Intel revealed on the 2nd that its manufacturing business’s operational losses deepened, dealing a significant blow to Intel’s attempts to surpass TSMC and regain its leading position.

According to Reuters, Intel stated that its manufacturing division incurred a $7 billion loss in 2023, a more severe downturn than the $5.2 billion loss in the previous year, with revenues reaching $18.9 billion, a 31% decrease from the previous year.

In the same report, Intel CEO Pat Gelsinger admitted that 2024 would be the year of worst operating losses for the company’s wafer fabrication business, with the break even expected by 2027.

The primary causes for the losses were attributed to bad decisions, including opposition to using ASML EUV equipment a year ago. The cost of this equipment could exceed $150 million but is more cost-effective than earlier chip manufacturing equipment.

Gelsinger believes that due to these mistakes, Intel has outsourced approximately 30% of its wafer production to external contract manufacturers like TSMC, with a goal to reduce this share to about 20%.

Intel plans to invest $100 billion in constructing or expanding chip factories across four states in the United States and convincing other companies to use Intel’s manufacturing services. Consequently, Intel has begun segregating its wafer foundry business into an independent division and financials, heavily investing to catch up with TSMC and Samsung.

According to TrendForce’s previous report on the fourth quarter of 2023, global semiconductor foundry revenue rankings showed that Intel Foundry Services (IFS), which ranked ninth globally in the third quarter of 2023, was pushed out of the top ten by PSMC and Nexchip due to factors such as the transition between old and new CPU generations and lackluster inventory momentum. At the same time, the top three semiconductor foundries globally were TSMC, Samsung, and GlobalFoundries.

(Photo credit: Intel)

Amid the overwhelming wave of Artificial Intelligence, the importance of advanced process chips is becoming increasingly prominent. Currently, the 3nm process is the most advanced node in the industry. Meanwhile, manufacturers such as TSMC, Samsung, Intel, and Rapidus are actively promoting the construction of 2nm wafer fabs. TSMC and Samsung previously planned to mass-produce 2nm chips in 2025, while Rapidus to begin trial production in 2025.

2nm Wafer Fabs to Complete Construction as Soon as this Year?

Recently, the Semiconductor Equipment and Materials International (SEMI) announced that it is expected that both TSMC and Intel will potentially complete the construction of 2nm wafer fabs by the end of this year.

Intel is anticipated to be the first to achieve commercialization of 2nm chips. The Intel PC CPU Arrow Lake product will utilize the 2nm process node. TSMC’s 2nm process is expected to be applied in Apple’s iPhone AP chips. Subsequently, TSMC’s 2nm capacity will soar up.

According to a report from Commercial Times the installation of equipment for TSMC’s 2nm process is accelerating. TSMC’s Fab20 P1 plant in Hsinchu, Baoshan is scheduled to install equipment in April this year, with pilot production expected to commence in 2H24 and small-scale production in 2Q25.

As for Intel, ASML already delivered the world’s first High Numerical Aperture (NA) EUV EXE:5200 to Intel in late 2023, supporting the latter in producing 2nm chips. Later, Intel kicked-start the calibration of lithography machine, which has been well on track.

Samsung and Rapidus all Set to Move

In terms of Samsung, its previously announced technology roadmap indicates that it will first mass-produce 2nm process chips for mobile terminals starting in 2025, followed by high-performance computing (HPC) products in 2026. It plans to expand to automotive chips by 2027.

Rapidus is setting up a 2nm chip fab in Chitose City, Hokkaido, Japan. Its pilot production line is scheduled to start operation in April 2025, aiming to commence mass production in 2027.

Recently, it’s reported that in order to promote the development of advanced wafer fabs in Japan, several Japanese manufacturers will supply products to Rapidus. Among them, Dai Nippon Printing (DNP) will begin mass production of masks for 2nm chips at its Fukuoka plant and other operations in Japan in 2027, which will be provided to Rapidus.

In addition to DNP, Japanese company TOPPAN Holdings is also collaborating with IBM to develop masks for 2nm chips and achieve mass production by 2026, and Rapidus is reportedly the purchaser. Moreover, companies like Tokyo Ohka Kogyo (TOK), JSR, Shin-Etsu Chemical are also expected to be the suppliers of Rapidus.

