The Biden administration has announced a significant investment of up to $6.4 billion in grants for Samsung to expand chip production in central Texas as part of efforts to strengthen domestic semiconductor manufacturing. This funding, allocated under the 2022 Chips and Science Act, aims to boost chip production for critical sectors like aerospace, defence, and automotive industries, enhancing national security, according to administration officials. The move reflects a strategic push to bring cutting-edge chip manufacturing back to the United States, marking a pivotal development in the semiconductor industry, as White House National Economic Adviser Lael Brainard emphasised.
Samsung’s receipt of these grants positions it as the third largest recipient under the Chips Act program, following Intel and TSMC. The overarching goal of the Chips Act is to decrease reliance on semiconductor manufacturing in China and Taiwan, given the declining US global market share in this sector over the years. Lawmakers have raised concerns about over-dependence on Taiwan-based TSMC, considering geopolitical tensions with China over Taiwan’s status.
The subsidy will support the establishment of two chip production facilities, a research centre, and a packaging facility in Texas, providing critical infrastructure for Samsung’s expansion plans. Commerce Secretary Gina Raimondo confirmed that these investments will facilitate the growth of Samsung’s semiconductor facility in Austin, Texas, aligning with broader ambitions to lead in semiconductor manufacturing, advanced packaging, research and development.
By the end of the decade, Samsung intends to invest approximately $45 billion in building and expanding its Texas facilities, showcasing a significant commitment to bolstering US semiconductor capabilities.
President Biden’s administration has escalated tensions with China by adding more Chinese entities to an export blacklist than any previous US government. This latest move by the Commerce Department brings the total number of entities targeted under Biden to 319, surpassing the count during Trump’s tenure. The decision underscores the increasing use of economic tools to achieve foreign policy objectives, particularly as Biden seeks to limit China’s access to advanced technology, citing national security concerns.
The heightened scrutiny on China comes amidst growing apprehensions in Washington over President Xi Jinping’s assertiveness towards Taiwan, fueling fears of Beijing leveraging American technology to bolster its military capabilities. Both Democrats and Republicans have rallied behind the tough stance on China, reflecting bipartisan consensus on the issue, especially with the upcoming elections looming. Biden has maintained Trump’s tariffs while expanding restrictions on Beijing’s access to cutting-edge innovations, notably in critical sectors like AI.
The entity list serves as a primary mechanism for sanctioning entities on national security grounds and has increasingly become a focal point in US-China relations. Beijing has denounced Washington’s actions as economic coercion and unilateral bullying, vowing to defend the rights and interests of Chinese companies. In a retaliatory move, China imposed sanctions on two US companies, signalling a tit-for-tat escalation in tensions. However, such measures are largely symbolic, with minimal impact on the targeted firms.
Despite the Biden administration’s firm stance, there have been occasional concessions, such as withdrawing a Chinese government laboratory from the entity list to address the fentanyl crisis. Nonetheless, the recent additions to the list signal a continuation of the US strategy to maintain its technological edge, particularly in dual-use technologies. As Washington tightens controls on exports to Chinese firms involved in military modernisation efforts, the stage is set for further friction in the already strained US-China relationship.
Samsung Electronics Co. is gearing up for a major investment of $44 billion in chipmaking in the US, aligning with Washington’s push to revive semiconductor production domestically. Expected to be unveiled in Taylor, Texas, alongside Commerce Secretary Gina Raimondo, the project has expanded significantly from its initial outline. Samsung has secured over $6 billion in US government grants for the venture, with more details to be revealed soon, though specifics could still shift before the official announcement.
This investment is part of the Biden administration’s broader strategy to bolster American chip manufacturing through initiatives like the 2022 Chips and Science Act. The Act aims to counterbalance the dominance of Asian production and address concerns about China’s technological ascent. The Act, which earmarked substantial grants and loan funds, has catalysed private semiconductor investments exceeding $200 billion. Notable beneficiaries include Intel Corp. and Taiwan Semiconductor Manufacturing Co., though it remains uncertain if Samsung will receive additional loan awards.
Samsung’s initiative contributes to Texas’ thriving semiconductor landscape, complementing significant investments from companies like Texas Instruments Inc. While the timeline for the Taylor site’s mass production remains unclear, it adds to the state’s robust ecosystem. Following the forthcoming announcement, a meticulous due diligence phase will ensue, during which Samsung and the Commerce Department will finalise terms. Funding will be disbursed based on construction and production milestones, with adjustment provisions if commitments aren’t met.
Japan is positioning itself as a promising destination for American investment in emerging tech sectors, with Prime Minister Fumio Kishida directly appealing to US executives during a lunch event in Washington. Kishida emphasised Japan’s openness to collaboration in critical areas like AI, semiconductors, and clean energy, highlighting the mutual benefits such investments would bring. His visit preceded a summit with President Joe Biden, which was focused on enhancing defence and economic ties between the two nations.
Japanese foreign direct investment in the US has exceeded $750 billion, making Japan the largest foreign investor in America and contributing to creating over 1 million jobs. Microsoft recently announced a substantial $2.9 billion investment to bolster its cloud computing and AI infrastructure in Japan, marking its largest-ever investment in Asia’s second-largest economy. This move underscores the increasing business ties between the US and Japan, coinciding with efforts to modernise their political and military alliance.
