Though being capable of running AI features may be the primary focus for global smartphones this year, due to restrictions on AI products’ usage in China, the Wall Street Journal reports that the upcoming new iPhone, expected at the end of the year, will not be able to use ChatGPT in China. Apple has reportedly been in discussions with companies like Baidu for potential partnerships, but no progress has been made yet.

China is Apple’s largest market for iPhones outside the United States. While smartphones from various brands will integrate AI this year at full throttle, incorporating apps like OpenAI’s ChatGPT, these apps from Western countries are not permitted for use in the Chinese market. According to the Wall Street Journal, industry insiders indicate that Apple is still searching for a Chinese AI partner. However, with the new iPhone set to launch in a few months, no progress has been made.

Notably, as per a report from TrendForce, in the first quarter, Apple faced a decline in sales in the Chinese market, resulting in a  drop in annual production to 47.9 million units.

In China, companies must obtain government approval to release AI devices. As of March this year, the Office of the Central Cyberspace Affairs Commission has approved 117 generative AI products, none of which are from brands outside of China.

The Wall Street Journal, citing industry sources, reported that Apple had tentatively inquired with Chinese authorities earlier this year about the possibility of allowing foreign language AI models on their smartphones. While believing approval to be unlikely, Apple has reportedly sought partnerships with local companies instead.

One of Apple’s main competitors, Samsung, has already launched the Galaxy S24 this year, featuring real-time translation and AI-enhanced photo editing and search capabilities. Samsung’s phone includes its own generative AI and also collaborates with Google. However, since Google’s AI tool Gemini is not permitted for use in China, Samsung has shifted to partnering with Baidu and Meitu AI.

It is not new for global tech companies to adjust their product and service offerings to cater to the Chinese market. For example, Apple uses state-owned enterprise servers for iCloud in China, and the recently launched Vision Pro cannot stream Apple TV+ in the country.

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• Q1 Smartphone Production Increases Due to Low Base Last Year, Expected to Decline 5–10% in Q2, Says TrendForce
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(Photo credit: Apple)

Recently, Reuters reported that NATO (North Atlantic Treaty Organization) has confirmed the first companies to receive Innovation Fund of EUR 1 billion (USD 1.1 billion). The companies are four European tech startups namely London-based AI chip manufacturer Fractile and Germany-based robotics company ARX Robotics, as well as UK manufacturers ICOMAT and Space Forge.

It’s reported that NATO has allocated funds to Fractile and ARX Robotics. Fractile aims to enable faster operation of large language model (LLM) like the one supporting ChatGPT, while ARX Robotics designs unmanned robots capable of performing tasks, from weight lifting to surveillance. ICOMAT specializes in producing lightweight materials for the automotive industry, and Space Forge has been committed to manufacturing semiconductors in orbit by leveraging space conditions such as microgravity and vacuum.

The NATO Innovation Fund was launched in summer 2022, promising investment in technologies that can enhance its defense capabilities. The fund is supported by 24 of NATO’s 32 member countries, including Finland and Sweden, which joined NATO earlier this year.

Moreover, the fund also reportedly collaborates with venture capital firms Alpine Space Ventures, OTB Ventures, Join Capital, and Vsquared Ventures to uphold further investment in deep tech on African continent.

Novatek, a major driver IC manufacturer in Taiwan, has made a significant breakthrough by securing a spot in the iPhone supply chain. According to a report from Economic Daily News, Novatek’s OLED driver IC is reportedly set to be used in Apple’s upcoming iPhone 16 series, which would be the first time a Taiwanese IC design company has secured a key chip order for the iPhone. Reportedly, the order is expected to boost NovaTek’s OLED driver IC shipments in the second half of the year by 50% compared to the first half.

As the new iPhone 16 series will debut in September, reports indicate that the model will feature the latest A18 processor, produced using TSMC’s N3P process, with mass shipments expected in the third quarter.

The iPhone 16 series will continue to equip OLED panels, but with expected pixel upgrades, which will also enhance the specifications of the OLED driver IC. Novatek will supply the OLED driver IC for the new iPhone, marking its first entry into the iPhone supply chain and the first time a Taiwanese IC design company has secured a key chip order for the iPhone, the report noted.

Novatek typically does not comment on orders or customers.

Previously, Novatek’s driver ICs have been adopted by Apple’s iPad for several years, but unable to secure an iPhone order. This breakthrough comes as Novatek penetrates the iPhone 16 supply chain via the collaboration with LG Display (LGD) of South Korea, combining with LGD’s OLED panels for shipment.

According to the industry sources cited by the same report, Novatek will begin delivering the OLED driver ICs to LGD in July. These ICs will be assembled into panel modules in the third quarter and then sent to OEMs for new device production, aligning with the AI iPhone launch.

