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)

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)

While surrounded by concerns raised by the USD 1.6 billion net loss in Q2 and the large-scale layoff plan, Intel has finally shared some good news. It announced on August 6^th that its next-gen 18A process has achieved a major milestone, and will start production in 2025.

The semiconductor giant states that the milestone has been achieved less than two quarters after tape-out, and confirms that two of its next-gen products, Panther Lake (AI PC client processor) and Clearwater Forest (server processor), will be fabricated with the node. The first external customer is expected to tape out on Intel 18A in the first half of next year, according to its press release.

The company also gives an advance notice on the progress of the aforementioned two processors. According to Intel, Clearwater Forest will mark the industry’s first mass-produced, high-performance solution combining RibbonFET, PowerVia, and Foveros Direct 3D for higher density and power handling. In addition, Panther Lake DDR memory performance is already running at target frequency.

Earlier in July, Intel released the 18A Process Design Kit (PDK) 1.0, design tools that enable foundry customers to harness the capabilities of RibbonFET gate-all-around transistor architecture and PowerVia backside power delivery in their designs on Intel 18A.

It is worth noting that Intel’s 18A is the company’s second fabrication technology, following 20A, to employ RibbonFET and PowerVia. A report by Tom’s Hardware notes that compared to Intel’s 2nm-class node, 18A offers an optimized RibbonFET design and additional enhancements, resulting in a 10% increase in performance per watt, which makes it especially fitted for data center-class products that require significant power.

The report also notes that Intel 18A is a process that Intel Foundry’s potential customers are very interested in, as some believed it to be more competitive than TSMC’s 3nm and 2nm-class offerings, which are expected to be available between 2024 and 2025.

On the other hand, TSMC, the global foundry leader, said earlier in the earnings call that it’s 2nm (N2) node is progressing well, and will begin mass production in 2025. The company is also on track to launch the N2P and A16 processes in the second half of 2026.

Read more

• [News] NVIDIA’s Backup Plan? Intel Reportedly Secures Packaging Orders from the AI Giant
• [News] Intel’s Earnings Fall Short, Cutting Over 15% of Workforce

(Photo credit: Intel)

Per a report from Reuters, Intel is said to be receiving the second new High-NA EUV equipment from ASML, costing EUR 350 million (~USD 383 million).

According to Intel’s earnings call on August 1, CEO Pat Gelsinger stated that Intel began receiving the first large equipment in December, and the installation process would take several months, which is expected to bring about a new generation of more powerful computer chip.

Gelsinger noted during the call that the second High-NA equipment is about to enter the facility in Oregon. Due to the poor stock performance following Intel’s earnings report, this statement did not attract much attention.

Previously, a senior executive from ASML once mentioned in July that the company already begun shipping the second High NA equipment to an unnamed customer, but would only record revenue for the first set this year. However, there are still some uncertainties regarding when the customer will adopt this equipment.

ASML has already received orders for over ten High-NA equipment from customers including TSMC, Samsung, Intel, Micron, and SK Hynix. Intel plans to use this technology for mass production by 2027, and TSMC is also set to receive the equipment this year, the time to put into production has not been disclosed, though.

ASML executive Christophe Fouquet stated on July 17 that DRAM memory chip manufacturers, which could refer to Samsung, SK Hynix, or Micron, are expected to start using High-NA equipment by 2025 or 2026.

Read more

• [News] ASML Slightly Beats Q2 Earnings Forecasts, with Full-Year Outlook Unchanged
• [News] Price for ASML’s Hyper-NA EUV Rumored to Double, Causing TSMC, Samsung and Intel to Hesitate

(Photo credit: ASML)

According to a report from Commercial Times, despite ongoing turbulence in the semiconductor industry, including Intel’s capital expenditure cuts and reported bottlenecks in NVIDIA’s B-series GPU, TSMC’s leading position in the industry may remain unshaken.

The sources cited in the report note that the issues with the B-series GPU, stemming from mask replacements to enhance chip stability, have been quickly resolved by the foundry.

The sources cited in the report believe that NVIDIA’s Blackwell started production at the end of the second quarter. To improve stability, NVIDIA replaced some masks, causing about a two-week production delay. The redesign has been completed, and large-scale production will proceed in the fourth quarter.

The same source do not believe it will affect TSMC’s CoWoS revenue, as the idle two-week capacity will be filled by the equally strong demand for H100.

On the other hand, Intel’s CPUs are reportedly facing issues as well. As per the company’s statement, the 13th and 14th generation Intel Core desktop systems are experiencing instability due to a microcode algorithm resulting in incorrect voltage requests to the processor.

Although the company has provided a two-year warranty extension and real-time updates to fix the errors, concerns about design flaws and manufacturing process issues still exist.

In 2024, Intel’s new platforms, Arrow Lake and Lunar Lake, will have their CPU tiles produced using TSMC’s 3nm process, accelerating the production schedule. Lunar Lake and Arrow Lake are expected to ship officially by the end of the third and fourth quarters of this year, respectively.

With the support of the 3nm technology, these measures are expected to alleviate market concerns.

The sources cited by Commercial Times estimate that TSMC’s competitor Intel has begun to strictly cut costs, reducing capital expenditures by 20%. This could affect key capabilities in mass production and defect resolution in wafer manufacturing.

Therefore, sources cited by the report believe that TSMC’s leading position remains difficult to challenge in the short term.

Read more

• [News] TSMC Pushes for FOPLP Mass Production by 2027, Reportedly Eyeing on Innolux’s Plant
• [News] TSMC Reportedly Forms a Team on FOPLP Development, with Mini Line on the Road

(Photo credit: TSMC)