Industry sources cited by Reuters have revealed that Huawei, the Chinese telecommunications giant, is slowing down the production of its high-end Mate 60 series smartphone due to surging demand in the AI chip market and production constraints. Instead, the company has decided to prioritize the production of AI chips from its Ascend series, diverging from the Kirin chips used in the Mate 60 series.

According to a report by Reuters on January 5th, Huawei is utilizing a plant to simultaneously produce chips from the Ascend series and the Kirin series. The current plan is to prioritize the production of Ascend chips over Kirin chips, although the exact starting date for this arrangement has not been disclosed.

On the other hand, the production volume of Huawei’s Mate 60 series, launched in August last year, has been hampered by low chip yields. Reportedly, Huawei is actively working to improve chip yields, and it is hoped that the mentioned production adjustment will be a short-term measure.

It’s worth noting that many Huawei products have recently been affected by production bottlenecks. The computation components for Huawei’s assisted driving system have encountered production issues due to shortages of components.

This has led to delays in the delivery of flagship models from Changan Automobile, Chery Automobile, and Seres. Changan Automobile and Chery Automobile have already filed complaints and are currently in negotiations with Huawei.

Reports have indicated that since 2019, the U.S. government has imposed sanctions on Huawei, citing national security concerns, thereby cutting off Huawei’s access to advanced chip manufacturing equipment and technology and weakening its smartphone division. In response, Huawei denies posing any security risks and is actively working to rebuild its business.

In addition, Bloomberg previously reported that the Chinese government has also been directly investing to assist Huawei in building its chip supply chain since 2019, creating an exclusive supply chain for Huawei in response to the tighten restrictions.

In October 2023, the U.S. further strengthened restrictions on the export of advanced chips and chip manufacturing equipment to China, building upon previous limitations. This move forced Chinese customers to turn to domestic alternatives. Huawei’s Ascend 910B chip is considered the most competitive non-NVIDIA chip available in the Chinese market.

Huawei has maintained a low profile regarding its chip manufacturing capabilities and objectives. There is limited public information about its progress or how it successfully produces advanced chips.

In August 2023, during U.S. Commerce Secretary Gina Raimondo’s visit to China, Huawei launched the Mate 60 series, garnering significant market attention.

(Photo credit: Huawei)

US officials have announced that the Pentagon has added over a dozen Chinese companies to a list established by the US Department of Defense. This list identifies entities accused of collaborating with the Chinese military.

According to the Pentagon’s website, the Department of Defense updated the list of “Chinese military companies” operating directly or indirectly in the United States, in accordance with Section 1260H of the National Defense Authorization Act (NDAA) for the fiscal year 2021.

As per a report from Reuters, the newly added companies to the list include Chinese memory manufacturer Yangtze Memory Technologies Corp (YMTC), artificial intelligence (AI) firm MEGVII, radar manufacturer Hesai Technology, and technology company NetPosa.

Reportedly, being listed on this roster doesn’t automatically impose bans, but it poses significant reputational risks for the designated companies and issues stern warnings to US entities, cautioning them about the risks associated with conducting business with these enterprises.

The list could also amplify pressure from the US Treasury Department to sanction these companies.

Read more

• [News] U.S. Department of Commerce Introduces New Regulations to Restrict China from Training AI Using U.S. Cloud Services
• [News] New Focus in the US-China Tech War! Can China Overtake with Silicon Photonics?

(Photo credit: iStock)

While TSMC is pushing forward with its 2nm fab in Taiwan, there is also good news about its overseas expansion. According to the Japanese newspaper “Kumanichi,” TSMC is expected to announce the construction of its Kumamoto Fab 2 in Japan on February 6, with the possibility of incorporating the 7nm process. Additionally, the United States is also expected to provide several billion dollars in subsidies to TSMC’s new fab by the end of March.

▲ TSMC’s Layout of Global Production Capacity Edited by TrendForce, January, 2024

Per the report from the ” Kumanichi,” Japan’s Minister of Agriculture, Forestry, and Fisheries, Tetsushi Sakamoto, who hails from Kumamoto, stated during a local meeting on January 28th that TSMC is evaluating Kumamoto Prefecture’s Kikuyo Town as the location for its second fab. The announcement of the site for Fab 2 in Kumamoto is expected to be made as early as February 6th.

The report further indicates that Fab 2 is expected to be situated next to the first fab, which was completed at the end of last year. TSMC had previously mentioned that if a second fab were to be constructed, it would be located in the vicinity of the existing facility under construction.

Regarding the rumors, the spokesperson for TSMC stated that the expansion strategy of TSMC’s global manufacturing footprint is based on considerations of customer demand, business opportunities, operational efficiency, government support, and economic costs.

Through necessary investments, TSMC continues to support customer demands and respond to the structural growth of semiconductor technology in the long term. “We are currently focusing on evaluating the possibility of setting up a second fab in Japan, and there is no further information to share at the moment.”

During the recent earnings call, Mark Liu also mentioned that the plan for TSMC’s second fab in Japan is still under evaluation. However, he hinted at the possibility of adopting the 7-nanometer process.

TSMC’s Kumamoto plant is scheduled to hold its opening ceremony on February 24th. After retiring following the shareholders’ meeting in June this year, TSMC Chairman Mark Liu, along with the designated successor and current President C.C.Wei, will lead several top executives to Japan for the event. TSMC has also invited Japanese Prime Minister Fumio Kishida to attend.

