AMD has encountered resistance from the United States when attempting to sell a custom-designed AI chip to the Chinese market, according to Bloomberg citing sources.

The same source further revealed that AMD sought approval from the U.S. Department of Commerce to sell this AI chip to Chinese customers. The chip’s performance is lower than AMD’s products sold in other regions of China, and its design complies with U.S. export restrictions.

However, U.S. officials informed AMD that the chip’s performance is still too robust, requiring the company to obtain approval from the U.S. Department of Commerce’s Bureau of Industry and Security before sales can proceed. It remains unclear whether AMD is currently seeking a license.

The U.S. government introduced initial export control measures in 2022 and bolstered a series of measures in October 2023, encompassing additional technologies and reforming potential sales that could undermine intermediary countries/regions.

The strict limitations on the sale of NVIDIA’s chips specifically designed for China align with the initial export regulations from 2022. Subsequently, the company developed new customized but lower-capacity products for the Chinese market, aligning with the restrictions imposed by the United States in 2023.

The U.S. ban in 2022 prevented both NVIDIA and AMD from selling their most powerful artificial intelligence chips to China. When the restrictions took effect in 2022, AMD anticipated that they would not substantially affect its operations.

While AMD has not publicly discussed its development of new AI chips for China, NVIDIA, on the other hand, immediately introduced improved products with reduced performance.

NVIDIA is set to commence pre-orders for its AI chip H20 specially designed for the Chinese market by the end of March this year in response to US export bans, according to sources cited by a report from STAR Market Daily.

Still, AMD is now actively expanding into the AI chip market. In December 2023, it launched the new MI300 series, challenging NVIDIA’s chips. According to sources cited by Bloomberg’s report, this customized product for China is known as the MI309. It is still unclear which Chinese customer wishes to purchase AMD’s AI chips, which could affect the company’s authorization.

Read more

• [News] NVIDIA and AMD Clash in AI Chip Market, as TSMC Dominates Orders with Strong Momentum in Advanced Processes
• [News] NVIDIA’s H100 AI Chip No Longer Out of Reach, Inventory Pressure Reportedly Forces Customers to Resell

(Photo credit: AMD)

According to a report by TechNews citing an article from the international column Project Syndicate, Burn Lin, former R&D Vice President of TSMC, Chintay Shih, former President of the Industrial Technology Research Institute, and Chang-Tai Hsieh, an Academia Sinica member and economics professor at the University of Chicago Booth School of Business, collaborated on an article titled “How America’s CHIPS Act Hurts Taiwan.”

In the article, they collectively elucidated how US semiconductor subsidies weaken TSMC’s strength, rendering the entire semiconductor industry more vulnerable. Additionally, they expressed concern that if China were to blockade or invade Taiwan, the supply chain would become compromised.

The US CHIPS and Science Act, aiming to address this issue with a USD 52 billion subsidy, seeks to encourage semiconductor manufacturers to relocate to the United States. However, according to the report addressing on the design of the bill, its objectives may not be achievable and could even weaken Taiwan’s most crucial industry, posing a threat to Taiwan’s security.

Concerns Arise Over Chip Act Threatening Taiwan’s Security

Currently, the semiconductor industry is dominated by specialized companies distributed globally. TSMC specializes in contract manufacturing, focusing primarily on high-end chips. Other important companies include AMD, NVIDIA, Qualcomm, ASML, Tokyo Electron, and Arm.

Specialization in the industry offers two major benefits.

Firstly, each part of the global supply chain can concentrate on its core expertise and advance further, benefiting other supply chains. Secondly, the production capacity of each link in the global supply chain increases, enhancing resilience against demand shocks.

The cost of specialization is that the industry becomes vulnerable to supply shocks. This issue is not unique to Taiwan; all segments of the supply chain face potential bottlenecks.

However, unlike other segments, Taiwan is reportedly confronted with territorial claims from China. Therefore, the United States and Japan have offered substantial subsidies for TSMC’s relocation. TSMC is constructing new factories in Kumamoto, Japan, and Phoenix, Arizona, in the United States.

Currently, Fab 1 in Kumamoto has been completed according to plan, and many of TSMC’s suppliers have also set up shop there. However, the Arizona plant is substantially behind schedule, and fewer TSMC suppliers have followed suit to establish operations in the United States.

Moreover, TSMC’s experience at its Portland plant in Washington state over the past 25 years has raised doubts about the prospects of the Arizona plant. TSMC struggled to find competitive workers there; even with identical training and equipment, production costs in the U.S. were still 50% higher than in Taiwan. Therefore, TSMC chose not to expand its Portland plant further.

Still, the fundamental issue lies in the fact that while American workers are skilled in chip design technology, they lack the skills required for chip manufacturing, which is crucial in this field.

The article further mentions that TSMC’s Phoenix plant will continue to struggle because there is a shortage of American workers with the skills necessary for semiconductor manufacturing.

As warned by TSMC’s founder, Morris Chang, in 2022, seeking economic security by relocating semiconductor manufacturing to the United States is an expensive exercise in futility. Furthermore, while the USD 52 billion subsidy from the United States may seem substantial, it is insufficient to establish a self-sufficient semiconductor ecosystem in Phoenix.

