The U.S. government announced on February 19th that semiconductor giant GlobalFoundries (GF) will be the third company to receive approval for subsidies under the Chips and Science Act, also known as the CHIPS Act, receiving USD 1.5 billion.

According to MoneyDJ’s reports citing from Reuters, The Wall Street Journal, and other global news outlets, under a preliminary agreement with the Department of Commerce, GlobalFoundries, the world’s third-largest semiconductor foundry, will construct a new fab in Malta, New York, while expanding the production capacity of its existing production lines in Malta and Burlington, Vermont.

The Department of Commerce stated that in addition to providing a USD 1.5 billion subsidy, GlobalFoundries will also be eligible for a USD 1.6 billion loan. It is anticipated that these arrangements may generate up to USD 12.5 billion in potential investment activities across the two states.

U.S. government officials further revealed that the proposed construction project is expected to create over 10,000 job opportunities in the next decade. The chips manufactured by GlobalFoundries in the new facility will find applications not only in automotive blind spot detection, collision warning systems, Wi-Fi, and mobile communications but also in satellite technology, aerospace communications, and the defense industry.

The U.S. Department of Commerce has previously granted subsidies of USD 35 million and USD 162 million to BAE Systems, a British defense and aerospace company, and Microchip Technology Inc., a microcontroller and analog IC supplier, respectively.

The U.S. Department of Commerce chose defense contractors as the first beneficiaries of the CHIPS Act subsidies, rather than traditional chip manufacturers, highlighting the focus of the legislation on national security.

The increasing reliance on advanced chips in weapon systems has become evident. Concerns were raised during the signing of the CHIPS Act in August 2022 regarding Taiwan potentially facing military attacks, which could lead to a global shortage of advanced chips and result in the United States falling behind.

As per the company’s press release, Thomas Caulfield, President and CEO of GlobalFoundries, pointed out that the industry needs to shift its focus to the increasing demand for American-made chips and strive to cultivate more semiconductor talents in the United States.

Secretary of Commerce Gina Raimondo stated at a press conference on February 19th that this is the third subsidy issued by the US government under the Chips and Science Act, with several more subsidies expected to be approved in the coming weeks to months.

Raimondo mentioned that GlobalFoundries’ expansion project at its Malta chip plant will ensure stable chip supplies for auto suppliers and manufacturers. Additionally, the high-value chips produced at the new Malta plant are unique to the United States.

In addition, GlobalFoundries and General Motors (GM) recently announced a long-term supply agreement on February 8th, aiming to avoid a recurrence of the chip shortage crisis during the COVID-19 pandemic.

Reports have surfaced indicating that the U.S. government is considering granting Intel Corp. subsidies exceeding USD 10 billion. This would mark the largest incentive program since the inception of the CHIPS Act.

Due to market challenges and the slow pace of subsidy disbursement by the U.S. government, Intel has delayed the construction schedule of its USD 20 billion chip plant in Ohio. TSMC recently announced that the production launch of its $40 billion chip plant in Arizona will also be delayed due to ongoing subsidy negotiations with the U.S. government.

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(Photo credit: GlobalFoundries)

TSMC is scheduled to hold the opening ceremony for its Kumamoto plant on February 24. In contrast, the construction progress of its Arizona plant in the United States has been relatively slow.

According to TechNews citing a research report from the Center for Security and Emerging Technology (CSET), the construction speed of semiconductor plants in the United States is the slowest globally due to the intricate regulatory environment. While the U.S. chip law supports the semiconductor industry, it is insufficient to address construction costs and timelines.

Looking at the construction speed of the three major foundries in the United States, they have indeed all fallen behind their original targets. For instance, TSMC’s Arizona plant was delayed by a year, Intel’s Ohio plant was pushed from 2025 to the end of 2026, and Samsung’s Texas plant, due to not receiving chip bill subsidies, was also delayed to 2025.

As per research conducted by CSET on the construction of 635 semiconductor plants from 1990 to 2020, the average time from groundbreaking to production was 682 days globally. However, in the United States, the average was 736 days, significantly higher than the global average and second only to Southeast Asia’s 781 days.

In comparison, the construction speeds in Taiwan, South Korea, and Japan are 654 days, 620 days, and 584 days, respectively, with Japan’s performance being quite remarkable. As for Europe and the Middle East, the average is 690 days, while in China, it is 701 days.

The report further indicates that in the 1990s and 2000s, foundries in the United States had a relatively faster construction speed, with an average time of about 675 days. However, by the 2010s, this time frame extended to 918 days.

Meanwhile, during the same period, the construction speed in China and Taiwan significantly accelerated, with average completion times of 675 days and 642 days, respectively.

Furthermore, the number of foundries in the United States has been declining, from 55 in the 1990s to 43 in the 2000s and 22 in the 2010s. In contrast, the construction speed of foundries in China has significantly accelerated, from 14 in the 1990s to 75 in the 2000s, and further to 95 in the 2010s.

Although China’s semiconductor technology is still in the catch-up phase, the construction of foundries positions it as a dominant force in the industry.

