According to a report from Reuters citing sources on August 7th, American chip giant Intel had an opportunity to invest in OpenAI several years ago but ultimately had the investment rejected by company executives, resulting in a missed opportunity.

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.

The discussions included Intel potentially purchasing a 15% stake in OpenAI for USD 1 billion in cash and possibly producing hardware for OpenAI at cost in exchange for an additional 15% stake.

Sources cited by the report further reveal that OpenAI was very interested in Intel’s investment, primarily because it would reduce the company’s reliance on NVIDIA chips and enable OpenAI to build its own infrastructure.

However, Intel ultimately rejected the deal. One reason cited by the report was that then-CEO Bob Swan did not believe generative AI could be commercialized in the short term and was concerned that Intel’s investment would not yield returns. Another reason was that Intel’s data center division was unwilling to produce hardware for OpenAI at cost.

After Intel’s refusal, Microsoft began investing in OpenAI in 2019. In 2022, OpenAI launched the chatbot ChatGPT, reportedly sparking a global AI boom and achieving a valuation of USD 80 billion. Per the data from CB Insights, it has made OpenAI the third most valuable tech startup worldwide, behind only ByteDance and SpaceX.

Neither Intel nor OpenAI has commented on these reports.

As per a previous report from The Atlantic, Intel had previously declined to produce processors for Apple’s iPhone, a misstep that caused Intel to miss the opportunity to transition into the mobile area.

The news from Reuters this time further suggests that Intel has made a similar mistake in the AI domain.

Read more

• [News] Intel’s 18A to Start Production in 2025, Featuring Processors for AI PCs and Servers
• [News] Intel’s Earnings Fall Short, Cutting Over 15% of Workforce

(Photo credit: Intel)

While HP is making a move to withdraw over half of its PC production lines from China, according to a report from Economic Daily News, ODM such as Quanta and Inventec have already started setting up operations in Thailand to address their clients’ need to reduce geopolitical risks by shifting supply chain.

Reportedly, HP is planning to transfer its manufacturing base to Thailand, with the ultimate goal of having 70% of its laptops manufactured outside of China.

As early as July last year, it was rumored that HP intended to follow the example of brands like Dell and Apple in promoting supply chain diversification by moving PC production lines out of China to locations such as Thailand and Mexico.

Amid ongoing US-China tensions, ODMs have accelerated their expansion into the Southeast Asian market post-pandemic. Quanta established a plant in Thailand as early as 2019 to meet customers’ needs for diversified manufacturing sites. Currently, its Thailand facility produces servers, consumer electronics, and laptops.

Initially, Quanta’s Thailand plant primarily focused on manufacturing Chromebooks and other consumer products. However, due to lower-than-expected customer orders, Quanta expanded its server capacity and pursued laptop manufacturing orders.

With HP increasing its production in Thailand, Quanta aims to leverage its years of established presence in Thailand to secure more orders.

For the past two years, Quanta has reportedly accelerated its expansion of overseas capacity. This year, its capital expenditures are expected to increase to NTD 10 billion, up from NTD 8.8 billion last year, marking a 13.6% year-on-year increase and surpassing the 10 billion threshold. This investment will support expansion needs in Europe, the US, Thailand, and Mexico.

Inventec originally planned to assist HP with laptop production in Mexico, but with HP deciding to relocate its main production base to Thailand, Inventec has urgently rented local plant space to secure customer orders.

At the end of last year, Inventec announced a USD 152 million investment in a new plant in Thailand to produce laptops and servers. Server production line is expected to be completed by the end of this year, with operations beginning in the first quarter of next year, while laptop production line is also expected to be completed in the first quarter of next year.

Read more

• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei
• [News] NVIDIA’s China-Exclusive H20 to Begin Pre-sales Next Month

(Photo credit: HP)

According to a report from Economic Daily News, the AI boom has significantly increased the use of passive components, particularly in AI PCs and AI servers. Murata, a Japanese giant in multilayer ceramic capacitors (MLCC), is optimistic about the market outlook, stating that AI is driving waves of MLCC demand.

As per a report from Nikkei, Murata President Norio Nakajima revealed in an interview that the AI trend is unstoppable, leading to an expansion in MLCC applications.

This expansion reportedly starts with smartphones and extends to edge AI in computers equipped with generative AI functions. The end-use of these devices will drive an increase in MLCC consumption, and the demand for components in AI servers is also ramping up.

Murata’s views on the passive component market are referable, as in the first half of this year, Murata was ahead of the industry in announcing a recovery in component shipments for the smartphone market and an increase in capacity utilization at its MLCC plants.