As the global geopolitical landscape undergoes significant shifts, Japan and the US are intensifying collaboration, particularly in areas like semiconductor technology. Rapidus, a Tokyo-backed chipmaker, is partnering with IBM to advance chip technology in Japan, aiming to regain ground in an industry once dominated by Japan but now led by competitors like TSMC, Intel, and Samsung. Japan’s efforts to revitalise its semiconductor sector align with Washington’s tightening restrictions on chip sales to China, reflecting broader tech rivalry between the two economic giants.
Prime Minister Kishida also addressed concerns about Japan’s economy, expressing optimism for a resurgence after years of deflationary pressures. With recent moves like ending negative interest rates and initiating the first rate hike in 17 years, Japan aims to break free from deflationary sentiments and foster growth in the coming years. These economic reforms signal Japan’s determination to regain its economic strength and reaffirm its position as a key player in the global market.
Meta is gearing up for the next leap in AI chip technology, promising enhanced power and faster training for its ranking models. The Meta Training and Inference Accelerator (MTIA) aims to optimise training efficiency and streamline reasoning tasks, particularly for ranking and recommendation algorithms. In a recent announcement, Meta emphasised MTIA’s pivotal role in its long-term strategy to fortify AI infrastructure for current and future technological advancements, aligning with existing technology setups and forthcoming GPU developments.
Today, we’re introducing the next generation of Meta’s custom-made chips, part of our growing investment in AI infrastructure.https://t.co/Vlev4wF2yU
The company’s commitment to custom silicon extends beyond computational power, encompassing memory bandwidth, networking, and capacity enhancements. Initially unveiled in May 2023 with a focus on data centres, MTIA v1 was slated for a 2025 release. However, Meta was surprised by revealing that both MTIA iterations are already in production, indicative of accelerated progress in their chip development roadmap.
While MTIA currently specialises in training ranking and recommendation algorithms, Meta envisions expanding its capabilities to include generative AI training, such as with its Llama language models. The forthcoming MTIA chip boasts significant upgrades, featuring 256MB memory on-chip and operating at 1.3GHz, compared to its predecessor’s 128MB and 800GHz configuration. Early performance tests indicate a threefold improvement across evaluated models, reflecting Meta’s strides in chip optimisation.
Why does it matter?
Meta’s pursuit mirrors a broader trend among AI companies, with players like Google, Microsoft, and Amazon venturing into custom chip development to meet escalating computing demands. The competitive landscape underscores the need for tailored solutions to efficiently power AI models. As the industry witnesses unprecedented growth in chip demand, market leaders like Nvidia stand poised for substantial valuation, highlighting the critical role of custom chips in driving AI innovation.
Google unveiled its latest proprietary chip, Axion, demonstrating a willingness to reduce reliance on major chipmakers and bolster its position in the competitive AI landscape. Axion is tailored to manage vast datasets crucial for AI applications and can be grouped into clusters of thousands of chips to enhance performance significantly. According to Google, Axion CPUs outperform existing ‘general-purpose’ chips by about 30%, a move aimed at supporting AI applications within its data centres. Unlike chips aimed at specific business segments, Axion marks Google’s first foray into AI-centric chips for data centre operations.
While customers of Alphabet’s subsidiary will access Axion through Google’s cloud services later this year, the chip won’t be directly purchasable. Google’s vice president, Amin Vahdat, who oversees proprietary chips, emphasised a collaborative approach, avoiding direct competition with longtime partners like Intel and Nvidia. Vahdat views Google’s entry into the chip market as an opportunity to grow the industry collectively, aiming to expand the market rather than capture a share directly from competitors.
In response to Google’s announcement, semiconductor giants like Intel and Nvidia are intensifying their AI chip offerings. Intel recently introduced Gaudi 3, which is expected to be available by the third quarter, focusing on AI applications like training large language models such as ChatGPT. On the other hand, Nvidia plans to launch its latest generation of its H100 chip later this year. Despite Nvidia’s stock decline following Google’s chip reveal, the company has seen substantial growth driven by demand for its powerful chips, now facing heightened competition from rivals like Google in the AI chip market.
Following the news of Axion, Alphabet’s stock rose by 2.4% initially, reflecting investor optimism about Google’s strategic move into AI chips. However, gains moderated later in the day, with Alphabet’s stock closing up 1.28% at approximately $158. Google’s entry into the chip market signals a pivotal shift in its AI strategy, poised to influence the broader semiconductor landscape and competition among major players like Intel and Nvidia.
The Biden administration is set to announce a substantial investment of more than $6 billion in South Korea’s Samsung next week, aimed at bolstering chip production in Taylor, Texas. The subsidy, to be revealed by Commerce Department Secretary Gina Raimondo, will support the construction of four facilities in Taylor, including a $17 billion chipmaking plant announced by Samsung in 2021, along with additional facilities for advanced packaging and research and development.
