Earlier in July, former ASML CEO Peter Wennick stated that the chip war between the U.S. and China may continue for quite a long time, even for decades. Now his prophecy seems to come true, as the Netherlands is said to ban the semiconductor equipment giant from conducting equipment maintenance and providing related backup components in China, according to the latest report by Bloomberg.

As the targets of the measure reportedly includes ASML’s deep ultraviolet (DUV) lithography systems, if implemented, the move would be a heavy blow to China’s semiconductor industry, especially on the development of advanced nodes, the report notes.

On the other hand, regarding ASML’s sales in lithography units in the second quarter of 2024, China emerged as the largest market, as it contributed 49% of the revenue, higher than South Korea’s 28% and Taiwan’s 11%. Therefore, the reported restriction will be a major setback for the company’s financial performance.

The report from Bloomberg, citing sources familiar with the matter, indicates that the government led by Dutch Prime Minister Dick Schoof is unlikely to renew some of ASML’s licenses for maintenance and the provision of backup components in China, which are set to expire at the end of 2024. These licenses include those related to ASML’s sale of DUV lithography equipment.

The report further suggests that ASML’s products are usually sold with maintenance agreements, which are crucial for the equipment to operate properly and continuously. Therefore, if ASML’s licenses for maintenance and the provision of backup components to China are no longer granted, some equipment may be unable to function properly as early as 2025.

In response to the rumors, both ASML and the Dutch Ministry of Foreign Affairs have declined to comment, Bloomberg notes.

In terms of the reason behind the move, the report states that the decision may be made after the Dutch government received pressure from the U.S. Citing a senior official from the Biden administration, if the super power’s allied countries do not agree to align with Washington on semiconductor controls against China, the U.S. government could propose certain unilateral measures against partner countries, including the use of the Foreign Direct Product Rule (FDPR).

The measure allows the U.S. to control transactions involving foreign products that use U.S. technology, thus is considered to be a tactic leveraged to push its allies, including the Netherlands, Japan and South Korea, to impose restrictions on semiconductor equipment exports to China.

According to a previous report by Reuters, since 2019, ASML has been prohibited from selling its most advanced EUV tool line in China as part of a U.S.-led effort to curb Beijing’s technological and military progress. Afterwards, China had to rely on ASML’s DUV lithography machines to advance in its semiconductor manufacturing technology.

As per a report by Wccftech in May, SMIC seems to be able to use ASML’s old DUV lithography machines to manufacture 5nm chips for Huawei. Therefore, if ASML stops servicing and supplying parts for DUV machines in China in the future, companies like Huawei and its foundry partner SMIC will find it increasingly difficult to make breakthroughs with their existing capabilities.

The latest report by Bloomberg emphasized that ASML’s CFO, Roger Dassen, confirmed in a July earnings call that the company still has employees in the fabs of Chinese customers. Therefore, if the maintenance ban is implemented, ASML will have to withdraw the employees who provide equipment services to Chinese semiconductor companies.

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(Photo credit: ASML)

The electric car market in China has been facing intense competition, with Xiaomi revealed that it suffered a USD 9200 loss per vehicle from April to June. However, the price war is not the only battleground, as the focus now seems to be turned to another front.

According to a report by CNBC, chip-powered tech features, such as the driver assist function, have gradually become the latest trend, while the development of in-house chips emerges as the possible match point for China’s EV makers. The reason behind: the need for customization and a must to reduce reliance on cutting-edge AI chips amid US- China tensions.

Until now, many leading Chinese EV manufacturers have relied on NVIDIA’s chips, with the AI heavyweight’s automotive chip business generating over USD 300 million in quarterly revenue in recent years, CNBC notes.

However, Chinese electric car start-ups Nio and Xpeng both announced progress on their self-developed chips lately, signaling the beginning of a new era in which in-house chips may become the mainstream for the industry.

In late July, Nio announced that it had taped-out its self-developed intelligent driving chip, Shenji NX9031, which is manufactured with 5nm node. The chip is said to be integrated into the company’s ET9 model, which is scheduled for delivery in 2025.

Citing industrial specialists, CNBC states that the move marks the first time that 5nm has been used in the Chinese automotive industry. For now, 3nm node is primarily utilized in smartphones, personal computers, and artificial intelligence-related applications.

On the other hand, another China’s EV start-up, XPeng Motors, announced in late August that its first AI chip, Turing, has been successfully taped-out. It is worth noting that XPeng has a strong relationship with NVIDIA, and Xpeng’s former head of autonomous driving joined Nvidia last year, CNBC reports.

In 2019, Tesla has reportedly moved away from using NVIDIA’s chips to developing its own, with a focus on advanced driver-assist functions. Citing an industrial specialist, CNBC suggests that Tesla and Chinese EV startups are expected to compete by designing their own chips, while traditional automakers will likely continue to depend on NVIDIA and Qualcomm for the foreseeable future.

The report does not anticipate a significant impact on NVIDIA in the short term, as Chinese automakers are expected to test new technology in small batches within the high-end segment of the market.

