Intel has reportedly retained the export licenses that would have prohibited them from selling laptop processor (CPU) chips to the Chinese telecommunications giant Huawei. This signifies that Intel has temporarily preserved its business of providing chips worth hundreds of millions of dollars to Huawei.

According to sources cited by Reuters on March 12th, the US placed Huawei on a trade blacklist in 2019, alleging violations of US sanctions. However, at the end of 2020, the US Department of Commerce granted special licenses to some US suppliers, including Intel, allowing them to sell certain technology products to Huawei.

Still, some sources cited in the report believe that Intel’s license is expected to expire later this year and is unlikely to be renewed.

The sources cited in the same report also stated that Intel’s competitor, AMD, had applied for a similar license to sell comparable chips in early 2021 but did not receive approval from the US Department of Commerce. AMD subsequently protested, claiming that the US government’s differential treatment was unfair.

Regarding this matter, Intel, Huawei, the Commerce Department and the White House declined to comment. AMD did not respond to a request for comment.

As per TrendForce, Intel is forecasted to hold a market share of 68.8% in the CPU market in 2024, while AMD is expected to have a share of 20.2%.

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(Photo credit: iStock)

AMD has encountered resistance from the United States when attempting to sell a custom-designed AI chip to the Chinese market, according to Bloomberg citing sources.

The same source further revealed that AMD sought approval from the U.S. Department of Commerce to sell this AI chip to Chinese customers. The chip’s performance is lower than AMD’s products sold in other regions of China, and its design complies with U.S. export restrictions.

However, U.S. officials informed AMD that the chip’s performance is still too robust, requiring the company to obtain approval from the U.S. Department of Commerce’s Bureau of Industry and Security before sales can proceed. It remains unclear whether AMD is currently seeking a license.

The U.S. government introduced initial export control measures in 2022 and bolstered a series of measures in October 2023, encompassing additional technologies and reforming potential sales that could undermine intermediary countries/regions.

The strict limitations on the sale of NVIDIA’s chips specifically designed for China align with the initial export regulations from 2022. Subsequently, the company developed new customized but lower-capacity products for the Chinese market, aligning with the restrictions imposed by the United States in 2023.

The U.S. ban in 2022 prevented both NVIDIA and AMD from selling their most powerful artificial intelligence chips to China. When the restrictions took effect in 2022, AMD anticipated that they would not substantially affect its operations.

While AMD has not publicly discussed its development of new AI chips for China, NVIDIA, on the other hand, immediately introduced improved products with reduced performance.

NVIDIA is set to commence pre-orders for its AI chip H20 specially designed for the Chinese market by the end of March this year in response to US export bans, according to sources cited by a report from STAR Market Daily.

Still, AMD is now actively expanding into the AI chip market. In December 2023, it launched the new MI300 series, challenging NVIDIA’s chips. According to sources cited by Bloomberg’s report, this customized product for China is known as the MI309. It is still unclear which Chinese customer wishes to purchase AMD’s AI chips, which could affect the company’s authorization.

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(Photo credit: AMD)

In the intense battle of AI chips between NVIDIA and AMD this year, AMD’s MI300 has entered mass production and shipment 1H24, gaining positive adoption from clients. In response, NVIDIA is gearing up to launch upgraded AI chips. TSMC emerges as the big winner by securing orders from both NVIDIA and AMD.

Industry sources have revealed optimism as NVIDIA’s AI chip shipment momentum is expected to reach around 3 million units this year, representing multiple growth compared to 2023.

With the production ramp-up of the AMD MI300 series chips, the total number of AI high-performance computing chips from NVIDIA and AMD for TSMC in 2024 is anticipated to reach 3.5 million units. This boost in demand is expected to contribute to the utilization rate of TSMC’s advanced nodes.

According to a report from the Economic Daily News, TSMC has not commented on rumors regarding customers and orders.

Industry sources have further noted that the global AI boom ignited in 2023, and 2024 continues to be a focal point for the industry. A notable shift from 2023 is that NVIDIA, which has traditionally dominated the field of high-performance computing (HPC) in AI, is now facing a challenge from AMD’s MI300 series products, which have begun shipping, intensifying competition for market share.

Reportedly, the AMD MI300A series products have commenced mass production and shipment this quarter. The central processing unit (CPU) and graphics processing unit (GPU) tile are manufactured using TSMC’s 5nm process, while the IO tile use TSMC’s 6nm process.

These chips are integrated through TSMC’s new System-on-Integrated-Chip (SoIC) and Chip-on-Wafer-on-Substrate (CoWoS) advanced packaging technologies. Additionally, AMD’s MI300X, which does not integrate the CPU, is also shipping simultaneously.

Compared to NVIDIA’s GH200, which integrates CPU and GPU, and the H200, focusing solely on GPU computation, AMD’s new AI chip performance exceeds expectations. It offers a lower price and a high cost-performance advantage, attracting adoption by ODMs.

