At TSMC’s third-quarter earnings call on the 17th, Chairman C.C. Wei was asked about potential interest in Intel’s spin-off of its IDM business. According to a report from TechNews, Wei responded with two decisive “No’s,” indicating that TSMC has no interest in acquiring the businesses.

C.C. Wei noted that a California-based IDM has been a strong customer for TSMC, consistently placing sizable orders. While Wei did not explicitly name the company, industry observers widely believe the client to be Intel.

During the call, analysts also raised questions about whether the current AI surge might be a bubble and how TSMC views the AI boom.

Wei confidently stated, “AI is real,” and noted that many large-scale cloud customers and AI innovators are collaborating with TSMC. He also mentioned that TSMC utilizes AI and machine learning (ML) within its own facilities to enhance capacity, add value, and improve yield rates.

Wei explained that for TSMC, even a 1 percent improvement in efficiency through AI could result in a revenue increase of NT$1 billion. He also noted that TSMC is not the only company benefiting from AI, and many other businesses are already leveraging AI to boost productivity.

Wei further stated that the demand for AI is just beginning. He referenced a key customer who described the current demand as crazy and noted that it is only starting, with expectations that this trend will continue for several years. This was widely seen as aligning with earlier remarks from NVIDIA CEO Jensen Huang regarding the high demand for chips based on the Blackwell architecture.

(Photo credit: TSMC)

Intel, having given a heads-up that it plans to let go 15,000 employees by year-end, has reportedly fired the first shot. According to Tom’s Hardware, the struggling giant has started issuing formal layoff notices to 1,300 employees at its Gordon Moore Park facility in Oregon.

The report notes that those who received the message would stay until next month before their positions are terminated.

Local media The Oregonian points out that the move affects about one in every 18 Intel employees in Oregon, where the company is the largest private employer. To be more specific, the layoffs will impact more than 5% of Intel’s workforce in Oregon, marking one of the largest mass layoffs in the state’s history.

It is worth noting that these figures don’t account for employees who accepted voluntary severance, buyouts, or early retirement packages, according to Tom’s Hardware. With Intel’s Oregon workforce standing at around 22,000, a 15% reduction would bring the total down to fewer than 20,000, the report says.

And more bad news may be around the corner. The report by Tom’s Hardware also indicates that the 1,300 layoffs represent less than half of Intel’s overall reduction target. Therefore, if Intel applies these cuts evenly across its workforce, the total number of employees leaving, whether voluntary or involuntary, could exceed 3,000.

Moreover, Intel’s Sales and Marketing Group (SMG) may be another hardest-hitting sector, as it is reportedly facing a 35% reduction in costs, according to Tom’s Hardware.

After its August earnings call, at which Intel reported a net loss of USD 1.6 billion for Q2, 2024, the company has been grappling to get out of the rut by a series of initiatives, including plans to cut approximately 15% of its workforce and suspend dividend payments starting in Q4, which are parts of Intel’s broader effort to implement a USD 10 billion cost reduction program.

In addition to the aforementioned efforts, Intel also tries to secure more external funding. The company is expected to receive an USD 8.5 billion direct funding grant from Washington’s CHIPS Act by the end of the year. Moreover, Intel confirmed a separate USD 3 billion award for its Secure Enclave project, which will enable the company to supply its advanced 18A chips, according to its press release.

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• [News] Intel Employees Prepare for Layoff Notices as Cuts Enter Peak Phase This Week

(Photo credit: Intel)

On October 15th, Intel and AMD announced the formation of an x86 Ecosystem Advisory Group. According to the press release, these two tech giants established this group to enhance architectural interoperability and simplify software development for the x86 system.

Other members of this x86 Ecosystem Advisory group include industry leaders from Broadcom, Dell, Google, Hewlett Packard Enterprise, HP Inc., Lenovo, Meta, Microsoft, Oracle, and Red Hat.

The press release stated that for over forty years, x86 has served as the foundation of modern computing, establishing itself as the preferred architecture in data centers and PCs worldwide.

According to a report from Forbes, x86 has long been the dominant architecture in both datacenters and PCs, while Arm has a strong presence in smartphones and IoT. However, Arm has recently started to encroach on x86’s territory, as seen in its increasing adoption within hyperscale datacenters and its emerging role in Microsoft’s Copilot+ PC initiative.

A report from Reuters stated that Intel and AMD have formed this group in response to the challenges posed by the rise of Arm Holdings, which is increasingly adopted by tech giants including Apple, Qualcomm, Amazon, Microsoft, and Alphabet.

According to the report from Reuters, one of the main reason behind Arm’s success is that Arm has indicated in its contracts that all Arm chips should be able to run all Arm software, regardless of who made the chip.

The report noted that, in contrast, while Intel and AMD use the same foundational x86 technology in their chips, software may require adjustments to function properly across their products.

To address this issue, one of the main objectives of the x86 Ecosystem Advisory Group is to identify “new ways to expand the x86 ecosystem by enabling compatibility across platforms,” as stated in the press release.

Intel and AMD have a rich history of both competition and collaboration within the industry, which makes this partnership quite interesting. In the past decade, Intel’s dominance in the laptop processors has gradually declined. In some sectors, AMD even caught up and overtook Intel’s throne.

Amid Intel’s efforts for restructuring, previous rumors even indicate that AMD could be a potential buyer of Intel’s Field Programmable Gate Array (FPGA) unit Altera.

On the other hand, the two companies’  joint efforts have played a crucial role in developing key technologies such as PCI, PCIe, and the Advanced Configuration and Power Interface (ACPI).

Additionally, both companies have been crucial in the development of USB, an essential connectivity standard for all computers, regardless of the processor.

