According to a report from South China Morning Post, Wang Tao, Executive Director, Chairman of the ICT Infrastructure Managing Board at Huawei, recently stated at the World Semiconductor Conference and Nanjing International Semiconductor Expo that Huawei’s advanced Ascend 910B AI chip achieves an efficiency of up to 80% compared to NVIDIA’s A100 when training large-scale language models. In terms of specific test performance, it surpasses NVIDIA’s A100 AI GPU by 20%.

Reportedly, leading Chinese companies such as Tencent Holdings and Baidu have also purchased the Ascend 910B chip for conference tasks, indicating substantial market adoption of the chip and encroaching on NVIDIA’s AI chip market share.

Huawei’s self-developed AI chip, the Ascend 910B, adopts the advanced Da Vinci architecture and supports various AI computing tasks such as deep learning and inference. The chip boasts computing capabilities of up to 320 TFLOPS in half-precision (FP16) and 640 TOPS in integer precision (INT8), all while consuming 310W of power.

Reportedly, it’s expected that Chinese tech giants may now be considering a shift towards local AI products, which could pose a challenge to NVIDIA. Currently, China accounts for 17% of NVIDIA’s revenue in the 2024 fiscal year, making the competition in the Chinese market increasingly fierce for NVIDIA.

According to a previous report from Reuters, NVIDIA, in response to the US ban on high-end chips, provided three chips specifically for the Chinese market, with the H20 chip receiving significant attention.

Hence, there are reports of a price reduction for the H20 chip to stimulate demand and address the intense competition from Huawei in the Chinese market. It’s reported that the price of the H20 chip is over 10% lower than Huawei’s Ascend 910B chip. 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.

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(Photo credit: Huawei)

The continuous increase in silicon content driven by AI servers, high-performance computing (HPC) applications, and the AI integration of high-end smartphones has led to a surge in demand for semiconductors. According to a report from the Economic Daily News, major companies such as Apple, Qualcomm, NVIDIA, and AMD are reportedly securing substantial production capacity for TSMC’s 3nm process family. This has resulted in a queue of clients stretching all the way to 2026.

TSMC has a consistent policy of not commenting on individual client information. Regarding whether the high demand for production capacity will lead to price increases to reflect its value, TSMC emphasizes that its pricing strategy is always strategically oriented rather than opportunistically driven. TSMC will continue to work closely with clients to provide value.

As per sources cited by the same report, TSMC is not a company that raises prices arbitrarily. Reflecting value does not equate directly to price increases, even though the company holds a leading edge in advanced process technology. There are various ways for TSMC to demonstrate value to its customers.

The members of TSMC’s 3nm family include N3, N3E, N3P, as well as N3X and N3A. As the existing N3 technology continues to be upgraded, N3E, which began mass production in the fourth quarter of last year, targets applications such as AI accelerators, high-end smartphones, and data centers. N3P is scheduled for mass production in the second half of this year and is expected to become mainstream for applications in mobile devices, consumer products, base stations, and networking through 2026. N3X and N3A are customized for high-performance computing and automotive clients.

Source: TSMC

Industry sources cited by Economic Daily News in the report believe that with clients rushing to book production capacity, TSMC’s 3nm family will continue to experience tight supply over the next two years. This does not yet include Intel’s outsourcing demand for CPUs.

Due to the fact that TSMC’s 3nm family production capacity has already been fully allocated by customers for this year and next, the company’s plan to triple the relevant capacity this year compared to last year is still insufficient. To ensure an uninterrupted supply for the next two years, TSMC has implemented several measures to expand its production capacity.

Previously, during an earnings call, the company announced that due to robust demand, its strategy includes converting some 5nm equipment to support 3nm production. Industry sources cited by the report also reveal that TSMC’s total 3nm family capacity is continuously increasing, with monthly production capacity expected to reach between 120,000 and 180,000 wafers.

Meanwhile, the sources cited by the Economic Daily News indicate that the main sources of orders for TSMC’s 3nm family include major clients such as Apple, Qualcomm, NVIDIA, and AMD. Apple is expected to launch the iPhone 16 series as early as September, which is anticipated to be the first iPhone with AI capabilities, potentially sparking a new wave of upgrades among Apple fans.

Source: TSMC

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(Photo credit: TSMC)

The New York Times reported on June 5th that the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) have reached an agreement, led by senior officials of both agencies, over the past week. The DOJ will investigate whether NVIDIA has violated antitrust laws, while the FTC will examine the conducts of OpenAI and Microsoft.

Reportedly, Jonathan Kanter, who is said to be the top antitrust official in the DOJ’s Antitrust Division, highlighted at an AI conference at Stanford University last week that AI’s reliance on massive amounts of data and computing power gives dominant companies a significant advantage. In a February interview, FTC Chair Lina Khan stated that the FTC aims to identify potential issues in the early stages of AI development.