1nm Chip Plans Brought to Light

Following 2nm, 1nm chip will be the next target for wafer fabs. In light of manufacturers’ plans, the industry is expected to see mass production of 1nm-level chips from 2027 to 2030.

TSMC plans to reach the A14 node (1.4nm) in 2027 and the A10 node (1nm) in 2030. Recent reports from Economic Daily News indicated that TSMC intends to establish a factory in the Science Park of Taibao City, Chiayi County in central Taiwan to produce 1nm chips.

Samsung anticipates to launch the 1.4nm process by late 2027. It is reported that Samsung’s SF1.4 (1.4 nm) process can increase the number of nanosheets from 3 to 4, which is expected to significantly improve performance and power consumption.

Intel’s latest foundry roadmap shows that the Intel 14A (1.4nm-level) node will put into production in 2026, and Intel 10A (1nm-level) will start development or production in late 2027.

Contract chip manufacturer United Microelectronics Corp has partnered with Intel to develop a 12-nanometer technology platform and will commence production at three Intel facilities in Arizona, USA. According to a report by Nikkei, mass production for chips destined for communication and other applications is slated to begin in 2027

During an interview at the Intel IFS Direct Connect event in February, Jason Wang, Co-President of UMC, stated that both UMC and Intel are pioneering innovative collaboration models. They aim to provide customers with foundry services with competitive pricing through vertical specialization. The two companies will leverage complementary advantages to accelerate the development timeline and expand their global presence.

The foundry market is generally divided into advanced chips and mature chips. Advanced chips, which constitute the brains of smartphones and other devices, are predominantly led by TSMC and Samsung Electronics.

In the realm of mature chips, around 10 companies from Taiwan, China, South Korea, and the United States are competing for the demands of telecommunications equipment, Vehicular communication systems, and other technology manufacturers.

Intel is changing its vertically integrated business model to compete with TSMC and Samsung in contract manufacturing demands.

In March of this year, the US government announced that Intel would receive up to USD 8.5 billion in subsidies for the development of advanced chips. By collaborating with UMC on mature chips, Intel may focus more resources on cutting-edge technologies like 1.4nm.

For UMC, partnering with Intel enables it to mass-produce chips that are more advanced than its mainstream 22nm to 28nm products. Obtaining production facilities in the United States will also help the company win North American clients, as revenue from this region currently accounts for less than 30% of its total.

TSMC is also constructing a semiconductor plant in Arizona, utilizing US assistance to produce advanced 4nm chips. In contrast, the collaboration between UMC and Intel will focus on relatively mature chips.

UMC has long been one of the pillars of the semiconductor industry in Taiwan. Established in 1980, seven years before TSMC, the company has been vying for the position of industry leader until the 2000s.

During the 2010s, UMC lagged behind TSMC in advanced chip development, as the latter made significant investments in the semiconductor market following the global financial crisis. Since then, UMC has reportedly put more emphasis on mature chips.

The company is currently at a turning point. Benefiting from the global chip shortage, its performance continued to grow from 2020 to 2022. However, as of December 2023, annual revenue declined by 20% to 222.5 billion New Taiwan dollars ($6.9 billion), marking the first decrease in four years. This is approximately one-tenth of TSMC’s revenue.

UMC’s downturn in 2023 also signifies an intensification in mature process technologies, especially as Chinese semiconductor enterprises’ mature process technologies and equipment remain unaffected by US export restrictions. In an effort to overcome US restrictions, China is heavily investing in mature process.

Per data from TrendForce, China’s share of mature chip production at 28nm and above is expected to increase from the current 31% to 39% by 2027, as production volumes grow.

Joanne Chiao stated that semiconductors for applications such as general sensors and display controllers are expected to face fierce price competition.

On the other hand, UMC continues to face competition from Taiwanese foundries. TSMC plans to produce mature chips at a new plant in Japan by the end of 2024 and at a plant in Germany by the end of 2027. With subsidies from the Japanese and German governments, TSMC will form joint ventures with buyer customers to ensure stable production capacity.

Powerchip Semiconductor Manufacturing Corporation (PSMC) announced at the end of February its plans to assist Tata Group in building a chip plant in India. PSMC stated that it would provide intellectual property for the project without investment, aiming to generate licensing revenue.