This advisory group aims to elevate their collaborative efforts further, benefiting the entire computing ecosystem and serving as a catalyst for product innovation.

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• [News] AMD Could Emerge as a Prospective Buyer for Intel’s Potential Sale of Altera
• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?

(Photo credit: Intel)

In September, Qualcomm was rumored to be investigating the possibility of acquiring parts of Intel’s design business to enhance its product portfolio, as it is reportedly interested in Intel’s PC business. Now a latest report by Bloomberg indicates that the smartphone chip giant might wait until after the US presidential election in November to make its decision.

Citing sources familiar with the situation, the report notes that Qualcomm hopes to seek greater clarity on the incoming president’s policies, as the new administration could significantly affect the antitrust environment and US-China relations.

The sources further note that Qualcomm may even choose to wait until after the new US president’s inauguration in January, 2025, to determine its next move regarding a potential Intel transaction due to the complexities involved.

The merger of the two tech giants would inevitably attract significant scrutiny from antitrust regulators globally, which includes China, as it is a crucial market for both, Bloomberg suggests. Therefore, it is understood that Qualcomm informally consulted with antitrust regulators in China to assess their position on any possible deal in September, though no response has been received, according to the report.

On the other hand, in the U.S. market, as Intel plays a central role in Washington’s strategy for revitalizing domestic chip manufacturing, political support would be essential for any potential deal, Bloomberg notes.

The report indicates that Intel is set to receive the largest share of funding from the 2022 Chips and Science Act, provided it proceeds with its factory construction plans. Qualcomm has been in discussions with US regulators and believes that an all-American merger could alleviate any concerns, according to sources familiar with the situation cited by the report.

It is also worth noting that submitting a bid after the election could provide Qualcomm with additional advantages, as it can wait until Intel to release its third-quarter earnings later this month, Bloomberg says. If Intel’s stock price continues to slide after its upcoming financial announcement, Qualcomm could benefit by getting a bargain.

According to the analysts’ projection quoted by Bloomberg, Intel is likely to suffer another net loss of over USD 1 billion this time around. The struggling chipmaking company reported a USD 1.6 billion net loss for the April to June quarter.

Representatives from Qualcomm and Intel declined to comment, and the State Administration for Market Regulation in China did not respond to requests for feedback, according to Bloomberg.

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• [News] A Quick Roundup of Intel’s Five Core Businesses: Key Moves to Watch Next
• [News] Arm’s Request of Acquiring Intel’s Product Division Has Been Reportedly Rejected

(Photo credit: Qualcomm)

As ASML accidentally released its financial report nearly a day ahead of its schedule due to a “technical error,” the Dutch semiconductor giant’s Q3 performance and its forecast for 2025 have also startled all by reporting orders at half of what the market predicted, raising concerns on the lackluster outlook of semiconductors despite strong demand for AI-related chips, according to the reports by Bloomberg and Reuters.

The result is regarded as a warning signal, as it might imply the weak performance for ASML’s major clients, such as tech heavyweights Intel and Samsung, the reports note. TSMC, another of ASML’s client, will release its Q3 earnings results tomorrow.

ASML shares plummeted 16%, marking their largest drop since June, 1998, the reports by Reuters and Bloomberg state.

Lackluster Q3 Bookings and 2025 Outlook as Customers Remain Cautious

ASML, known for producing the world’s most advanced chipmaking equipment such as High-NA EUV machines, posted a net profit of 2.1 billion euros on revenue of 7.5 billion euros (USD 8.2 billion) in Q3. However, it reported third-quarter bookings of €2.6 billion (USD 2.8 billion), falling short of the average estimate of €5.39 billion from analysts surveyed, according to Bloomberg.

According to its press release, ASML revised its 2025 total net sales forecast to a range of €30 billion to €35 billion, down from its previous estimate of up to €40 billion.

For next year, the company anticipates a gross margin between 51% and 53%, lower than the prior projection of 54% to 56%, mainly due to delays in the rollout of its high-end extreme ultraviolet machines.

According to a statement by ASML Chief Executive Officer Christophe Fouquet cited by the reports, the recovery of the semiconductor industry is progressing more slowly than anticipated, and this cautious outlook is expected to persist into 2025, leading to more conservative behavior from customers.

Key Clients in Trouble while Chip War Remains an Issue

It is worth noting that according to Reuters, ASML indicates that despite strong demand for AI-related chips, other segments of the semiconductor market are facing prolonged weakness. This has caused logic chip manufacturers to postpone orders, while memory chip companies are only planning “limited” expansions in new capacity.

According to a report from South Korean media outlet Business Korea, Samsung is said to mull to reduce its procurement of ASML’s next-generation EUV lithography equipment. Reportedly, Samsung initially planned to purchase more than three units of the next versions, EXE:5200, EXE:5400, and EXE:5600, over the next ten years. However, the company has now decided to introduce only the EXE:5200.

On the other hand, another struggling semiconductor giant, Intel, has secured five units of High-NA EUV machines from ASML to ensure its progress with the 2nm node, according to a previous report by TheElec. However, as the company has been doing its best to reduce expenses through restructuring and delaying overseas expansion, whether it will stick to the original purchase plan remains to be seen.

The report by Bloomberg also warns that while China was ASML’s largest market, the demand from China may slow in the coming periods, as Washington’s ongoing chip war with Beijing remains a persistent long-term concern for ASML.

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• [News] Intel Completes Assembly of Second High-NA EUV System, ASML Confirms
• [News] Samsung Reportedly Reduces Procurement of ASML’s Next-Generation EUV Lithography Equipment

(Photo credit: ASML)