The US House has recently passed a bill aimed at streamlining federal permitting for semiconductor manufacturing projects, a move anticipated to benefit companies like Intel and TSMC. This legislation seeks to address concerns that lengthy environmental reviews could hinder the construction of domestic chip plants, an essential component of US manufacturing strategy, especially as chipmakers have pledged around $400 billion in investments following the 2022 Chips and Science Act.
Many projects are experiencing delays despite investments. Intel’s facilities in Arizona, initially scheduled to open in 2024, may now begin operations in early 2025. Additionally, a $20 billion project in Ohio has been pushed back beyond 2026 due to market challenges and subsidy holdups. The new bill introduces criteria to exempt some projects from National Environmental Policy Act (NEPA) reviews, enabling construction to start before the year ends.
The legislation poses a challenge for the Biden administration, which seeks to enhance domestic manufacturing while achieving ambitious climate targets. As the government tackles this dilemma, the urgency to lessen dependence on Asian chip production, especially from Taiwan, continues to be a key priority.
In mid-August, TSMC sealed a significant deal to acquire the AP8 facility from panel manufacturer Innolux in southern Taiwan, aiming to bolster its advanced packaging capacity. This new fab is set to produce advanced 3D Chip on Wafer on Substrate (CoWoS) IC packaging services, which are crucial for meeting the rising demand from AI server manufacturers. Expected to begin production in the latter half of 2025, the AP8 facility will have nine times the capacity of TSMC’s existing AP6 fab.
The acquisition, finalised for NTD 17.14 billion, came in under market expectations and was motivated by the need to bypass lengthy environmental assessments associated with new builds. TSMC intends to make internal modifications to the facility, enabling faster equipment installation, with deliveries set to begin as early as April next year.
TSMC Chairman C.C. Wei is optimistic about doubling CoWoS capacity in 2024 and 2025, with a goal of achieving a supply-demand balance by 2026. Analysts forecast that TSMC’s monthly CoWoS output could increase from 32,000 wafers this year to approximately 70,000 by the end of 2025, driven by this strategic expansion.
With an anticipated compound annual growth rate of over 50% for CoWoS capacity from 2022 to 2026, TSMC is committed to accelerating its fab construction timelines, aiming to reduce the typical 3-to-5 years down to just 2 years, ensuring it meets the surging market demand efficiently.
During a visit to Washington, Netherlands’ economy minister Dirk Beljaarts emphasised the significance of China as a trading partner. They advocated for the semiconductor equipment maker ASML to operate with maximum freedom. His discussions with US Deputy Secretary of Commerce Don Graves were focused on enhancing bilateral trade rather than addressing export restrictions, which are not under his jurisdiction.
Beljaarts’ visit comes amid anticipation of expanded US export rules affecting semiconductor sales to China. ASML, a leading supplier to chip manufacturers, recently faced new export license requirements imposed by the Dutch government, influenced by US pressure.
While the US is a crucial ally of the Netherlands, Beljaarts highlighted that ASML’s main markets are in Taiwan, China, and South Korea. He stressed the need to maintain balanced trade relationships, arguing that ‘We have our economy to uphold,’ and expressed pride in ASML as a vital asset for the Dutch economy.
Qualcomm has approached Intel to discuss a potential acquisition, a move that could transform the semiconductor landscape. CEO Cristiano Amon is personally engaged in these early talks, which have yet to produce a formal offer. Reports suggest that Qualcomm is especially interested in Intel’s PC design unit and its overall portfolio as part of this exploration.
Intel, once the dominant force in chip manufacturing, has seen its stock plummet nearly 60% this year, highlighting its current vulnerability. A deal with Qualcomm would likely face intense scrutiny from antitrust regulators in the US, China, and Europe, possibly requiring Qualcomm to divest parts of Intel to gain approval.
If successful, this acquisition would mark a historic move in the tech sector, rivalling Broadcom’s attempted $142 billion takeover of Qualcomm in 2018. However, how Qualcomm would finance the deal, given its $13 billion cash reserves and Intel’s $122 billion valuation, remains unclear. Additionally, Qualcomm would need to navigate the complexities of managing Intel’s extensive manufacturing operations, a challenge for a company that currently relies on external contractors for chip production.
Intel is actively seeking to revitalise its business by prioritising AI processors and restructuring its operations, which includes pausing factory construction in Poland and Germany. As discussions with Qualcomm progress, both companies will need to navigate significant challenges in a rapidly changing market.
Two leading chip manufacturers, TSMC and Samsung Electronics, are exploring the establishment of chip factories in the United Arab Emirates. Reports suggest these projects could surpass $100 billion in value, indicating significant investment in the region’s technology sector.
Executives from TSMC have made recent visits to the UAE, discussing plans for a facility comparable to their advanced plants in Taiwan. Meanwhile, Samsung is also assessing opportunities for major chip-making operations in the country, though these talks remain in preliminary stages.
Funding for these ambitious projects may largely come from the UAE, with Abu Dhabi’s Mubadala playing a crucial role. The overarching aim is to boost global chip production while maintaining the profitability of manufacturers.
As tech ventures in the Middle East accelerate, concerns in Washington grow regarding the potential transfer of advanced US technology to China via the UAE and other regional partners.
In 2024, the storage market is seeing notable advancements, especially in NAND flash technology, as key players like Samsung, Micron, and SK Hynix innovate to meet rising demands. Samsung has recently begun mass production of its 9th generation QLC V-NAND, boasting impressive enhancements in bit density and performance. This new model improves data retention and significantly lowers power consumption, addressing the growing need for efficient storage solutions in AI applications. Micron and SK Hynix are also pushing forward with their high-performance SSDs, reflecting a broader trend toward optimising storage for increased data demands.