Norio Nakajima pointed out that as demand surges, the capacity utilization rate of Murata’s MLCC plants has been continuously increasing to meet end-user demand. Last quarter, the capacity utilization rate was approximately 80% to 85%, and this quarter it is expected to rise to 85% to 90%.

Following Murata, Taiwanese companies such as Yageo and Walsin Technology also saw a recovery in their operations, marking the beginning of a bullish phase for the passive component market.

Industry sources cited by Economic Daily News further explain that Murata’s optimistic outlook is well-founded. The average MLCC usage per AI PC has surged by about 80% compared to traditional PCs, while the usage in AI servers has more than doubled, with each server requiring an average of 3,000 to 4,000 MLCCs.

In high-speed computing environments, this will further drive the demand for high-capacity and high-voltage MLCCs. Meanwhile, Yageo and Walsin Technology are actively seizing the business opportunities brought by AI.

Yageo Chairman Pierre Chen once stated that at this stage, the group not only provides MLCCs and chip resistors for AI applications but also inductors and magnetic components.

These offerings include both standard and niche products, and the company can also provide customized product combinations according to customers’ requirements for high-temperature and high-current tolerance.

Read more

• [News] Global Passive Component Giants to Raise Prices by 20%, Benefiting Taiwanese Supply Chain
• Passive Component Industry Nearing Bottom, Embracing AI and Automotive

(Photo credit: Murata)

As the demand for memory chips used in AI remains strong, prompting major memory companies to accelerate their pace on HBM3e and HBM4 qualification, SK hynix CEO Kwak Noh-jung stated on August 7 that driven by the high demand for memory chips like high-bandwidth memory (HBM), the market is expected to stay robust until the first half of 2025, according to a report by the Korea Economic Daily.

However, Kwak noted that the momentum beyond 2H25 “remains to be seen,” indicating that the company needs to study market conditions and the situation of supply and demand before making comments further. SK hynix clarified that was not an indication of a possible downturn.

According to the analysis by TrendForce, HBM’s share of total DRAM bit capacity is estimated to rise from 2% in 2023 to 5% in 2024 and surpass 10% by 2025. In terms of market value, HBM is projected to account for more than 20% of the total DRAM market value starting in 2024, potentially exceeding 30% by 2025.

SK hynix, as the current HBM market leader, said earlier in its earnings call in July that its HBM3e shipment is expected to surpass that of HBM3 in the third quarter, with HBM3e accounting for more than half of the total HBM shipments in 2024. In addition, it expects to begin supplying 12-layer HBM3e products to customers in the fourth quarter.

The report notes that for now, the company’s major focus would be on the sixth-generation HBM chips, HBM4, which is under development in collaboration with foundry giant TSMC. Its 12-layer HBM4 is expected to be launched in the second half of next year, according to the report.

Samsung, on the other hand, had been working since last year to become a supplier of NVIDIA’s HBM3 and HBM3e. In late July, it is said that Samsung’s HBM3 has passed NVIDIA’s qualification, and would be used in the AI giant’s H20, which has been developed for the Chinese market in compliance with U.S. export controls. On August 6, the company denied rumors that its 8-layer HBM3e chips had cleared NVIDIA’s tests.

Notably, per a previous report from the South Korean newspaper Korea Joongang Daily, following Micron’s initiation of mass production of HBM3e in February 2024, it has recently secured an order from NVIDIA for the H200 AI GPU.

Read more

• [News] SK hynix, TSMC, and NVIDIA Reportedly Forge Alliance to Develop Next-Generation HBM
• [News] SK hynix Secures up to USD 450 Million Funding for Indiana Packaging Facility under CHIPS Act

(Photo credit: SK hynix)

AI industry has been driving semiconductor industry to advance forward. Benefited from the surge in AI-driven demand for advanced process chip, foundry industry is experiencing a gradual turnaround, while demands for consumer chip and automotive chip have not yet fully recovered, and competition remains fierce in the mature process chip sector, representing a stark contrast within the wafer foundry industry.

• Financial Results Indicate Strong AI Development but Weak Automotive Terminal Demands

Recently, several major foundries released their Q2 financial reports and shared outlook on future market conditions.

For the second quarter ending June 30, TSMC reported consolidated revenue of approximately USD 20.82 billion, up 32.8% YoY and 10.3% QoQ, which was attributed to strong demand for its 3nm and 5nm technologies.

As per the financial report, revenue from advanced technologies (7nm and below) accounted for 67% of TSMC’s total wafer revenue in 2Q24. In terms of application areas, HPC has replaced mobile business as the core driver of the company’s growth, contributing 52% of revenue.