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(Photo credit: UMC)

According to wccftech, Intel’s new GPUs will come in two models, namely Battlemage-G10 (abbreviated as BMG-G10) and Battlemage-G21 (abbreviated as BMG-G21).

These two new GPUs from Intel were revealed in an internal document. According to the document, the BMG-G10, targeted at enthusiasts, is a GPU with a TDP of less than 225W, while the BMG-G21 is designed as a mid-range performance product with a maximum TDP not exceeding 150W.

As for specific parameters and performance, the enthusiast-grade BMG-G10 is expected to be equipped with up to 64 Xe2 cores, directly competing with NVIDIA’s RTX 4070. On the other hand, the mid-range BMG-G21 aims at the RTX 4060, both continuing to utilize TSMC’s 4nm manufacturing process.

Therefore, previous rumors suggesting that Intel had canceled the development of BMG-G10 and only retained the BMG-G21 with 40 Xe2 cores appear to be untrue. Moreover, the core count of BMG-G10 is larger than initially reported at 56 Xe2 cores, indicating it is poised to deliver even higher performance.

Recently, per a report from Reuters, Intel, Qualcomm, Google, and other major tech companies are teaming up to challenge NVIDIA’s market dominance and make inroads into the AI software sector. They are expected to look to steer developers away from NVIDIA’s CUDA software platform, a parallel computing platform tailored for GPU acceleration.

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(Photo credit: Intel)

With the rapid advancement of AI-powered PC chips, industry giants like Intel, AMD, and Qualcomm, alongside various brands, are optimistic about the inaugural year of AI PCs entering the market.

According to a report from Commercial Times, chip manufacturers are showcasing their AI PC chip solutions, with newcomer Qualcomm partnering with Google to launch Snapdragon X expected mid-year, while Intel leveraging both hardware and software resources.

Per the same report citing sources, laptop brands are beginning to plan AI PC-related products for the second half of the year. Recently, companies like Dell, Lenovo, and HP have held internal meetings with the Taiwan supply chain. In addition to contract manufacturers, IC design is also a key focus, with companies like MediaTek and Realtek being actively engaged.

Reportedly, each company currently has its own perspective on AI PC, with many opting to integrate AI accelerator chips. However, Microsoft and Intel have jointly defined AI PC as requiring NPU, CPU, and GPU, along with support for Microsoft’s Copilot. They are also incorporating a physical Copilot key directly on the keyboard and become the standard setters.

To adapt to significant changes in software and hardware, Intel is expanding its ecosystem. In addition to AI application software, they are incorporating Independent Hardware Vendors (IHVs) into their AI PC acceleration program.

This collaboration assists IHV partners in preparing, optimizing, and leveraging hardware opportunities in AI PC applications. Support is provided from the early stages of hardware solutions and platform development, offering numerous opportunities for IC design companies in Taiwan to enter Intel’s supply chain during the nascent stage of AI PC.

Reportedly, Qualcomm is rumored to maintain its partnership with Google as it ventures into the AI PC market this year with Snapdragon X Elite. Qualcomm and Google have previously collaborated closely in the realm of Android smartphones, with many devices equipped with Snapdragon chipsets already using Google software.

Intel estimates that by the end of this year, the market will introduce over 300 AI acceleration applications, further advancing its AI software framework and enhancing the developer ecosystem. Intel further predicts that by the end of 2025, there will be over 100 million PCs shipped with AI accelerators, indicating immense opportunities in the AI PC market. However, competition is fierce, and success in this market requires innovative products that are differentiated and meet user needs. With both Intel and Qualcomm unveiling unique strategies, the AI PC market is poised for significant developments.

For AI PC, TrendForce believes that due to the high costs of upgrading both software and hardware, early development will be focused on high-end business users and content creators. This targeted group has a strong demand for leveraging AI processing capabilities to improve productivity efficiency and can also benefit immediately from related applications, making them the first-generation primary users.

The emergence of AI PCs is not expected to necessarily stimulate additional PC purchase demand. Instead, most upgrades to AI PC devices will occur naturally as part of the business equipment replacement cycle projected for 2024.

Nevertheless, looking to the long term, the potential development of more diverse AI tools—along with a price reduction—may still lead to a higher adoption rate of consumer AI PCs.

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(Photo credit: Intel)