Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest contract chipmaker, has initiated its routine typhoon preparations ahead of Typhoon Krathon. The storm is expected to make landfall soon, but TSMC remains confident that its operations will face minimal disruption.
TSMC emphasised that it does not foresee significant impacts on production or business continuity. Its typhoon protocols, which have been developed over years of experience, ensure that any potential risks are effectively mitigated. Move like this one allows the company to continue providing services to its global clients.
Typhoon Krathon has prompted widespread preparation efforts across Taiwan, with residents and businesses securing their properties and essential supplies. The island frequently experiences typhoons, so firms like TSMC are well-versed in storm readiness.
Despite the potential severity of the typhoon, TSMC’s proactive approach and robust procedures highlight its resilience. The company remains focused on maintaining its leadership in the semiconductor industry while ensuring the safety of its workforce.
The British government has purchased a struggling semiconductor factory from United States-based Coherent Inc. to safeguard domestic production of gallium arsenide semiconductors. These components are vital for military technology, including fighter jets. The plant, located in Newton Aycliffe, northern England, is the United Kingdom‘s only secure producer of these semiconductors.
The acquisition, estimated at £20 million ($27 million), ensures the preservation of 100 skilled jobs. While it is unusual for the government to intervene in private companies, the semiconductor industry has become a strategic priority due to its crucial role in both the economy and national security.
Semiconductors are key to the UK’s future technological advancements, particularly in growth and clean energy sectors. The British government has previously intervened in the industry, having bought Newport Wafer Fab three years ago to prevent a sale to a Chinese-owned firm.
The Newton Aycliffe factory, which had faced financial challenges after losing contracts, will receive government investment under its new name, Octric Semiconductors UK, as part of efforts to revitalise the business.
In August 2023, Powerchip Semiconductor Manufacturing Corp (PSMC) announced a partnership with Japan’s SBI to build a chipmaking plant in Japan. However, the plan was halted last Friday, with reports suggesting that PSMC’s declining financial performance may be the cause. PSMC has denied these claims, stating that the decision to terminate the collaboration is unrelated to its financial situation.
PSMC explained that its collaboration with SBI was structured around the Fab IP model, which involves offering consulting services, personnel training, and technology transfer in exchange for service fees and royalties. The company does not plan to invest in or oversee the operations of the new factory. After the board confirmed the termination of the partnership, PSMC dispatched representatives to Japan’s Ministry of Economy, Trade and Industry (METI) to clarify the situation and has informed SBI Holdings of the decision.
Reports indicate that PSMC opted not to assume the risks tied to the project, resulting in the dissolution of their partnership to build the facility in Miyagi Prefecture. This plant was projected to start mass production by 2027, specialising in automotive semiconductors with an estimated investment of ¥800 billion. Despite these challenges, SBI intends to proceed with the project by searching for new partners.
Notably, this decision comes after PSMC recently announced its intention to supply technology for a new chip plant in India, in partnership with Tata Group. The company has signed an agreement to assist in constructing India’s first 12-inch wafer fab in Dholera, Gujarat, which will employ mature process technologies and provide training for local workers. This USD 11 billion facility is expected to have a monthly capacity of 50,000 wafers and create over 20,000 high-tech jobs in the region.
Arm Holdings recently inquired about purchasing Intel Corp.’s product division, which focuses on chips for personal computers and servers. However, Intel informed Arm that the division is not for sale, as confirmed by a source familiar with the discussions. This comes amid ongoing struggles for Intel, which has seen a significant decline in its business, prompting speculation about potential acquisitions and significant layoffs.
Intel is grappling with significant financial difficulties, highlighted by a disappointing earnings report that led to a notable decline in its stock price. In reaction, the company plans to lay off 15,000 employees and reduce its factory expansion initiatives while exploring a potential restructuring that could result in a division of its operations. Meanwhile, Arm, traditionally recognised for its smartphone chip designs, aims to broaden its presence in the personal computer and server markets to strengthen its competitive position against Intel.