Stringent Regulations in the United States Lead to Slow Factory Construction Despite Favorable Conditions 

The report highlights seven key requirements for foundry construction: Large plots of land, low seismic activity, stable water supply, stable supply of electricity, talent, transportation infrastructure, and nearby land for co-location with key suppliers.

In these aspects, the United States outperforms Taiwan; however, the primary obstacle is regulatory issues.

Due to the unique federal structure of the United States, foundry construction must comply with federal, state, and local regulations, resulting in an exceptionally complex regulatory process. Additionally, environmental policies pose obstacles to foundry construction, particularly due to stringent requirements for environmental protection

The report suggests that to enhance the United States’ competitiveness in the global semiconductor industry, the government needs to streamline regulatory processes, eliminate redundant regulations, and establish expedited pathways to accelerate semiconductor industry construction projects.

Additionally, there should be an acceleration of environmental review processes and investment in the development of alternative materials to ensure sustainable semiconductor material supplies.

With the continued growth in global semiconductor demand, the construction speed and efficiency of US semiconductor fabs will directly impact its position in the global market.

To maintain its leading position, per the report, the United States urgently needs to take action to address this issue. Currently, it is unclear how much impact the delayed construction of semiconductor fabs by TSMC, Intel, and Samsung will have.

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(Photo credit: TSMC)

Novatek has unveiled its AI and related domain strategies during its year-end investor conference. According to a report from Taiwanese news outlet Tai Sounds, Novatek anticipates that the demand for AI will drive an enhancement in display specifications and necessitate the integration of edge devices such as security systems.

Transmission interfaces stand as the core focus of Novatek, with subsequent products extending towards high-speed transmission. In both its driver IC and SoC product lines, Novatek maintains customized product lines, with expectations for growth in customized chips this year.

As per sources cited by Taiwanese news outlet Tai Sounds, Novatek is rumored to be venturing into the IP domain and may have opportunities to collaborate with ARM, a subsidiary of SoftBank Group.

Further clarification from the source also indicates that Novatek specializes in customized power management chips for mobile devices, while Realtek offers USB4 hub solutions.

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(Photo credit: Novatek)

In 2023, “generative AI” was undeniably the hottest term in the tech industry.

The launch of the generative application ChatGPT by OpenAI has sparked a frenzy in the market, prompting various tech giants to join the race.

As per a report from TechNews, currently, NVIDIA dominates the market by providing AI accelerators, but this has led to a shortage of their AI accelerators in the market. Even OpenAI intends to develop its own chips to avoid being constrained by tight supply chains.

On the other hand, due to restrictions arising from the US-China tech war, while NVIDIA has offered reduced versions of its products to Chinese clients, recent reports suggest that these reduced versions are not favored by Chinese customers.

Instead, Chinese firms are turning to Huawei for assistance or simultaneously developing their own chips, expected to keep pace with the continued advancement of large-scale language models.

In the current wave of AI development, NVIDIA undoubtedly stands as the frontrunner in AI computing power. Its A100/H100 series chips have secured orders from top clients worldwide in the AI market.

As per analyst Stacy Rasgon from the Wall Street investment bank Bernstein Research, the cost of each query using ChatGPT is approximately USD 0.04. If ChatGPT queries were to scale to one-tenth of Google’s search volume, the initial deployment would require approximately USD 48.1 billion worth of GPUs for computation, with an annual requirement of about USD 16 billion worth of chips to sustain operations, along with a similar amount for related chips to execute tasks.

Therefore, whether to reduce costs, decrease overreliance on NVIDIA, or even enhance bargaining power further, global tech giants have initiated plans to develop their own AI accelerators.

Per reports by technology media The Information, citing industry sources, six global tech giants, including Microsoft, OpenAI, Tesla, Google, Amazon, and Meta, are all investing in developing their own AI accelerator chips. These companies are expected to compete with NVIDIA’s flagship H100 AI accelerator chips.

Progress of Global Companies’ In-house Chip Development

• Microsoft

Rumors surrounding Microsoft’s in-house AI chip development have never ceased.

At the annual Microsoft Ignite 2023 conference, the company finally unveiled the Azure Maia 100 AI chip for data centers and the Azure Cobalt 100 cloud computing processor. In fact, rumors of Microsoft developing an AI-specific chip have been circulating since 2019, aimed at powering large language models.

The Azure Maia 100, introduced at the conference, is an AI accelerator chip designed for tasks such as running OpenAI models, ChatGPT, Bing, GitHub Copilot, and other AI workloads.

According to Microsoft, the Azure Maia 100 is the first-generation product in the series, manufactured using a 5-nanometer process. The Azure Cobalt is an Arm-based cloud computing processor equipped with 128 computing cores, offering a 40% performance improvement compared to several generations of Azure Arm chips. It provides support for services such as Microsoft Teams and Azure SQL. Both chips are produced by TSMC, and Microsoft is already designing the second generation.

