According to Reuters citing sources, Intel, facing a critical survival crisis, has temporarily halted its new chip packaging and testing project in Penang.

Malaysian media outlet The Star, citing informed sources, reported that Intel will temporarily halt its new chip packaging and testing project in Penang as part of cost-cutting efforts. However, the operations of existing facilities will remain unaffected.

The U.S. chip giant had announced three years ago that it would invest approximately USD 7 billion to build new chip packaging and testing facilities in Malaysia, looking to make it its largest overseas packaging and testing base.

Facing what is described as the most challenging period in its 56-year history, Intel is making drastic survival moves, including suspending dividend payments and laying off 15% of its global workforce to significantly reduce expenses.

Per The Star, Intel employs around 14,000 people in Malaysia, meaning over 2,000 local employees may face the risk of job loss.

Three weeks ago, Penang Chief Minister Chow Kon Yeow stated that Intel would continue its expansion plans in Penang, though he admitted that Intel’s USD 10 billion cost-cutting initiative would inevitably impact its operations in the region.

The Star cited sources, pointing out that Intel has been reassessing its investment projects in Malaysia. While construction at its new facility in Penang is still ongoing, the number of workers has been reduced.

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• [News] Intel’s 18A Reportedly Runs into Trouble with Broadcom, while 20A Plan on Arrow Lake Cancelled
• [News] Intel Reportedly Considering Foundry Spin-Off or Merger to Mitigate Losses

(Photo credit: Intel)

Disappointing financial results. A 15% layoff of its workforce. Restructuring and cost-reduction plans which may include the sale of FPGA unit Altera and freezing its USD 32 billion German fab project. Now, there seems to be more bad news on the way for Intel, as its advanced nodes, specifically 18A and 20A, reportedly run into trouble.

Broadcom Regards 18A Not Ready for High-volume Production

According to Reuters and The Verge, Broadcom’s initial tests with Intel’s 18A (1.8nm-class) process did not meet expectations, creating additional pressure on the semiconductor giant’s efforts to catch up with TSMC in the foundry sector. The reports note that Broadcom tested Intel’s 18A by producing wafers with typical design patterns. However, its engineers and executives were said to be disappointed with the results, regarding the process as “not ready for high-volume production.”

A Broadcom spokesperson informed Reuters that the company has not yet completed its evaluation of Intel’s 18A, indicating that the assessment is still in progress.

The 18A node plays a crucial role in Intel’s roadmap, as it has been working on the process for years, targeting to begin mass production next year, with major clients including Microsoft, according to the Verge.

However, another report from Tom’s Hardware also suggests that a defect density below 0.5 defects per square centimeter is typically seen as a positive outcome, which Intel may have already accomplished. Citing CEO Pat Gelsinger’s previous remarks, the report notes that Intel is now below 0.4 d0 defect density, which can be considered a healthy process.

20 A Cancelled: Not a Bad Idea for Cost-reduction?

Another latest bad news, though, is that Intel announced that it will no longer use its own 20A process for the upcoming Arrow Lake processors aimed at the consumer market. In its own words, the Arrow Lake processor family will be built primarily using external partners and packaged by Intel Foundry.

The unexpected move, according to Intel, is made in order to focus resources on Intel 18A, helping the company to optimize its engineering investments.

The strategy might not be a bad idea amid Intel’s crisis, as the bypass of the 20A process altogether can help avoiding the significant capital expenditures needed to scale the node to full production, a report by Tom’s Hardware notes. By sidestepping the typically high costs associated with ramping up a new and advanced node like 20A, the company will likely make progress toward its cost-cutting objectives. The order of Arrow Lake, though, might possibly go to TSMC, the report indicates.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Intel Reportedly Mulls to Sell FPGA Unit Altera and Freeze USD 32 Billion German Project amid Crisis

(Photo credit: Intel)

Recent comments from former U.S. President Donald Trump on protection fees have hit semiconductor stocks hard and brought TSMC back into the spotlight for investors.

As per a report from Barron’s, it’s suggested that America’s stance towards Taiwan is not the best diplomatic strategy. The following key figures highlight TSMC’s importance to both the U.S. and the global economy.

• 700 Billion

After Bloomberg published an exclusive interview with Trump, the Nasdaq Composite Index plummeted 2.8% on July 17th. Large semiconductor stocks, including TSMC and the seven major U.S. tech giants, collectively lost about USD 700 billion in market value overnight.

The report from Barron’s suggested that this phenomenon indicates that the market views TSMC not just as a foundry but also as a crucial supplier of key components for America’s largest and most important enterprises.

• 92%

According to the Semiconductor Industry Association, TSMC manufactures 92% of the world’s advanced semiconductors, while South Korea produces the remaining 8%.

Barron’s noted that though the U.S. aims to increase domestic production of advanced chips, targeting 20% of advanced chips to be produced locally by 2030,. However this will take some time to achieve.