As per Reuters’ report, Microsoft, OpenAI, NVIDIA, DOJ and FTC did not immediately respond to requests for comment outside regular business hours.

In a May interview with CNBC, Appian co-founder and CEO Matt Calkins stated that AI might not be a winner take all market. He suggested that if alliances could secure victory in the AI race, Google would already have won.

Per a report from Roll Call on May 15th, a bipartisan Senate AI working group led by Senate Majority Leader Chuck Schumer released an AI roadmap, calling for the federal government to invest at least USD 32 billion annually in non-defense-related AI systems.

In March, The Information reported that Microsoft does not want its hiring of Inflection AI’s two co-founders and the majority of its 70-member team to be perceived as an acquisition.

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(Photo credit: NVIDIA)

Amid tightening U.S. chip export controls to China, Shanghai-based AI chip companies, MetaX and Enflame, have rumored to downgrade chip designs to TSMC in late 2023 in order to comply with the U.S. export requirements, according to a report by Reuters on 5 June.

Regarding this rumor, TSMC declined to comment, Reuters stated.

In recent years, the U.S. has continuously introduced measures to limit China’s access to high-end chips, chip manufacturing equipment, and advanced processors.

MetaX and Enflame, which formerly claimed that their chips can rival NVIDIA’s GPUs, are recognized as “Little Giants,” a title given to startups with potential for development in key areas and valued by the Chinese government.

MetaX was founded in 2020 by former senior executives from AMD and has multiple R&D and wafer fab projects in China. Citing sources familiar with the matter, Reuters disclosed that the company reportedly developed a downgraded product, C280, in order to be manufactured by TSMC, while its inventory of its most advanced GPU, C500, was sold out earlier.

Enflame, established in 2018, counts Chinese tech giant Tencent among its backers and raised $2.7 billion last year. The company sells its products to state-owned enterprises and collaborates on projects with various local governments, Reuters reported.

In October last year, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced a new package of export control measures, and giving specific details on the chip specifications under restriction. For instance, any chip with a total processing performance of 4,800 or higher, or a performance density of 5.92 or more, is prohibited from being shipped to China.

For context, GPU giant NVIDIA’s A100 and the even more potent H100, were banned from export to China in late 2022. The less powerful A800 and H800 chips, tailored by NVIDIA for the Chinese market, were also subject to bans last October. According to a report by Asia Times, A800’s performance is approximately 70% of the A100’s.

(Photo credit: TSMC)

On June 5th, NVIDIA CEO Jensen Huang gave a congratulatory gift to TSMC’s new chairman C.C. Wei, emphasizing that TSMC’s stock price has been undervalued. He supports Wei’s value theory and will back TSMC in its wafer and CoWoS pricing.

As per a report from Commercial Times citing sources, it’s estimated that both parties will negotiate chip prices for next year, potentially boosting TSMC’s revenue and profit margins further.

Jensen Huang revealed that he is not particularly worried about geopolitical issues because Taiwan has a strong supply chain. To ensure annual advancements in computing power, NVIDIA is building complete systems and creating more value.

Huang further emphasized that TSMC is not just manufacturing wafers but also handling numerous supply chain issues. He agrees that the current pricing is too low and will support TSMC’s price increase actions.

Notably, according to a previous Commercial Times’ report, NVIDIA’s H200 and B100 are said to adopt TSMC’s 4-nanometer and 3-nanometer processes, respectively.

Industry sources cited by Commercial Times also noted that in NVIDIA’s most recent quarterly report, its gross margin reached 78.36%, significantly outperforming AMD’s 46.78% and even TSMC’s first-quarter margin of 53.07%, exceeding it by 25 percentage points. If TSMC raises prices for its advanced processes, NVIDIA’s gross margin will remain unaffected. However, this price increase will dilute the gross margins for other companies using TSMC’s advanced processes, including Apple, AMD, and Qualcomm. 

In response to long-term capacity planning, TSMC held a board meeting on June 5th and approved a capital budget of USD 17.356 billion to expand advanced process capacity, primarily to address long-term capacity planning and the burgeoning demand for AI.

Semiconductors are fundamental to driving AI, with advanced processes and packaging being crucial competitive factors. Last year, TSMC’s advanced packaging capacity was strained, with ODM and OEM companies waiting for supply. Although there has been some relief in the first quarter of this year, the market demand is still unmet.

TSMC has confirmed the strong demand, stating that even tripling the capacity from 5nm to 3nm processes is insufficient, necessitating further capacity expansion. Sources cited by Commercial Times estimate that by the end of this year, TSMC’s CoWoS monthly capacity could reach 45,000 to 50,000 wafers, while SoIC capacity could reach 5,000 to 6,000 wafers.

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(Photo credit: TSMC)