In response to strong competition from AMD, NVIDIA is upgrading its product line. Apart from its high-demand H200 and GH200, NVIDIA is expected to launch new products such as B100 and GB200, utilizing TSMC’s 3nm process, by the end of the year.

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(Photo credit: NVIDIA)

TSMC operates at full capacity, AMD aims for AI chips reportedly seeks CoWoS-like supply chain.

In 2023, NVIDIA led the global AI chip development, and in 2024, the global demand for AI chips is expected to continue to surge due to the expansion of end-user applications such as PCs and mobile phones.

Meanwhile, AMD has not stopped in AI chip development either, with the expected MI300 products poised to heat up the global AI business opportunities. However, the key to supply lies in advanced packaging, and AMD will seek outsourced semiconductor assembly and test (OSAT) service providers to offer support similar to CoWoS.

According to Taiwan’s Commercial Times, TSMC’s CoWoS capacity has long been fully loaded, and even if it expands production this year, it will mainly be reserved for NVIDIA. Market sources pointed out that TSMC will continue to increase CoWoS capacity to support AMD’s demand, but it takes six to nine months to establish a new production line. Therefore, it is expected that AMD will seek cooperation with other companies with CoWoS-like packaging capabilities. ASE, Amkor, Powertech, and KYEC are the first batch of potential partners.

TSMC has been outsourcing part of its CoWoS operations for some time, mainly targeting small-volume, high-performance chips. TSMC maintains in-house production of the CoW, while the back-end WoS is handed over to test and assembly houses to improve production efficiency and flexibility. This model will continue in the future 3D IC generation.

ASE and Amkor both received WoS orders last year. ASE has strengthened the development of advanced packaging technology and has a complete solution for the entire CoWoS process. ASE previously stated that it sees the strong potential of AI and expects related revenue to double in 2024.

According to reports citing market sources, the monthly production capacity of the ASE Group’s 2.5D packaging is about 2,000 to 2,500 pieces. Some experts believe that test and assembly houses will maintain the business model of TSMC or UMC providing the interposer. Therefore, in 2024, a significant increase in CoWoS production capacity is expected.

KYEC is responsible for testing Nvidia AI chips and is expected to benefit from AMD’s search for CoWoS-like capacity. Nvidia is currently KYEC’s second-largest customer.

KYEC’s testing of Nvidia A100 and H100 chips is mainly in the final test (FT), with a market share of up to 70%. KYEC provides comprehensive IC burn-in testing, has self-developed burn-in equipment, and has been in the industry for more than a decade, accumulating many patents and technologies.

AMD stated at the end of 2023 that AI chip revenue could reach US$2 billion in 2024, excluding other HPC chips. AMD pointed out that the annual compound growth rate of the AI chip market in the next four years will reach 70%, and it is estimated that it will reach US$400 billion in 2027.

(Image: AMD)

According to a report by TechNews, TSMC’s Arizona-based Fab21, currently in the intensive equipment installation phase, has initiated the construction of a small-scale trial production line. With a small amount of equipment expected from multiple supply chain by the end of 2023, industry sources suggest that Fab21 is planning to commence trial production in the first quarter of 2024.

The reason behind TSMC’s anticipated trial production in the first quarter of 2024 stems from orders from its U.S. clients. Market reports indicate that among Fab21’s U.S. clients, in addition to major players like , NVIDIA CEO Jensen Huang has not ruled out placing orders with Fab21. Furthermore, there are indications that Intel, planning to outsource core computing to TSMC’s N3B process, is likely to place orders to Fab21 in the near future.

However, due to cost considerations, despite the commencement of a small-scale trial production line, the initial capacity increase for Fab21’s 4-nanometer process will not accelerate. This situation is expected to persist into the subsequent second phase of the 3-nanometer production line.

Looking back at TSMC’s progress in Arizona, the company announced the construction of the 12-inch wafer Fab21 in Arizona back in 2020, anticipating the commencement of formal equipment installation in the first quarter of 2024 and official mass production before the end of 2024. The initial phase of Fab21 will produce on the 5-nanometer process, with a monthly production capacity of 20,000 wafers.

TSMC later upgraded the initial processs from 5-nanometer to 4-nanometer. However, due to a shortage of skilled installation workers in the region, TSMC postponed the mass production start date to 2025.

In addition, the second phase of the project is currently slated for mass production in 2026, introducing the 3-nanometer process. The total investment for both phases amounts to $40 billion.

Industry sources also acknowledge that Fab21’s manufacturing costs are high, and its capacity cannot compete with TSMC’s fab in Taiwan, making U.S. client orders primarily a response to U.S. government requirements, with the majority of production still centered in Taiwan.

(Image: TSMC)