Semiconductor Week in Review (Dec 1- 7) :
The semiconductor landscape is seeing seismic shifts in early 2025, with Elon Musk's xAI securing US$1.08 billion in priority Nvidia orders while Intel weighs foundry spinoff amid leadership turmoil. China's chip sector approaches CNY1 trillion (approx. US$137.4 billion) in exports despite US restrictions triggered by Huawei's advanced Mate 70 launch, as TSMC plans revolutionary 9x reticle packaging by 2027.
These developments underscore growing tensions between technological ambitions, geopolitical pressures, and market realities, particularly as Chinese manufacturers like Hongjun face TSMC supply constraints while domestic MCU makers struggle to compete globally.
Musk's xAI jumps ahead in Nvidia's supply queue with US$1.08 billion rush order
Elon Musk's xAI has secured priority access to Nvidia's next-generation AI hardware, offering a premium for 1,600 GB200 server cabinets worth US$1.08 billion, with 360 units requested for January delivery. The deal comes as Nvidia grapples with production challenges for its Blackwell-based chips, pushing mass production to March 2025 due to design flaws and downstream component yields, affecting major clients including Microsoft and Meta.
Microsoft has responded by adjusting its procurement strategy, reallocating orders between GB200 and GB300 models for 2025-2026 deliveries. The developments coincide with xAI's ambitious plan to build the world's largest GPU cluster of 300,000 B200 GPUs. At the same time, Foxconn, Nvidia's key manufacturer, reports "exceptionally intense" demand with AI servers expected to represent half of its server revenue by 2025.
Intel weighs foundry spinoff as leadership crisis deepens post-Gelsinger
Intel faces a pivotal moment following CEO Pat Gelsinger's unexpected retirement announcement, with industry sources suggesting a potential separation of its struggling foundry division as a strategic solution. While history offers parallel recovery stories through Apple's resurrection under Steve Jobs and AMD's transformation led by Lisa Su, Intel's immediate challenge lies in securing new leadership, potentially from TSMC's veteran pool including JK Wang, to revitalize its manufacturing operations.
The semiconductor giant must balance profitability with increased TSMC outsourcing while seeking US government support to advance process technologies and attract external clients, though experts note the company's design division remains strong despite manufacturing setbacks.
Huawei's Mate 70 launch triggers fresh US chip curbs on China
The launch of Huawei's Mate 70 series in late November, featuring advanced Kirin 9020 chips and marketed with a bold "Strong enough to take off" campaign, appears to have prompted swift US regulatory action against China's semiconductor industry. By early December, Washington expanded restrictions on seven Chinese chipmakers, particularly targeting SMIC with "FN5" regulations, while removing key players like Hua Hong Semiconductor from the Validated End-User program.
The timing of these measures, following Huawei's showcase of cutting-edge technology including eight-core, twelve-thread architecture, and pioneering 5G-A standard implementation, reflects escalating US efforts to contain China's semiconductor advancement amid Huawei's increasingly defiant stance against technology restrictions.
Chinese chipmakers face reality check as Microchip closes Arizona fab
As Microchip Technology announces the closure of its Arizona Fab 2 and pauses its US subsidy application, Chinese MCU manufacturers face a complex market reality despite showing growth through 2024's first three quarters. While domestic players like GigaDevice and Chipsea Technologies benefit from China's import substitution drive, industry experts warn of broader challenges, including intense competition and persistent inventory pressures in automotive sectors.
Despite progress in RISC-V-based automotive MCU development and an expanding NEV market, Chinese manufacturers remain confined to mid and entry-level applications, with domestic substitution rates staying below 5%. The sector grapples with significant hurdles including engineer shortages, lengthy certification processes, and sustained losses amid price pressures, suggesting that long-term success will hinge on securing adequate capital and mass production capabilities to compete with established global players.
Chinese chip designer Hongjun faces layoffs amid TSMC supply constraints
Hongjun Microelectronics Technology, a Chinese Arm server processor designer founded in 2021, is reportedly planning to cut up to 50% of its 300-person workforce amid mounting pressures from TSMC's reduced supply of advanced processes to China and financial constraints. The company, led by former Intel and Inspur veteran Rong Shen, had secured nearly CNY800 million in early funding and recently reached the tape-out stage for its Arm Neoverse N2 platform server CPU.
However, TSMC's decision to restrict 7nm and below processes to Chinese clients, combined with rising operational costs and intensifying US semiconductor restrictions, has cast doubt over Hongjun's future development in the increasingly competitive Chinese server CPU market.
China's chip exports near CNY1 trillion milestone despite US curbs
China's semiconductor industry is demonstrating remarkable resilience, with exports approaching CNY1 trillion in 2024 after reaching CNY931.17 billion in the first 10 months, marking a 21.4% year-over-year increase despite ongoing US sanctions. Rather than hindering growth, US restrictions on advanced chip technology have inadvertently accelerated China's dominance in mature process manufacturing, particularly benefiting from automotive and industrial sector demand where 80% of chips utilize mature processes.
This strategic pivot away from cutting-edge technology pursuit has strengthened China's semiconductor self-sufficiency campaign, with Chinese manufacturers capitalizing on the stability and reliability requirements of automotive applications to expand their global market share in mature segments, effectively working around US trade restrictions.
TSMC plans the largest chip package yet with 9x reticle size for 2027
TSMC has unveiled plans at its European OIP forum to certify an unprecedented 9x reticle size CoWoS packaging technology by 2027, offering a massive 7,722 square mm space capable of hosting twelve HBM4 memory stacks. The advancement marks a significant leap from the current 3.3x reticle size and will enable the stacking of 1.6nm process chips on 2nm chips, though challenges remain in managing substrate sizes exceeding 120x120mm and handling power consumption that could reach hundreds of kilowatts per rack.
This development, targeted for deployment in high-end AI processors by 2027-2028, follows TSMC's intermediary step of launching a 5.5x reticle package in 2025-2026, reflecting the industry's growing demand for enhanced computing power in AI and HPC applications.