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(Photo credit: Novatek)

Following Foxconn’s substantial order for the assembly of NVIDIA’s GB200 AI servers, according to a report from Economic Daily News, Foxconn has now exclusively secured a major order for the NVLink Switch, a key component of the GB200 renowned for enhancing computing power. The volume of this order is estimated to be seven times that of the server cabinets. Not only is this a brand new order, but it also carries a significantly higher gross profit margin compared to server assembly, the report noted.

While Foxconn does not comment on orders and customers, industry sources cited by the same report highlight that NVLink is an exclusive NVIDIA technology consisting of two parts. The first is the bridge technology, which connects the central processing unit (CPU) with the AI chip (GPU). The second is the switch technology, which is crucial for interconnecting GPUs, enabling thousands of GPUs to combine in operation, thereby maximizing their collective computing power.

Industry sources cited by Economic Daily News have stated that the key feature of the GB200 is not just its significant computing power but also its high-speed transmission capabilities. NVLink is considered the magic ingredient for enhancing this computing power.

Reportedly, the primary reason Foxconn has secured the exclusive order for NVIDIA’s NVLink is due to their long-standing cooperation and mutual understanding. Foxconn has been a leading manufacturer for network communication equipment for years, making it a reasonable choice for NVIDIA to entrust with these orders.

Industry sources cited by the report further claim that as each server cabinet requires seven NVLinks, this new order means that for every GB200 server cabinet produced, Foxconn receives an order for seven NVLink switches. Given that the profit margin for switches is considerably higher than for server assembly, this order is expected to significantly boost Foxconn’s operations.

Per the report, the world’s top seven switch manufacturers, including Dell, HP, Cisco, Nokia, and Ericsson, are all clients of Foxconn. This has enabled Foxconn to secure over 75% of the global market share in switches, firmly establishing its leading position.

Regarding the AI server market, Foxconn’s Chairman Young Liu previously revealed that the GB200 is in high demand, and he anticipates that Foxconn’s market share in AI servers could reach 40% this year.

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• [News] NVIDIA’s Packaging Advancement Boosts Taiwanese Supply Chain with Emerging Opportunities in Panel-Level Fan-Out Packaging
• [News] Foxconn Capitalizes on AI Opportunities? Reportedly Looking at Apple’s AI Server Market, B200 Also Poised to Succeed

(Photo credit: NVIDIA)

Taiwanese panel company Innolux have said to be involving in collaborating with leading global memory manufacturers. According to a report from the Economic Daily News, plans are underway to repurpose its 4th Plant in Tainan (5.5-generation LCD panel plant) for AI-related semiconductor applications, specifically targeting back-end packaging.

Sources cited in the report indicate that, based on the strategies of the top three global memory manufacturers, the partner in this collaboration is likely a memory manufacturer that already has a presence in Taiwan and seeks to expand its capacity there. Innolux’s advantage lies in its advanced panel-level fan-out packaging (FOPLP), which is poised to make a substantial impact in the AI field. However, these reports have not been confirmed by Innolux or any global memory giants.

Regarding the 4th Plant developments at Tainan, Innolux stated on June 16 that, based on flexible strategic planning principles, the company continues to optimize production configurations and enhance overall operational efficiency. Some production lines and products are being adjusted to streamline and strengthen the group’s layout and development.

The surge in AI demand has driven the need for advanced chip heterogenous integration and high-end packaging technologies to meet the high-performance application requirements of AI devices. Targeting these opportunities, Innolux has reportedly repurposed its Tainan 3.5-generation and 4-generation LCD panel production lines for semiconductor-related uses, including FOPLP and X-ray sensors.

Sources cited in the report also revealed that Innolux’s transformation efforts are making progress. After closing the 5.5-generation LCD panel production at the 4th Plant last year, the company has gradually reassigned staff to other facilities. To revitalize capacity and assets, Innolux has been in close contact with leading global memory manufacturers, aiming to develop AI-related applications.

Currently, the three major global memory manufacturers are actively developing high-bandwidth memory (HBM) for AI servers. South Korea’s SK Hynix is the most proactive in collaborating with Taiwanese companies. SK Hynix has partnered with TSMC to aggressively target the AI market. As per a report from Korean media outlet The Korea Herald,  SK Group Chairman Chey Tae-won recently visited TSMC Chairman C.C. Wei to ensure continued close cooperation on the next-generation HBM.

On the other hand, Micron has established memory production in Taiwan but does not yet have HBM capacity for AI servers in the region. Meanwhile, Samsung does not have direct AI cooperation with Taiwanese companies in the memory sector.

Sources cited in the report from Economic Daily News indicate that Innolux is engaging with one of these three major international memory manufacturers, focusing on new semiconductor applications. As Innolux is advancing into the promising glass substrate packaging business through panel-level fan-out packaging, this technology is expected to be combined with memory applications for AI development. Therefore, the developments at its 4th Plant in Tainan are receiving considerable attention.

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(Photo credit: Innolux)