The investment marks a substantial expansion of Samsung’s presence in the US, with plans to more than double its investment to over $44 billion. While the Commerce Department and Samsung have refrained from commenting on the matter, sources indicate that this subsidy will rank as the third largest under the program, trailing only Taiwan’s recent $6.6 billion award. This move aligns with the Biden administration’s efforts to boost domestic chip production and counter reliance on foreign manufacturing hubs.
The announcement is part of a broader push to enhance domestic semiconductor output following Congress’s approval of the Chips and Science Act in 2022. With $52.7 billion allocated for research and manufacturing subsidies, the US aims to reduce dependence on China and Taiwan, whose dominance in semiconductor manufacturing has raised concerns about supply chain vulnerabilities. While President Biden is not expected to attend the event, Republican Governor Greg Abbott of Texas has been invited, underscoring the bipartisan nature of efforts to strengthen America’s chipmaking capabilities.
Microsoft announced a substantial investment of $2.9 billion over two years to bolster its cloud and AI infrastructure in Japan, marking its largest investment since its operations began 46 years ago. The investment will expand data centres and cloud computing assets and support the development of AI applications and workloads. The move underscores a broader trend among major tech firms, including Amazon and Google, to ramp up overseas expansions in response to the growing demand for AI technologies following the launch of ChatGPT in late 2022.
Japanese Prime Minister Fumio Kishida expressed interest in deepening collaboration with the United States in next-generation computer chips during a business roundtable on Critical and Emerging Technologies hosted by the US Chamber of Commerce in Washington. Microsoft announced the investment before Kishida’s upcoming summit with US President Joe Biden.
Part of Microsoft’s investment will focus on skilling three million people in AI-related fields, demonstrating a commitment to developing talent and fostering innovation in Japan’s technology sector. Additionally, Microsoft plans to establish a new Microsoft Research Asia lab in Tokyo, further enhancing regional research and development capabilities. This initiative aligns with the company’s strategy to strengthen its presence and competitiveness in the global cloud computing market.
Why does it matter?
The surge in investments by tech giants like Amazon, Google, and Microsoft highlights the critical role of cloud infrastructure in supporting AI advancements. For instance, Amazon’s cloud unit directs significant investments into regions like Mississippi and Saudi Arabia, while Google is constructing a major data centre near London. In the intensely competitive landscape of cloud computing, Microsoft’s Azure, Google Cloud (Alphabet), and Amazon Web Services (AWS) remain the top three players, driving innovation and shaping infrastructure expansion to meet evolving market demands and capitalise on the AI revolution.
South Korean President Yoon Suk Yeol has unveiled plans to invest $6.94 billion in AI by 2027, aiming to solidify the nation’s position as a leader in cutting-edge semiconductor chips. The commitment also includes a substantial $1.32 trillion fund for nurturing AI semiconductor firms.
The investment comes as South Korea faces pressure to keep pace with other major players like the US, China, and Japan, who are also bolstering their semiconductor supply chains through significant policy support.
Semiconductors are a crucial pillar of South Korea’s export-oriented economy. In March, chip exports reached a 21-month high of $11.7 billion, comprising nearly one-fifth of the country’s total exports. President Yoon emphasised the intense global competition in the semiconductor industry, characterising it as an industrial and national battleground during a meeting with policymakers and chip industry executives.
South Korea plans to channel investments and funding towards expanding research and development in AI chips, including artificial Neural Processing Units (NPUs) and next-generation high-bandwidth memory chips to advance its semiconductor capabilities. Additionally, the government aims to promote the development of next-generation Artificial General Intelligence (AGI) and safety technologies beyond current models.
Why does it matter?
President Yoon has set ambitious goals for South Korea to rank among the top three countries in AI technology, including chips, and secure a 10% or higher share of the global system semiconductor market by 2030. He envisions South Korea writing a new semiconductor narrative with AI chips, akin to its dominant position in memory chips over the past three decades. Despite potential disruptions like the recent earthquake in Taiwan, a key semiconductor hub, Yoon emphasised the importance of thorough preparation to mitigate uncertainties for South Korean companies.
TSMC, the world’s leading semiconductor foundry, has secured a $6.6 billion subsidy from the US government under the CHIPS Act to support the construction of advanced semiconductor manufacturing facilities in Phoenix, Arizona This fabrication plant aims to commence the production of the world’s most advanced 2-nanometer semiconductors by the end of the decade. This initiative follows TSMC’s establishment of its first Phoenix plant, which broke ground in 2021 and is expected for production in 2024, and a second facility to open by 2026, focusing on advanced 3-nanometer chip technology.
The Arizona project, with a total investment of $65 billion, is anticipated to generate thousands of high-tech and construction jobs, significantly contributing to the US’s economic and strategic objectives under the Biden administration.
This agreement is part of a broader strategic partnership aimed at strengthening advanced semiconductor manufacturing in the US while limiting China’s development in the field. The ripple effects of TSMC’s expansion are expected to catalyze a major shift in the semiconductor supply chain, with leading tech giants like Advanced Micro Devices, Apple, and NVIDIA anticipated to transition their semiconductor sourcing to the US.