The decision for TSMC to establish a plant in Kumamoto, Japan, was announced in October 2021, and construction began in 2022. In comparison to TSMC’s announcement of a plant in the United States in 2020, which faced delays and is set to commence production in 2025, the Japanese plant has advanced more swiftly.

This aligns with TSMC founder Morris Chang’s statement last year that Japan is considered an ideal location for establishing a semiconductor supply chain.

Analyst Joanne Chiao from TrendForce previously pointed out that Japan’s expertise in materials and machinery is one of the factors attracting TSMC’s expansion. Japan stands to benefit from TSMC’s establishment as the pace of creating a local semiconductor ecosystem by Japanese government surpasses that of the U.S. government.

On the other hand, despite TSMC delaying the production at its new US plant, according to Bloomberg, the United States plans to announce substantial chip subsidies by the end of March. The aim is to pave the way for chip manufacturers like TSMC and Intel by providing them with billions of dollars to accelerate the expansion of domestic chip production.

These subsidies are a core component of the US 2022 “CHIPS and Science Act,” which allocates a budget of USD 39 billion to directly subsidize and revitalize American manufacturing.

Read more

• [News] Completion of TSMC’s Kumamoto Plant, Grand Opening on 2/24
• [News] Rumored to Build Third Plant in Kumamoto, TSMC: Currently Focusing on Assessing the Construction of a Second Plant

(Photo credit: TSMC)

U.S. Commerce Secretary Gina Raimondo stated on January 26th that the U.S. government will propose that American cloud computing companies determine whether foreign entities are accessing U.S. data centers to train artificial intelligence models.

The proposed “know your customer” regulation was made available for public inspection on January 26th and is scheduled for publication on January 29th.

According to a report from Reuters, Raimondo stated during her interview that, “We can’t have non-state actors or China or folks who we don’t want accessing our cloud to train their models.”

“We use export controls on chips,” she noted. “Those chips are in American cloud data centers so we also have to think about closing down that avenue for potential malicious activity.”

Raimondo further claimed that, the United States is “trying as hard as we can to deny China the compute power that they want to train their own (AI) models, but what good is that if they go around that to use our cloud to train their models?”

Since the U.S. government introduced chip export controls to China last year, NVIDIA initially designed downgraded AI chips A800 and H800 for Chinese companies. However, new regulations in October of 2023 by the U.S. Department of Commerce brought A800, H800, L40S, and other chips under control.

Raimondo stated that the Commerce Department would not permit NVIDIA to export its most advanced and powerful AI chips, which could facilitate China in developing cutting-edge models.

In addition to the limitations on NVIDIA’s AI chips, the U.S. government has also imposed further restrictions on specific equipment. For example, ASML, a leading provider of semiconductor advanced lithography equipment, announced on January 1st, 2024, that it was partially revoking export licenses for its DUV equipment in relation to the U.S. government.

Read more

• [News] New Focus in the US-China Tech War! Can China Overtake with Silicon Photonics?
• [News] NVIDIA Rumored to Downgrade AI Chips for China Amid U.S. Restrictions, Year-End Mass Production Expected

(Photo credit: iStock)

Negotiations between Hyundai Motor and the U.S. government concerning tax incentives for the Korean automaker’s USD 5.5 billion EV plant in Georgia have yet to reach a conclusion.

It was first reported on August 31st 2023, indicating that Hyundai Motor Group and LG Energy Solution (LGES) would invest an additional USD 2 billion in their battery cell manufacturing joint venture (JV) at the Metaplant in Bryan County, Georgia.

The company subsequently aimed to expedite the construction of its factory in Georgia and establish partnerships with local battery suppliers to align with the Inflation Reduction Act (IRA), as stated by Hyundai’s CFO Seo Gang-Hyun during an earnings call.

In an latter interview, Georgia Governor Brian Kemp expressed concerns that the IRA is adversely affecting Korean companies. Korea Joongang Daily further noted that no Korean electric vehicles, including those from Hyundai Motor and Kia, are currently listed for the IRA tax credit. According to TrendForce’s analyst, the market share in 2023 for Hyundai Motor and Kia combined is 10.6%, which ranks as 4th in the US market, behind GM, Toyota, and Ford.

Currently, the U.S. Energy Department has reportedly yet provided a definitive response to Hyundai’s request for a 30 percent tax credit under the IRA, as per a report from the Korean media outlet Korea Joongang Daily. As reported by The Korea Daily, the potential value of these incentives could be around USD 350 million.

“We’ve been constantly discussing with the U.S. government for the incentives,” Hyundai Motor confirmed regarding the news. “Nothing has been decided, and we’re waiting for the result.” Still, reportedly, Hyundai and Kia have not announced any cuts to EV production or investment.

TrendForce notes that the automotive industry is currently facing high raw material and labor costs, as well as significant investments in electrification and autonomous driving. Balancing the protection of local enterprises, maintaining competitiveness, and managing consumer costs is an urgent task for governments worldwide. Most countries are focusing on the country of origin rather than the brand of vehicles in their restrictive measures.

Measures taken by the US—specifically for EVs—include requiring that EVs and their batteries be assembled in North America. Furthermore, critical minerals in the batteries must originate from countries that have signed free trade agreements with the US to qualify for subsidies totaling US$7,500.

Read more

• [Insights] Hyundai Defies Headwinds with 1.52 Billion Groundbreaking for Electric Vehicle Plant

(Photo credit: Hyundai)