Micron and SK Hynix are advancing their storage solutions as well, with Micron’s latest SSDs featuring 9th-generation TLC NAND technology that delivers impressive data transfer speeds. Meanwhile, SK Hynix is developing high-performance SSDs tailored for data centres. As the demand for storage continues to surge due to AI applications, there is a growing preference for higher-capacity SSDs, leading manufacturers to prioritise both TLC and QLC technologies in their offerings. This shift reflects the industry’s response to the increasing need for efficient and powerful storage solutions.
Market research forecasts that the demand for AI-related SSDs will surpass 45 exabytes in 2024, with the share of AI SSDs in the NAND flash market expected to grow significantly. Despite facing challenges in the PC and smartphone sectors, NAND flash revenue has risen, driven by strong demand from the AI industry. As companies ramp up production capacity, they are well-positioned to meet the increasing needs of data centres and AI applications. This trend underscores a transformative period for the NAND flash market, reflecting its critical role in supporting advancements in technology.
Analog Devices (ADI) has entered into an agreement with India’s Tata Group to explore semiconductor manufacturing opportunities in the country. Tata Electronics, the conglomerate’s electronics manufacturing division, is investing $14 billion to build India’s first semiconductor fabrication plant in Gujarat and a chip-assembly and testing facility in Assam.
The collaboration aims to produce ADI’s semiconductor products at Tata Electronics’ facilities, boosting India’s presence in the global semiconductor industry. Prime Minister Narendra Modi’s government is pushing for the country to become a key player in semiconductor production, rivalling established hubs such as Taiwan.
As part of the deal, Tata will also integrate ADI’s semiconductor products into Tata Motors’ electric vehicles and Tejas Networks’ telecom infrastructure. However, neither company has disclosed specific details regarding the products that will be manufactured or utilised.
Several other global companies, including NXP Semiconductors and Micron, have also announced plans to invest in India’s growing semiconductor sector, further solidifying the nation’s ambitions in this critical technology area.
Intel is going through a major restructuring by spinning off its chip manufacturing business into a new independent subsidiary called Intel Foundry. This decision comes after the company experienced significant financial losses, totalling $1.6 billion in the first quarter of 2024. The restructuring, which was announced by CEO Pat Gelsinger, is intended to address the company’s declining stock price. It includes the creation of a separate board of directors and financial reporting specifically for Intel Foundry.
As part of its reorganisation, Intel will suspend operations at its manufacturing plants in Poland and Germany for two years, while continuing projects in Arizona, Oregon, New Mexico, and Ohio. The company also plans to sell part of its stake in Altera and reduce its global real estate footprint by about two-thirds to cut operating expenses. Intel has already laid off 15,000 employees as part of its cost-saving measures.
On a positive note, the Biden administration has approved up to $3 billion in funding for Intel to build chips for the US military, which could boost its position in the defence sector. Despite these efforts, Intel faces challenges with its 13th and 14th generation processors and a $7 billion operating loss in 2023. The company is investing in the new 18A chip manufacturing process, but early tests have raised concerns. Intel plans to begin producing chips with this new process for partners like Microsoft and Amazon next year, which will be crucial for its recovery and regaining its semiconductor leadership.
Lenovo has announced plans to begin manufacturing AI servers at its plant in Puducherry, southern India, and has opened an AI-focused research and development lab in Bengaluru. The company intends to produce 50,000 AI rack servers and 2,400 GPU servers annually, designed for machine learning and other resource-intensive tasks.
These servers will not only serve local demand but also be exported, according to Amar Babu, Lenovo’s Asia Pacific president. Although no specific investment or hiring targets were disclosed, Lenovo already manufactures laptops, notebooks, and personal computers at the Puducherry plant.
The demand for AI chips has surged following the rise of generative AI in late 2023, with AI hardware expected to capture 12% of the global AI market by 2027. Lenovo, which now earns nearly half its revenue from non-PC businesses, is joining other tech giants like Apple and Dell in boosting production in India, partly to reduce reliance on China.
India has attracted global companies with manufacturing incentives, although Lenovo’s AI server production is not tied to any such scheme. However, its collaboration with Dixon Technologies on PC and Motorola phone production does benefit from these incentives.
Qualcomm faced another legal setback in the EU as the continent’s second-highest court largely upheld an EU antitrust fine, reducing it slightly to €238.7 million ($265.5 million) from the original €242 million. The fine, imposed by the European Commission in 2019, stemmed from Qualcomm’s practice of selling chipsets below cost between 2009 and 2011—a tactic known as predatory pricing—aimed at driving British competitor Icera, now part of Nvidia, out of the market.
Qualcomm argued that the chipsets in question only accounted for a small fraction (0.7%) of the market, making it unlikely they could have effectively blocked competitors. However, the General Court in Luxembourg dismissed most of the company’s claims, apart from a minor point regarding the fine’s calculation, which led to a slight reduction.
The ruling marks another chapter in Qualcomm’s legal battles with the EU. While the company can appeal on legal grounds to the EU Court of Justice, it has already experienced mixed results in the European courts. In 2021, Qualcomm overturned a separate €997 million fine, which had been levied for paying Apple billions to exclusively use its chips in iPhones and iPads from 2011 to 2016.
For now, the EU’s watchdog continues to pursue antitrust enforcement in the tech sector, with Qualcomm remaining a key target in its efforts to curb anti-competitive behaviour.