• Open AI

OpenAI is also exploring the production of in-house AI accelerator chips and has begun evaluating potential acquisition targets. According to earlier reports from Reuters citing industry sources, OpenAI has been discussing various solutions to address the shortage of AI chips since at least 2022.

Although OpenAI has not made a final decision, options to address the shortage of AI chips include developing their own AI chips or further collaborating with chip manufacturers like NVIDIA.

OpenAI has not provided an official comment on this matter at the moment.

• Tesla

Electric car manufacturer Tesla is also actively involved in the development of AI accelerator chips. Tesla primarily focuses on the demand for autonomous driving and has introduced two AI chips to date: the Full Self-Driving (FSD) chip and the Dojo D1 chip.

The FSD chip is used in Tesla vehicles’ autonomous driving systems, while the Dojo D1 chip is employed in Tesla’s supercomputers. It serves as a general-purpose CPU, constructing AI training chips to power the Dojo system.

• Google

Google began secretly developing a chip focused on AI machine learning algorithms as early as 2013 and deployed it in its internal cloud computing data centers to replace NVIDIA’s GPUs.

The custom chip, called the Tensor Processing Unit (TPU), was unveiled in 2016. It is designed to execute large-scale matrix operations for deep learning models used in natural language processing, computer vision, and recommendation systems.

In fact, Google had already constructed the TPU v4 AI chip in its data centers by 2020. However, it wasn’t until April 2023 that technical details of the chip were publicly disclosed.

• Amazon

As for Amazon Web Services (AWS), the cloud computing service provider under Amazon, it has been a pioneer in developing its own chips since the introduction of the Nitro1 chip in 2013. AWS has since developed three product lines of in-house chips, including network chips, server chips, and AI machine learning chips.

Among them, AWS’s lineup of self-developed AI chips includes the inference chip Inferentia and the training chip Trainium.

On the other hand, AWS unveiled the Inferentia 2 (Inf2) in early 2023, specifically designed for artificial intelligence. It triples computational performance while increasing accelerator total memory by a quarter.

It supports distributed inference through direct ultra-high-speed connections between chips and can handle up to 175 billion parameters, making it the most powerful in-house manufacturer in today’s AI chip market.

• Meta

Meanwhile, Meta, until 2022, continued using CPUs and custom-designed chipsets tailored for accelerating AI algorithms to execute its AI tasks.

However, due to the inefficiency of CPUs compared to GPUs in executing AI tasks, Meta scrapped its plans for a large-scale rollout of custom-designed chips in 2022. Instead, it opted to purchase NVIDIA GPUs worth billions of dollars.

Still, amidst the surge of other major players developing in-house AI accelerator chips, Meta has also ventured into internal chip development.

On May 19, 2023, Meta further unveiled its AI training and inference chip project. The chip boasts a power consumption of only 25 watts, which is 1/20th of the power consumption of comparable products from NVIDIA. It utilizes the RISC-V open-source architecture. According to market reports, the chip will also be produced using TSMC’s 7-nanometer manufacturing process.

China’s Progress on In-House Chip Development

China’s journey in developing in-house chips presents a different picture. In October last year, the United States expanded its ban on selling AI chips to China.

Although NVIDIA promptly tailored new chips for the Chinese market to comply with US export regulations, recent reports suggest that major Chinese cloud computing clients such as Alibaba and Tencent are less inclined to purchase the downgraded H20 chips. Instead, they have begun shifting their orders to domestic suppliers, including Huawei.

This shift in strategy indicates a growing reliance on domestically developed chips from Chinese companies by transferring some orders for advanced semiconductors to China.

TrendForce indicates that currently about 80% of high-end AI chips purchased by Chinese cloud operators are from NVIDIA, but this figure may decrease to 50% to 60% over the next five years.

If the United States continues to strengthen chip controls in the future, it could potentially exert additional pressure on NVIDIA’s sales in China.

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(Photo credit: NVIDIA)

DRAM prices have risen for three consecutive months, a trend attributed to Chinese clients accepting the price hike requests from memory manufacturers, as reported by Nikkei on February 16th.

As per data cited by Nikkei, the wholesale price (transaction price) of the benchmark product DDR4 8Gb was around USD 1.85 each in January 2024, marking a 9% increase from the previous month (December 2023). The price of the smaller 4Gb product was around USD 1.40 each, representing an 8% increase from the previous month. The aforementioned prices have been rising for the third consecutive month.

Reportedly, the price negotiation occurred before the Chinese Lunar New Year holiday, with Chinese clients increasing their purchasing volume before the break.

On the other hand, per TrendForce, since the fourth quarter of last year through the first quarter of this year, contract prices for DRAM products have seen continuous increases. For the mainstream product DDR4 8Gb, the contract price in January was USD 1.80.

The estimated increase for the first quarter is between 10% to 15%, and it is anticipated that there will be an additional increase of at least close to 10% by the end of the first quarter.

The report from Nikkei further addresses that 2024 is expected to enter the early stages of the PC replacement cycle, leading to increased demand for DRAM. According to sources cited in the report, besides Chinese clients, major PC manufacturers are also accepting price hikes.

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(Photo credit: Samsung)