Additionally, although TSMC’s automotive electronics revenue grew 5% QoQ, the company warned of a potential downturn in the automotive market this year.

UMC reported Q2 revenue of TWD 56.8 billion, up 4% QoQ. UMC expected customer inventories in the communications, consumer electronics, and computer sectors to return to seasonal levels as usual in the second half of this year, and to reach healthy levels by the end of the year.

However, demand in the automotive end market remains weak, which may extend the period of inventory adjustment, with healthy levels anticipated only by the first quarter of next year.

On August 6, GlobalFoundries released its latest financial report.

In the second quarter of this year, the company achieved revenue of USD 1.63 billion, a year-on-year decrease of 12% and a quarter-on-quarter increase of 5%. Net profit was USD 155 million, a year-on-year decrease of 35% and a quarter-on-quarter increase of 16%.

Industry sources cited by the report from WeChat account DRAMeXchange believe that during the pandemic, customers in sectors such as IoT, mobile device, and data center accumulated high inventory, which impacted GlobalFoundries’ revenue.

Moreover, the company is experiencing a cyclical downturn due to soft demands in the automotive, industrial, and other sectors.

• Advanced Processes Continue to Thrive while Mature Processes Face Intense Competition

The adoption of AI generative models keeps on the rise, driving high demand for AI chip. In this context, advanced processes have been well-received, leading to price increase and production expansion.

TrendForce’s survey in June showed that TSMC is seeing full capacity utilization in its 5/4nm and 3nm nodes due to strong demand from AI applications, new PC platforms, HPC applications, and high-end smartphones.

Its capacity utilization is expected to exceed 100% in the second half of the year, with visibility extending into 2025. Given cost pressures from overseas expansion and rising electricity prices, TSMC plans to raise prices for its advanced processes, which are experiencing strong demand.

TSMC is seeing full capacity utilization in its 5/4nm and 3nm nodes due to strong demand from AI applications, new PC platforms, HPC applications, and high-end smartphones. Its capacity utilization is expected to exceed 100% in the second half of the year, with visibility extending into 2025.

Given cost pressures from overseas expansion and rising electricity prices, TSMC plans to raise prices for its advanced processes, which are experiencing strong demand.

As per other sources cited by the same report, TSMC informed customers of a price increase for 5/3nm process products in 2024 at the beginning of this year.

In late July, TSMC notified several customers that due to rising costs, prices for 5/3nm process products will increase again starting January 2025, and the increase will range from 3-8%, depending on the tape-out plan, product, and partnership.

Meanwhile, the surge in demand for advanced packaging driven by AI will also lead to higher CoWoS prices.

To seize the significant opportunities brought by AI, many companies are actively investing in advanced processes. Currently, the 3nm process is the most advanced in the industry.

Meanwhile, TSMC, Samsung, Intel, and Rapidus are vigorously promoting the construction of 2nm fabs. Previously, TSMC and Samsung intended to produce 2nm chip at scale in 2025, while Rapidus planed to start trial production in 2025.

Following 2nm, 1nm chip will be the next goal for these fabs. According to their plans, the industry is likely to see the mass production of 1nm chip from 2027 to 2030.

Unlike the rising prices and volume in advanced process chip, mature process chip faces some uncertainty due to weaker-than-expected recovery in end-user demand, and sees more intense competition among manufacturers.

TrendForce’s survey reveals that the capacity utilization rates of PSMC and Vanguard is expected to improve more than anticipated in the second half of the year. However, overall demand for mature processes remains weak, with average capacity utilization still around 70–80%—indicating no significant shortages.

TrendForce further pointed out that in 2024, concerns over global inflation and weak recovery in end-demand may result in inconsistent momentum in replenishing inventory. Many foundries might offer price incentives to attract customers and boost capacity utilization, leading to a decline in overall ASP.

Furthermore, a significant amount of new capacity is expected to come online in 2025, including TSMC JASM, PSMC P5, SMIC’s new Beijing/Shanghai plants, HHGrace Fab9, HLMC Fab10, and Nexchip N1A3.

This increase in mature process capacity could intensify competition and impact future pricing negotiations.

Read more

• [News] Intel and NVIDIA’s New Platform Orders Rolling Out, TSMC Unaffected by Market Turbulence
• Foundry Market Shows Mixed Conditions with Price Adjustments for Specific Chinese Processes and Anticipated Price Increases for Taiwanese Advanced Processes, Says TrendForce

(Photo credit: TSMC)