Semiconductor Week in Review (Nov 3 - 9): The semiconductor industry faces a transformative moment as TSMC readies its Arizona fab's politically-charged December opening and Intel's covert Taiwan visit reveals its deepening dependence on TSMC's advanced nodes.
Samsung's mounting foundry losses and ASML's China retreat signal shifting dynamics in Asia's chip landscape, while Korean manufacturers' breakthrough in ultra-low temperature etching offers a glimpse of memory's future.
Meanwhile, Supermicro's potential delisting sends shockwaves through the AI server market, forcing Nvidia to recalibrate its supply chain.
US Election Clouds Future for Intel's Revival and TSMC's Dominance
The upcoming U.S. presidential election could reshape the semiconductor landscape, particularly affecting industry giants Intel and TSMC. Despite recent setbacks and financial losses, Intel maintains a unique position as an American corporation "too big to fail," with potential government support likely regardless of electoral outcomes. Industry sources suggest Vice President Kamala Harris's potential victory would pose minimal risk to TSMC, while Donald Trump's return could revive discussions about chip protection fees and potentially pressure TSMC's market dominance.
The election's outcome could determine whether Intel, backed by U.S. government intervention through subsidies or strategic alliances, can revive its manufacturing prowess, while TSMC, currently at its peak with advanced process technology, faces challenges navigating U.S. demands and sanctions. This political transition period highlights the increasing intersection of semiconductor manufacturing with national security and geopolitical interests.
TSMC Plans Landmark Arizona Opening as $40B US Expansion Faces Political Crossroads
TSMC's Arizona facility is poised for a symbolic opening ceremony in early December 2024, potentially bringing together President-elect Donald Trump and President Biden in a rare display of bipartisan support for U.S. semiconductor independence. The facility, part of a broader $40 billion investment including three planned fabs, represents TSMC's strategic pivot from initial resistance to U.S. manufacturing to a comprehensive expansion plan targeting advanced node production.
Despite securing US$11.6 billion in government incentives, the project has faced significant challenges including labor disputes and cost overruns, delaying mass production of 4nm chips to early 2025. The ambitious roadmap, which includes 3nm and 2nm production capabilities by 2028, highlights TSMC's evolving role from a purely commercial entity to a crucial geopolitical asset in U.S.-China technology competition.
ASML Faces Growth Challenge as China Revenue Set to Drop Amid Export Controls
ASML, the world's leading lithography equipment maker, projects its China revenue share to decline to around 20% by 2025, marking a significant drop from its 2023-2024 peak of 40-50%. The Dutch company's revised 2025 outlook of EUR30-35 billion reflects the impact of tightened U.S. and Dutch export controls on advanced chip-making equipment to China, including restrictions on its 2000i and newer immersion lithography systems.
The expected decline follows a period of aggressive front-loading by Chinese chipmakers ahead of export bans, which previously drove ASML's China market share above 30% for the first time in 2023. While ASML maintains a dominant position in high-end ArF immersion DUV and EUV markets, with key customers like TSMC and Samsung accounting for over 55% of its revenue, the company faces the challenge of finding new growth drivers as China's foundry sector enters maturation and export restrictions continue to tighten.
Korean Chip Giants Pioneer Ultra-Low Temperature Tech for Next-Gen Memory
Samsung Electronics and SK Hynix are pushing the boundaries of memory chip manufacturing with "ultra-low-temperature" etching technology, marking a significant advancement in semiconductor production. The technique, operating at temperatures between -60°C and -70°C, promises enhanced precision and efficiency compared to conventional etching methods that run between -20°C and 30°C.
Samsung plans to implement this technology in its upcoming 430-layer V10 NAND production and is testing it for 7th-generation 10nm-class DRAM manufacturing, while SK Hynix explores applications for DRAM capacitors. The breakthrough could prove particularly crucial for HBM production and TSV applications, potentially giving Korean manufacturers an edge in the increasingly competitive memory market as they prepare for mass production of 6th-generation 1c DRAM in 2025.
Intel CEO's Secret Taiwan Trip Underscores Critical TSMC Partnership for Advanced Chips
Intel CEO Pat Gelsinger made an unannounced visit to Taiwan on November 1, meeting with TSMC Chairman C. C. Wei to secure critical 2nm and 3nm manufacturing capacity through 2025, according to sources familiar with the matter. The high-stakes meeting focused on negotiating exclusive N3B production capacity and potential price exemptions for 3nm technology, while also discussing allocations for Intel's upcoming Panther Lake processors and Falcon Shores AI GPU.
The discussions highlight Intel's delicate balancing act between developing its proprietary 18A technology and maintaining crucial ties with TSMC, whose advanced processes are already being used in Intel's Lunar Lake processors through N3B compute tiles and 6nm I/O components. The meeting comes at a critical time as Intel competes with Apple, Nvidia, and other tech giants for TSMC's limited advanced manufacturing capacity.
Samsung's Foundry Troubles Deepen as Losses Mount and Production Cuts Loom
Samsung's semiconductor division faces mounting challenges as reports emerge of potential production cuts of up to 50% at its advanced node facilities, despite company denials. The tech giant's foundry business, estimated to have lost up to KRW1 trillion (approx. US$750 million) in the third quarter, is grappling with low yields on 3nm processes and declining orders from Chinese clients amid U.S. trade restrictions.
DS Division head Young-hyun Jun issued a rare apology as operating profits fell 40% quarter-over-quarter to KRW3.86 trillion (approx. US$2.9 billion), well below market expectations. The struggles have sparked internal restructuring discussions and raised concerns about Samsung's competitive position against TSMC, with potential ripple effects including the possible loss of its Exynos 2500 processor slot in the upcoming Galaxy S25 series to Qualcomm chips.
Supermicro's Financial Woes Trigger Industry Shake-up as Nvidia Redirects AI Server Orders
Super Micro faces potential delisting by November 20 amid delayed financial reporting and accounting concerns, marking its second such crisis since 2018. The turmoil, exacerbated by a damaging Hindenburg Research report and Ernst & Young's resignation as auditor, has prompted Nvidia to intervene by redistributing server orders to competitors.
Taiwan-based manufacturers Gigabyte and ASRock have emerged as primary beneficiaries, with Gigabyte raising its 2024 revenue forecast to NT$165 billion (US$3.75 billion) and ASRock securing record quarterly revenues. The fallout has rippled through Supermicro's supply chain, impacting partners like Leadtek, Ablecom Technology, and Orient Semiconductor Electronics, while reshaping the competitive landscape in the booming AI server market that Supermicro once dominated.