Additionally, the article points out that Taiwan’s industrial planners have deliberately chosen a niche market built upon existing manufacturing advantages, without attempting to replicate the model of the leading Intel at that time, due to the scarcity of Taiwanese workers with the necessary design skills. Similarly, Japan’s subsidies for TSMC are likely to succeed because Japan already possesses an ample supply of skilled manufacturing workers.

The article also highlights three major risks brought about by the US chip act at the end:

Firstly, if TSMC shifts its focus and loses its investment in innovation, the biggest losses will be incurred by its customers and suppliers, most of which are American companies.

Moreover, it may hinder AI development, as this field largely relies on TSMC-manufactured advanced chips. Consequently, TSMC may reduce its investment in production capacity in Taiwan, reducing the entire semiconductor industry’s ability to withstand demand shocks.

Lastly, TSMC may lose its way and risk being replaced by other companies, losing its leadership position in the field of advanced semiconductor manufacturing.

Well-Intentioned US Chip Act with Poor Design May Ultimately Harm Taiwan’s Economy

The commentary suggests that despite the well-intentioned nature of the US chip act, its design is flawed. Instead of establishing a sustainable semiconductor manufacturing cluster in the United States, it may result in long-term damage to TSMC and ultimately harm Taiwan’s economy.

A better approach for the United States, per the report, would be to protect its own economic security while strengthening Taiwan’s, committing to defend Taiwan, and building production capacity in countries like Japan. This strategy may be more prudent in the long run.

Read more

• [News] Latest Overview on TSMC’s Global Expansion Initiatives
• Strategic Collaboration Between Intel and UMC to Optimize FinFET Foundry Market with Existing Resources, Says TrendForce

(Photo credit: TSMC)

U.S. Commerce Secretary Gina Raimondo previously mentioned during an online Intel foundry event that the U.S. must continue investing to regain global leadership and requires “Chip Act 2.”

According to a report from TechNews citing from global media Tom’s Hardware, the U.S. Department of Commerce plans to announce additional subsidies for the semiconductor bill as soon as this week.

Raimondo is scheduled to attend the “Revitalizing American Innovation” conference hosted by the Center for Strategic and International Studies (CSIS) in Washington on February 26th and will unveil the latest subsidies under the “Chip Act.”

In this regard, Intel is expected to receive a government subsidy of USD 10 billion, while TSMC and Samsung may also be included in the latest subsidy list. Samsung Electronics is, according to its own expectation, investing USD 17 billion to construct a foundry in Taylor, Texas, while TSMC is investing roughly USD 40 billion to build a foundry in Phoenix, Arizona. However, it’s rumored that due to the U.S. prioritizing domestic companies, the expected subsidy amounts may differ from those of Intel.

The U.S. government enacted the “Chip Act” in 2022, but subsidies have been modest, with only three American companies currently benefiting, including BAE Systems, GlobalFoundries, and Microchip Technology.

Due to Intel’s investment of USD 43.5 billion in the United States since 2021, constructing new semiconductor plants, sources cited by the report believe that the likelihood of Intel receiving USD 10 billion (equivalent to 23% of the investment amount) is quite high.

Read more

• [News] GlobalFoundries Reportedly Becomes Third Recipient of CHIPS Act Subsidy, Receives USD 1.5 Billion
• [News] US Allocates USD 39 Billion Subsidy to Semiconductor Industry for Establishing Plants

(Photo credit: TSMC)

The U.S. government announced on February 19th that semiconductor giant GlobalFoundries (GF) will be the third company to receive approval for subsidies under the Chips and Science Act, also known as the CHIPS Act, receiving USD 1.5 billion.

According to MoneyDJ’s reports citing from Reuters, The Wall Street Journal, and other global news outlets, under a preliminary agreement with the Department of Commerce, GlobalFoundries, the world’s third-largest semiconductor foundry, will construct a new fab in Malta, New York, while expanding the production capacity of its existing production lines in Malta and Burlington, Vermont.

The Department of Commerce stated that in addition to providing a USD 1.5 billion subsidy, GlobalFoundries will also be eligible for a USD 1.6 billion loan. It is anticipated that these arrangements may generate up to USD 12.5 billion in potential investment activities across the two states.

U.S. government officials further revealed that the proposed construction project is expected to create over 10,000 job opportunities in the next decade. The chips manufactured by GlobalFoundries in the new facility will find applications not only in automotive blind spot detection, collision warning systems, Wi-Fi, and mobile communications but also in satellite technology, aerospace communications, and the defense industry.

The U.S. Department of Commerce has previously granted subsidies of USD 35 million and USD 162 million to BAE Systems, a British defense and aerospace company, and Microchip Technology Inc., a microcontroller and analog IC supplier, respectively.

The U.S. Department of Commerce chose defense contractors as the first beneficiaries of the CHIPS Act subsidies, rather than traditional chip manufacturers, highlighting the focus of the legislation on national security.

The increasing reliance on advanced chips in weapon systems has become evident. Concerns were raised during the signing of the CHIPS Act in August 2022 regarding Taiwan potentially facing military attacks, which could lead to a global shortage of advanced chips and result in the United States falling behind.