With a valuation surpassing $156 billion, Arm is viewed as a beneficiary of the growing AI sector and has the financial backing of Japan’s SoftBank. In contrast, Intel’s market capitalisation has fallen to approximately $102.3 billion this year. Meanwhile, the company is exploring other investment opportunities, including a $5 billion offer from Apollo Global Management and plans to divest part of its stake in Altera Corp., further indicating its intent to stabilise and restructure its operations.
The United States Commerce Department has announced a new rule that could streamline the process for sending AI chips to data centres in the Middle East. The rule will allow data centres to apply for Validated End User (VEU) status, enabling them to receive AI chips through a general authorisation, eliminating the need for individual licences for each shipment.
The move follows concerns in Washington that Middle Eastern countries could act as intermediaries for China to acquire US chips that are restricted from direct export to China. G42, an AI company based in the United Arab Emirates with historical connections to China, has been at the centre of these concerns, despite its efforts to distance itself from China and comply with US regulations.
The VEU program will involve rigorous screening to ensure safeguards are in place to prevent the misuse or diversion of US technology. The Commerce Department emphasised the importance of this review process to protect national security.
The Bureau of Industry and Security reiterated its commitment to facilitating international AI growth while mitigating risks to US and global security, aiming to balance technological development with safety concerns.
Semiconductor manufacturers are set to pour a record $400 billion into chip-making equipment from 2025 to 2027, as the global industry association SEMI estimates. This surge is being driven by China, South Korea, and Taiwan, who are ramping up their production capacity in response to US-China trade tensions and soaring demand for AI and memory chips. Investment is expected to jump by 24%, reaching $123 billion in 2025 alone.
China is projected to lead the investment race, committing over $100 billion in the next three years as it strives for self-sufficiency in semiconductor production. South Korea, home to major memory chip producers Samsung and SK Hynix, is expected to spend $81 billion, while Taiwan, led by chipmaking giant TSMC, plans to invest $75 billion. Other regions, including the Americas, Japan, and Europe, are also ramping up investments, driven by government policies aimed at securing semiconductor supply chains.
Leading chip-making equipment suppliers, such as ASML, Applied Materials, KLA Corp, Lam Research, and Tokyo Electron, are set to benefit significantly from this investment boom. By 2027, spending on semiconductor equipment in the US, Japan, and Europe is expected to more than double from 2024 levels as countries push to stabilise semiconductor supply chains for emerging technologies.
Intel and the US government are expected to finalise a direct funding package of $8.5 billion by the end of this year to increase domestic semiconductor production. The funding is part of a larger $20 billion commitment from the US government, including grants and loans to expand Intel’s chip manufacturing capabilities in Arizona. The funds will support the construction of two new factories and the modernisation of an existing facility, as the US pushes to strengthen its semiconductor supply chain.
Despite advanced talks, there is no guarantee the deal will be finalised before the year’s end, as potential disruptions, such as a takeover of Intel, could pose risks. Qualcomm recently approached Intel to explore a possible acquisition, adding another layer of complexity to the ongoing discussions. Once a chip manufacturing leader, Intel has struggled in recent years, losing ground to Taiwan Semiconductor Manufacturing Company and missing out on opportunities in the AI chip market dominated by competitors like Nvidia and AMD.
The US government’s funding initiative reflects a broader strategy to revitalise American chip production amid global supply chain challenges. President Joe Biden’s administration has prioritised strengthening domestic technology industries, and this substantial financial commitment to Intel underscores the government’s determination to regain a competitive edge in the semiconductor sector.
While South Korean memory giants Samsung Electronics and SK hynix experienced a significant sales increase in China during the first half of this year, the report by the Korea Eximbank Overseas Economic Research Institute indicates that South Korea’s reliance on China for critical semiconductor raw materials is also growing. Key materials such as silicon, germanium, gallium, and indium have seen notable increases in demand, with South Korea’s dependence on silicon rising from 68.8% to 75.4% in 2022.
