Recent reports reveal that German automotive parts supplier ZF Friedrichshafen AG (ZF) plans to withdraw from a 3 billion USD joint project with U.S. chipmaker Wolfspeed to build the world’s largest 8-inch SiC chip manufacturing plant. Industry speculation suggests the reasons behind ZF’s decision are Wolfspeed’s financial struggles, repeated construction delays, and the failure of the European Union to deliver on promised subsidies.

Delays in the Construction of Wolfspeed’s 8-inch SiC Chip Factory

In January 2023, Wolfspeed and ZF announced plans to build the world’s largest and most advanced 8-inch SiC device manufacturing facility in Saarland, Germany. ZF initially intended to invest 185 million USD in the project. The factory was expected to be co-owned by ZF and Wolfspeed, but the success of the project was contingent on the EU’s subsidy commitment, which was expected to cover a quarter of the total investment.

However, in June 2023, Wolfspeed announced a delay in the plant’s construction. A company spokesperson cited the weak electric vehicle markets in both Europe and the U.S. as reasons for reducing capital expenditures. Wolfspeed said it would prioritize increasing production at its New York facility instead. Although the German project has not been canceled entirely, Wolfspeed is still seeking additional financing. The company now expects to start construction in mid-2025, two years later than originally planned.

In October, Wolfspeed announced on its website that it had signed a non-binding preliminary term sheet with the U.S. Department of Commerce. Under the CHIPS and Science Act, the Department of Commerce plans to provide Wolfspeed with up to 750 million USD in funding to support the construction of the John Palmour SiC manufacturing facility in Siler City, North Carolina, and to expand Wolfspeed’s existing plant in Marcy, New York.

Additionally, an investment consortium led by Apollo, The Baupost Group, Fidelity Management & Research Company, and Capital Group has agreed to provide 750 million USD in new financing to Wolfspeed. This funding is expected to alleviate much of the financial pressure currently facing the company.

Delayed EU Chip Act Subsidies?

While the U.S. CHIPS Act subsidies have gradually started to materialize, the EU’s 2020 European Chips Act has faced significant roadblocks in securing funding. According to Reuters, the EU’s subsidy promises attracted several major companies, including Wolfspeed, Intel, TSMC, Infineon, STMicroelectronics, and GlobalFoundries, to announce plans for new plants in Europe. However, very few of these projects have actually broken ground.

In addition to the delays in Wolfspeed’s German plant, Intel has also postponed construction of its plant in Magdeburg, Germany. On September 16, Intel’s CEO informed employees that the chip factory’s construction would be delayed by two years. Over a year ago, Intel secured a 10 billion EUR subsidy commitment from the German government. Intel had initially planned to invest over 30 billion EUR to build two cutting-edge chip factories in Germany, marking the largest foreign investment in the country’s history. However, in August 2023, the German government expressed concerns about Intel’s project in Magdeburg and devised an emergency “Plan B” in case Intel pulls out.

Industry experts suggest that both Wolfspeed and Intel are under significant financial pressure, and the delay in receiving German government subsidies has only exacerbated their operational risks. Among the announced projects, even fewer have received formal EU approval. Infineon, for example, began construction on a 5 billion EUR power chip plant in Dresden in 2023, expecting completion by 2026, though it has not yet received EU funding approval. Similarly, onsemi’s 2 billion USD investment to expand its SiC operations in the Czech Republic is still awaiting EU approval.

(Photo credit: Intel)

What if the struggling giant, Intel, has not be left out of the AI wave? What if it is able to team up with NVIDIA, the world’s second-largest company by market capital currently? Surprisingly, it used to have the chance. According to a report from the New York Times, former Intel CEO Paul Otellini proposed to acquire NVIDIA for USD 20 billion in 2005, but the board ultimately rejected the idea.

The New York Times report, citing sources familiar with Intel’s boardroom discussions, noted that even at that time some executives believed NVIDIA’s designs could become essential for data centers, which has proven true with the recent boom in AI.

However, the plan to acquire NVIDIA did not materialize, as it would have been Intel’s most expensive acquisition, and there were concerns regarding the purchase.

The report noted that after the board rejected the idea of acquiring NVIDIA, Intel opted to pursue an internal graphics project called Larrabee, led by Pat Gelsinger, Intel’s current CEO. Larrabee was a hybrid that combined graphics with Intel’s PC-style chip design. However, Intel discontinued the development of Larrabee in 2009

In subsequent years, after missing the chance to acquire NVIDIA, Intel purchased other AI companies, including Nervana Systems and Movidius in 2016, as well as Habana Labs in 2019, according to the report. However, none of these acquisitions have come close to matching NVIDIA, which now has a market cap exceeding USD 3 trillion.

The missed opportunity to acquire NVIDIA is not the only instance where Intel struggled to make the right decision in the AI market. According to a Reuters report citing sources, Intel had the chance to invest in OpenAI several years ago, but the investment was ultimately rejected by company executives.

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, according to the report in the Reuters.

Recently, according to a report from Wccftech, Intel has stepped away from competing with NVIDIA in AI computing power and the market of training large-scale AI models. Instead, the company is now entering a less saturated segment of the AI market, focusing on its new cost-effective AI accelerator, Gaudi 3.

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• [News] Intel Reportedly Rejected OpenAI Investment, Missing Out on AI Opportunity
• [News] Intel Steps Back from AI Race with NVIDIA, Shifts Focus to Cost-Effective Solutions with Gaudi 3

(Photo credit: Intel)

According to a report by the Maeil Business Newspaper, U.S. semiconductor giant Intel has reached out to Samsung Electronics to explore the possibility of forming a foundry alliance.

