moderate job growth, while wage growth continued to slow in several areas.

Prices continued to rise moderately, though businesses in many regions noted that input costs were increasing faster than their selling prices, leading to profit margin compression. Consumer spending showed mixed results, with some regions observing a shift towards less expensive substitute goods.

In terms of business activity, the report indicated that manufacturing activity declined in most regions. The banking sector remained steady with mixed loan demand, but lower interest rates led some banks to express a more positive outlook. The real estate market also remained stable, with national housing inventory increasing and home prices mostly unchanged. However, uncertainty around mortgage rates kept some potential buyers in a wait-and-see mode.

Overall, the steady trends in economic activity, employment, and inflation have dampened market expectations for further rate cuts by the Federal Reserve. The yield on the 10-year U.S. Treasury bond has risen to around 4.2%, and Fed Watch data shows a 97% probability of a 25-basis-point rate cut in November.

Read more at Datatrack

According to a report from Bloomberg, TSMC’s first wafer fab built in Arizona, USA, has achieved a major breakthrough in early production yield, surpassing that of similar factories in Taiwan.

The report in Bloomberg indicates that, citing the words from TSMC’s U.S. division president Rick Cassidy, the yield of chips produced at TSMC’s facility in Phoenix is about 4 percentage points higher than that of comparable facilities in Taiwan.

The recent yield improvements are significant for TSMC, which has traditionally maintained its most advanced and efficient facilities in Taiwan. According to Bloomberg, TSMC’s Arizona plant faced early challenges due to a shortage of skilled workers for advanced equipment installation and issues related to safety and management. However, TSMC resolved these setbacks by reaching an agreement with construction labor unions late last year.

Cassidy further pointed out that TSMC may intend to further expand its presence in the United States, partly depending on whether the government will provide more subsidies, referring to the early conversations in Washington about a second CHIPS Act. He mentioned that there is space for at least six total fabs at the Phoenix complex, according to the report in Bloomberg.

Earlier this year, the U.S. government has officially announced that it will provide subsidy about USD 6.6 billion to TSMC, and TSMC will build its third fab in Arizona.

According to the press release from TSMC, Arizona’s first fab is on track to begin production using 4nm technology in the first half of 2025. The second fab will produce the world’s most advanced 2nm process technology with next-generation nanosheet transistors in addition to the previously announced 3nm technology, with production beginning in 2028.

The press release further states that the third fab will produce chips using 2nm or more advanced processes, with production beginning by the end of the decade.

The report in Bloomberg pointed out that, citing the words of Chief Executive Officer C.C. Wei, TSMC expects volume production of its first fab in Arizona to start in the beginning of 2025, and are confident to deliver the same level of manufacturing quality and reliability  in Arizona as from fabs in Taiwan.

On the other hand, according to the report in Bloomberg, Samsung’s investment in the U.S. is facing challenges. Meanwhile, Intel, despite being a major beneficiary of the CHIPS Act, is experiencing financial difficulties due to delays in global projects and may consider selling off assets.

According to a report from MoneyDJ, TSMC previously has announced that its first US fab in Arizona has begun producing engineering wafers using the 4nm process in April but did not provide additional details about the yield. Investors are concerned about the yield and expect that the company’s gross profit to maintain stable.

Addressing this issue, according to the report from MoneyDJ, TSMC mentioned that the gross profit rate will remain 53% or even higher, and the net profit margin has maintained above 36% in the last four years.

(Photo credit: TSMC)