• 33%

TSMC taks pride in itself that it is the world’s first dedicated semiconductor foundry. Namely, all chips produced by TSMC are supplied to semiconductor companies that do not manufacture their own chips. For companies like NVIDIA, AMD, Broadcom, Qualcomm, and others, TSMC is a major supplier.

Barron’s noted that approximately one-third of their chip manufacturing expenses go to TSMC. This has further underscored the significance of the company.

• 45%

NVIDIA and other companies purchase chips from TSMC and then resell them to other companies. According to Barron’s, Microsoft, Meta, Alphabet, Amazon, and Tesla contribute about 45% of NVIDIA’s sales. Although Apple currently doesn’t purchase many chips from NVIDIA, about 27% of Qualcomm’s sales and 17% of Broadcom’s sales come from Apple.

In theory, without TSMC, there would be no iPhone, AI servers, or other electronic products people rely on. For this reason, Tae Kim, a technology journalist at Barron’s, refers to the true risk of disruptions in TSMC’s operations as a “Global Depression.”

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• [News] TSMC Dominates High-End Packaging Market, Potentially Impacting Opportunities for OSAT
• [News] TSMC Introduces “Foundry 2.0” to Include Packaging, Testing, Mask making and Others

(Photo credit: TSMC)

According to a report from The Information, generative AI application giant OpenAI has held talks with several chip designers, including Broadcom, to discuss plans for developing new AI chip.

It’s reported that OpenAI is currently exploring the possibility of manufacturing its own AI chip. This move would not only allow for efficient integration of software and hardware,  but also help alleviate the current shortage of AI chips. Moreover, OpenAI is said to be actively recruiting former Google employees, hoping to leverage their experience and expertise in developing Tensor processors to create its own AI chip.

The report emphasized that there is little possibility for OpenAI to develop AI server chip that can rival that of NVIDIA, and it would take years of research and development to achieve any significant results.

However, OpenAI might be able to shorten the development time by actively drawing in former talents from Google and harnessing their expertise and experience in developing Tensor processors.

Previously, the industry pointed out that OpenAI CEO Sam Altman has formulated an ambitious AI chip development plan, aiming to raise USD 7 trillion to renovate the global semiconductor industry ecosystem and promote the development of the general AI industry.

Sam Altman also stated that this USD 7 trillion would bring about considerable investment in AI, enabling the fabrication of AI chip and the construction of AI-related infrastructures, which will ultimately translate into vast services to the world and substantial value to everyone.

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• [Insights] OpenAI CEO’s Ambition to Build Semiconductor Plant Grows Stronger
• [News] OpenAI Reportedly Expected to Gather with Samsung and SK Group for Deepened Chip Collaboration

(Photo credit: Broadcom)

According to a report from Reuters, it’s rumored that ByteDance, the parent company of TikTok, is collaborating with American chip designer Broadcom to develop an advanced AI processor, which could provide ByteDance with a steady supply of high-end chips.

On June 24th, Reuters’ report cited sources, stating that the 5nm Application-Specific Integrated Circuit (ASIC) being developed by the two companies will comply with U.S. export control regulations and will be manufactured by TSMC.

Since the introduction of advanced chip export controls by Washington in 2022, no public announcements have been made regarding the development of 5nm or more advanced chips in collaboration between Chinese and American companies.

The sources cited by the same report indicate that ByteDance’s collaboration with existing partner Broadcom can help reduce procurement costs and ensure a stable supply of high-end chips. However, TSMC will not start manufacturing this new chip this year. According to Reuters citing other sources, although the two companies have already begun the design process, they have yet reached the tape-out stage, which signifies the completion of the design phase and readiness for manufacturing.

Securing a reliable source of AI chips is crucial for ByteDance’s algorithms. In addition to TikTok, the company operates numerous popular apps, including “Doubao,” an AI chatbot service similar to ChatGPT. The report further suggests that ByteDance stockpiled a significant number of NVIDIA chips, including A100, H100, A800, and H800, ahead of the initial round of U.S. sanctions. In 2023, ByteDance allocated USD 2 billion for purchasing NVIDIA chips.

Per another previous report from Reuters, it indicated that in response to U.S. sanctions, some Chinese AI chip manufacturers decided to downgrade their self-designed processors to avoid being cut off from TSMC’s foundry services. Reportedly, MetaX and Enflame entrusted downgraded chip design schematics to TSMC late last year to comply with U.S. regulations. These two leading Chinese AI chipmakers had previously claimed that their chips could rival NVIDIA’s GPUs in performance.

The downgraded AI chips designed by NVIDIA specifically for the Chinese market, including the most advanced model “H20,” reportedly received a lackluster initial market response. Due to abundant supply and forced price reductions, currently, the H20 is reportedly cheaper than competing chips from Huawei. The chip is reportedly to be sold at approximately 100,000 yuan per unit, while Huawei 910B sold at over 120,000 yuan per unit.

A previous report by The Information also indicated that major tech companies such as Alibaba, Baidu, ByteDance, and Tencent have been instructed to reduce their spending on foreign-made chips like NVIDIA’s.

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• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei

(Photo credit: Broadcom)