Citing sources in the semiconductor industry, the report reveals that a senior Intel executive recently requested a high-level meeting between the two companies. Intel’s CEO, Pat Gelsinger, is reportedly seeking a direct meeting with Samsung Electronics Chairman Lee Jae-yong to discuss comprehensive cooperation plans for their foundry divisions.

Since the establishment of Intel Foundry Services (IFS) in 2021, Intel has secured contracts with Cisco and AWS but has struggled to attract larger-scale clients. Samsung Electronics, which launched its foundry business in 2017, has gained some traction with customers but still trails far behind TSMC.

According to data from TrendForce, in the second quarter of this year, TSMC and Samsung held 62.3% and 11.5% market shares in the foundry sector, respectively.

The report also highlights that if an Intel-Samsung foundry alliance materializes, the two companies could collaborate on various fronts, including process technology exchanges, shared production equipment, and joint research and development (R&D) efforts.

Samsung Electronics is known for its advanced 3nm GAA (gate-all-around) technology, which enhances performance and power efficiency in fine processes,. Meanwhile, Intel possesses technologies such as Foveros, which combines chips produced using different processes into a single package, and PowerVia, which improves power efficiency. These combined strengths could be crucial in developing high-performance, low-power designs for AI, data centers, and mobile application processors.

Additionally, Samsung operates manufacturing facilities in the U.S., South Korea, and China, while Intel has facilities in the U.S., Ireland, and Israel, enabling potential collaboration or equipment sharing when needed. The report also notes that with tightening controls on advanced semiconductor exports, particularly from the U.S. and EU, regional production capabilities are becoming increasingly important.

However, both Samsung and Intel declined to confirm whether a top-level meeting will take place, according to the Maeil Business Newspaper.

(Photo credit: Intel)

According to a report from Wccftech, Intel has stepped away from competing with NVIDIA in AI computing power and the market of training large-scale AI models. Instead, the company is now entering a less saturated segment of the AI market, focusing on its new cost-effective AI accelerator, Gaudi 3.

Intel aims to present Gaudi 3 as the product with the best price-to-performance ratio, though Gaudi 3 is “not catching up” to NVIDIA’s latest GPU from a head-to-head performance standpoint, citing the words from Anil Nanduri, head of Intel’s AI acceleration office, during an interview with CRN.

Nevertheless, Nanduri highlights that the Gaudi 3 accelerator chip is ideal for supporting cost-effective systems that run task-based and open-source models for enterprises.

On the other hand, according to the report from Wccftech, Intel claims that following the introduction of “reasoning-focused” LLM models, its Gaudi 3 lineup delivers performance comparable to NVIDIA’s well-known H100 AI accelerator, especially in inference workloads.

According to the report from CRN, Intel claims that Gaudi 3 is about 9% faster than H100 in the Llama 3 model and 80% more cost-effective; in the Llama 2 model, Gaudi 3 is 19% faster and the price-performance difference is up to 2 times.

However, when evaluated in terms of floating-point operations, the Gaudi 3 AI GPUs fall short compared to NVIDIA’s options, indicating that high-end AI performance isn’t currently Intel’s strength.

Therefore, according to the report from Wccftech, Intel has no plans to compete directly with NVIDIA’s GPUs. Furthermore, there is another rising competitor in the AI computing sector: AMD.

Regarding the reason behind Intel’s choice, the company believes that smaller LLM models will see increased acceptance as the initial excitement around AI and the buzz surrounding large-scale data centers diminish, as indicated by the report in Wccftech.

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• [News] Intel May Cut Gaudi 3’s 2025 Shipment Target by 30%, Raising Concerns for TSMC, ASE, and Alchip

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Rumors have been circulating for a while that Intel is considering to sell off its FPGA unit Altera, and later subsided as Altera reiterated that it still eyes an IPO in 2026. However, Intel’s stance of regarding Altera to be a critical part of its core business seems to waver, according to the latest report by CNBC.

Citing sources familiar with the situation, CNBC notes that Intel is seeking to sell at least a minority stake in Altera, a move that could generate several billion dollars in cash for the struggling semiconductor giant.

This week, the company was said to be reaching out to various private equity and strategic investors regarding Altera, according to the sources cited by the report. It is worth noting that Intel has indicated that acquiring a majority stake in the business is also a possibility.

A month ago, CEO Pat Gelsinger mentioned in a press release that Intel is working to carefully manage its cash as the company meaningfully improves its balance sheet and liquidity.

The efforts, in his own words, include selling part of Intel’s stake in Altera, something has been talked about publicly several times and has long been part of its strategy to generate proceeds for Intel on Altera’s path to an IPO.

According to CNBC, Intel aims to strike a deal that values Altera at around USD 17 billion, an amount approximately equivalent to the USD 16.7 billion Intel paid to acquire Altera in 2015.

An Intel representative declined to comment on the matter, according to CNBC.

Qualcomm, another tech giant who has expressed its interest in acquiring Intel, is said to be investigating the possibility of acquiring parts of Intel’s design business to enhance its product portfolio, but the decision might not be made after the U.S. presidential election, according to Bloomberg. Whether the development of the Altera sale would cause an impact to the potential deal remains to be seen.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Altera CEO Denies Rumors for Sale, Claiming IPO Plan by 2026 Remains Unchanged

(Photo credit: Intel)