Anyhow, the reason behind the wave of self-developing chips for Chinese EV makers may be that it would be difficult for a company to differentiate itself if it uses the same silicon to power its infotainment and intelligent driving systems. By designing their own chips, Chinese automakers can customize features and mitigate supply chain risks associated with geopolitical tensions.

According to the report, U.S. restrictions on NVIDIA’s chip sales to China have not directly impacted automakers, as their vehicles have not yet required the most advanced semiconductor technology.

However, with a growing emphasis on driver-assist functions, which depends heavily on artificial intelligence—a key area in the U.S.-China tech rivalry—Chinese automakers are now turning to in-house technology.

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• [News] China Reportedly Demands Automakers Increase Local Chip Procurement to 25%
• [News] Chinese EV Maker XPeng Tapes out Latest In-House Chip, Boasting Triple the Computing Power of its Rivals

(Photo credit: Nio)

As per its official release, SK hynix has announced that it has developed the industry’s first 16Gb DDR5 built using its 1c node, the sixth generation of the 10nm process. Reportedly, it will be ready for mass production of the 1c DDR5 within the year to start volume shipment next year.

To reduce potential errors stemming from the procedure of advancing the process and transfer the advantage of the 1b, the company claims in the release that it extended the platform of the 1b DRAM for development of 1c.

As per the press release, the operating speed of the 1c DDR5, expected to be adopted for high-performance data centers, is improved by 11% from the previous generation, to 8Gbps.

With power efficiency also improved by more than 9%, SK hynix expects adoption of 1c DRAM to help data centers reduce the electricity cost by as much as 30% at a time when advancement of AI era is leading to an increase in power consumption.

Per a report from Businesskorea, the difficulty of advancing the shrinking process for 10nm-range DRAM technology has increased with each generation.

However, with the official release this time, SK hynix has become the first in the industry to overcome these technological limitations by achieving a higher level of design completion.

Per another report from Korea JooAng Daily, this marks a win for SK hynix, as its rival Samsung Electronics had previously outpaced it in the development of the 1b DRAM, which corresponds to nodes in the 12-nanometer range.

Supermicro Computer has reportedly been targeted by short-sellers and questioned over alleged accounting manipulations, leading to a delay in filing its 2024 10-K annual report and causing market unease.

On August 27, Hindenburg Research, a short-selling company known for targeting major entities like India’s Adani, Nikola, Lordstown, and fintech giant Block, released a report accusing Supermicro of accounting violations, inadequate disclosure of related party transactions, and evading sanctions by selling products to Russia.

At the moment following the release of Hindenburg’s report, Supermicro also announced a delay in submitting its 2024 fiscal year 10-K annual report, citing the need for more time to assess the design of internal controls and operational effectiveness. This move has further heightened market concerns about Supermicro.

Moreover, Hindenburg also raised concerns about the quality of Supermicro’s products and services, suggesting that competitors like Dell might capitalize on Supermicro’s lost orders.

According to a report from Barron’s citing Evercore ISI analyst Amit Daryanani’s report, it’s highlighted that Supermicro is facing a risk of customer order withdrawals.

Supermicro, on the other hand, didn’t immediately respond to a request for comment about the delay in filing the annual report.

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• [News] Quick Couplings’ Buying Surge Reportedly Leads to AI Server Component Shortage Brought up by Supermicro
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(Photo credit: Supermicro)

According to a report from Nikkei on August 29, Apple is said to be betting that its first iPhone with Apple Intelligence will be a hit. Thus, the tech giant has requested suppliers to provide components for approximately 88 to 90 million iPhones, over 10% more than the initial component orders of 80 million units for new iPhones in 2023.

Reportedly, some component suppliers have received orders for more than 90 million iPhones. However, they also noted that Apple’s initial orders are typically larger, with adjustments made based on actual sales performance after the launch.

An industry source cited in the report expressed caution regarding Apple’s strong order volume, noting that geopolitical factors are likely to pose significant challenges for iPhone sales in China.

The report cited multiple sources, noting that Apple suppliers are generally cautious,  and forecasting that iPhone shipments for the year will likely be flat, due to the high comparison base from 2023.

In late 2022, COVID-19 has caused disruptions in Zhengzhou, China, the world’s largest iPhone manufacturing hub, resulting in the delay in iPhone shipments to the first half of 2023.

On the other hand, it is still unclear how Apple Intelligence will operate in China, as Apple has yet to finalize agreements with any Chinese AI companies.

While OpenAI’s chatbot, ChatGPT, is available in countries like the United States, it is not accessible in China. To introduce similar AI functionalities, Apple will likely need to collaborate with Chinese AI companies.

A previous report from Economic Daily News once indicated that Apple has been in discussions with Baidu, Alibaba Group, and Beijing-based startup Baichuan AI, but no agreements have been confirmed yet.

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• [News] Taiwanese AI Server Supply Chain to Benefit from Apple’s Potential Collaboration with Baidu and Alibaba
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(Photo credit: Apple)