The report emphasises an increasing reliance on rare earth elements, crucial for semiconductor abrasives, and a slight uptick in dependence on tungsten, which is vital for semiconductor wiring. This trend is occurring against the backdrop of export restrictions enacted by the Chinese government on critical minerals such as germanium and gallium, in response to US sanctions. Currently, China dominates the global supply, producing 98% of the world’s gallium and 60% of its germanium, underscoring its pivotal role in the semiconductor supply chain.
Dependence on germanium rose significantly by 17.4 percentage points to 74.3% in 2022, and reliance on gallium and indium also increased by 20.5 percentage points to 46.7%. Despite the Chinese government’s export restrictions, local production among major Chinese firms has remained stable. For example, Samsung’s NAND flash facility in Xi’an has boosted its share of the company’s total NAND capacity from 29% in 2021 to 37% in 2023, with expectations to reach 40% this year.
The US Commerce Department has finalised a $123 million grant for Polar Semiconductor to expand its Minnesota facility, a development anticipated to nearly double the company’s production capacity for power and sensor chips. This grant marks the first award from the Biden administration’s $52.7 billion semiconductor manufacturing and research subsidy program, designed to strengthen domestic chip production. Commerce Secretary Gina Raimondo emphasised that this funding will help establish a new US-owned foundry, raising Polar’s output from about 20,000 wafers to 40,000 per month, serving key industries such as aerospace, automotive, and defence.
The state of Minnesota is contributing $75 million to Polar Semiconductor’s $525 million expansion project. Polar is primarily owned by Sanken Electric, holding a 70% stake, while Allegro MicroSystems owns the remaining 30%. Recently, the company secured investment commitments totalling $175 million from Niobrara Capital and Prysm Capital. Meanwhile, the US Commerce Department has allocated over $35 billion for various semiconductor initiatives, including substantial grants to major companies like Samsung, Intel, TSMC, and Micron Technology.
White House economic adviser Lael Brainard announced that more funding awards will be finalised shortly, with Commerce Secretary Gina Raimondo confirming additional financial support for companies expected in the coming weeks. This initiative is part of the 2022 chips law, which aims to boost US competitiveness against China and significantly enhance domestic chip production. Additionally, Congress has recently approved legislation designed to streamline federal permitting processes for semiconductor manufacturing projects, facilitating quicker and more efficient development in the industry.
Recent developments in 8-inch silicon carbide (SiC) technology mark a significant transformation in the semiconductor sector, especially for power electronics. Japan’s NGK Insulators has successfully created 8-inch SiC wafers, which will be showcased at ICSCRM 2024, underscoring the rapid advancements in this field. Additionally, Resonac is nearing the commercialisation of its 8-inch epitaxial wafers, targeting mass production of both epitaxial wafers and substrates by 2025, while Onsemi is set to introduce its 8-inch wafers later this year.
In the U.S., Wolfspeed has introduced a new 2300V SiC power module, leveraging advanced 8-inch wafer technology to enhance renewable energy applications and fast charging solutions. Meanwhile, in China, Sanan Optoelectronics has launched its 8-inch SiC substrate factory, with plans for significant production capacity, further indicating the growing global demand for these materials.
Market analysts anticipate that the transition from 6-inch to 8-inch wafers will lower production costs, enhancing the accessibility of SiC technology. Larger wafer sizes significantly decrease unit chip costs, with projections indicating that the market share for 8-inch SiC products could grow from under 2% today to approximately 15% by 2026. This shift is expected to create new opportunities across multiple industries, including automotive and renewable energy, as prices for SiC substrates continue to decline.
With increasing competition and advancements in production technology, the SiC industry is on the brink of widespread adoption. As prices for 6-inch substrates fall and 8-inch technology becomes more prevalent, the future looks promising for silicon carbide as a key player in the evolution of power electronics.