As per the company’s press release, Thomas Caulfield, President and CEO of GlobalFoundries, pointed out that the industry needs to shift its focus to the increasing demand for American-made chips and strive to cultivate more semiconductor talents in the United States.

Secretary of Commerce Gina Raimondo stated at a press conference on February 19th that this is the third subsidy issued by the US government under the Chips and Science Act, with several more subsidies expected to be approved in the coming weeks to months.

Raimondo mentioned that GlobalFoundries’ expansion project at its Malta chip plant will ensure stable chip supplies for auto suppliers and manufacturers. Additionally, the high-value chips produced at the new Malta plant are unique to the United States.

In addition, GlobalFoundries and General Motors (GM) recently announced a long-term supply agreement on February 8th, aiming to avoid a recurrence of the chip shortage crisis during the COVID-19 pandemic.

Reports have surfaced indicating that the U.S. government is considering granting Intel Corp. subsidies exceeding USD 10 billion. This would mark the largest incentive program since the inception of the CHIPS Act.

Due to market challenges and the slow pace of subsidy disbursement by the U.S. government, Intel has delayed the construction schedule of its USD 20 billion chip plant in Ohio. TSMC recently announced that the production launch of its $40 billion chip plant in Arizona will also be delayed due to ongoing subsidy negotiations with the U.S. government.

Read more

• [News] Overview of China’s Semiconductor Equipment Industry
• [News] Price War Among Chinese, Taiwanese, and Korean Foundries? Chinese Foundries Reportedly Cutting Tape Out Prices

(Photo credit: GlobalFoundries)

TSMC is scheduled to hold the opening ceremony for its Kumamoto plant on February 24. In contrast, the construction progress of its Arizona plant in the United States has been relatively slow.

According to TechNews citing a research report from the Center for Security and Emerging Technology (CSET), the construction speed of semiconductor plants in the United States is the slowest globally due to the intricate regulatory environment. While the U.S. chip law supports the semiconductor industry, it is insufficient to address construction costs and timelines.

Looking at the construction speed of the three major foundries in the United States, they have indeed all fallen behind their original targets. For instance, TSMC’s Arizona plant was delayed by a year, Intel’s Ohio plant was pushed from 2025 to the end of 2026, and Samsung’s Texas plant, due to not receiving chip bill subsidies, was also delayed to 2025.

As per research conducted by CSET on the construction of 635 semiconductor plants from 1990 to 2020, the average time from groundbreaking to production was 682 days globally. However, in the United States, the average was 736 days, significantly higher than the global average and second only to Southeast Asia’s 781 days.

In comparison, the construction speeds in Taiwan, South Korea, and Japan are 654 days, 620 days, and 584 days, respectively, with Japan’s performance being quite remarkable. As for Europe and the Middle East, the average is 690 days, while in China, it is 701 days.

The report further indicates that in the 1990s and 2000s, foundries in the United States had a relatively faster construction speed, with an average time of about 675 days. However, by the 2010s, this time frame extended to 918 days.

Meanwhile, during the same period, the construction speed in China and Taiwan significantly accelerated, with average completion times of 675 days and 642 days, respectively.

Furthermore, the number of foundries in the United States has been declining, from 55 in the 1990s to 43 in the 2000s and 22 in the 2010s. In contrast, the construction speed of foundries in China has significantly accelerated, from 14 in the 1990s to 75 in the 2000s, and further to 95 in the 2010s.

Although China’s semiconductor technology is still in the catch-up phase, the construction of foundries positions it as a dominant force in the industry.

Stringent Regulations in the United States Lead to Slow Factory Construction Despite Favorable Conditions 

The report highlights seven key requirements for foundry construction: Large plots of land, low seismic activity, stable water supply, stable supply of electricity, talent, transportation infrastructure, and nearby land for co-location with key suppliers.

In these aspects, the United States outperforms Taiwan; however, the primary obstacle is regulatory issues.

Due to the unique federal structure of the United States, foundry construction must comply with federal, state, and local regulations, resulting in an exceptionally complex regulatory process. Additionally, environmental policies pose obstacles to foundry construction, particularly due to stringent requirements for environmental protection

The report suggests that to enhance the United States’ competitiveness in the global semiconductor industry, the government needs to streamline regulatory processes, eliminate redundant regulations, and establish expedited pathways to accelerate semiconductor industry construction projects.

Additionally, there should be an acceleration of environmental review processes and investment in the development of alternative materials to ensure sustainable semiconductor material supplies.

With the continued growth in global semiconductor demand, the construction speed and efficiency of US semiconductor fabs will directly impact its position in the global market.

To maintain its leading position, per the report, the United States urgently needs to take action to address this issue. Currently, it is unclear how much impact the delayed construction of semiconductor fabs by TSMC, Intel, and Samsung will have.

Read more

• [News] High Efficiency in TSMC Kumamoto Plant Construction Sets Stage for Potential Advanced Packaging Investment in Japan
• [News] TSMC Reportedly Announcing Kumamoto Plant 2 in Japan, while U.S. Subsidies Expected by End of March

(Photo credit: TSMC)