Semiconductor Week in Review (Dec 15 - 21) :
In a transformative week for the semiconductor industry, the Biden administration moved to tighten controls on China's AI chip access while launching a trade probe into mature node semiconductors. The sector witnessed major transitions with Intel's leadership vacuum following CEO Pat Gelsinger's departure, as TSMC and Samsung race toward 2nm production. Meanwhile, Japan's Rapidus faces a US$32 billion challenge in its 2nm venture, while India's chip sector expands through strategic partnerships.
US set to launch trade probe into Chinese chips amid mature node concerns
The US is preparing to launch a Section 301 investigation into Chinese semiconductors, particularly targeting mature process chips used in medical devices, automobiles, and smartphones, amid growing concerns over China's market dominance and pricing strategies.
The investigation, expected to take at least six months to complete, comes as US officials estimate China could supply up to 50% of new global capacity for mature process chips in the next three to five years, with Chinese chip prices running 30% to 50% below US levels.
The probe, to be led by the US Trade Representative, could potentially result in tariffs or other trade restrictions, though officials face challenges in targeting semiconductor imports since many arrive as components in finished products rather than as standalone chips.
Indian chipmaker secures power semiconductor deal, expands partnerships
Kaynes Semiconductor, a subsidiary of Kaynes Electronics, has embarked on a significant expansion of its semiconductor capabilities through multiple strategic partnerships. The company has secured an anchor customer for IGBT and IPM products in the power electronics segment, starting with a proof-of-concept phase before scaling to high-volume production.
In parallel, Kaynes has formed alliances with major industry players, including a partnership with Mitsui for raw material procurement, collaboration with Siemens for advanced design tools, and ongoing discussions with a global memory chip vendor for packaging services.
The company is also strengthening its position in India's semiconductor ecosystem through partnerships with startups like Light Speed Photonics and a workforce development initiative with Perceptive Solutions, which includes training programs and academic partnerships to build a skilled talent pipeline for the growing industry.
Biden to crack down on China's AI chip access through third countries
The Biden administration is preparing to unveil new regulations targeting China's acquisition of advanced AI chips through third-party nations, with a particular focus on Southeast Asian transit points like Singapore and Malaysia. The measures, expected by year-end, will introduce a "country cap" system and enhanced monitoring requirements to close existing loopholes in semiconductor export controls.
The move follows earlier restrictions announced by the Commerce Department on December 2, which expanded controls on semiconductor manufacturing equipment and high-bandwidth memory chips. While Nvidia has declined to comment on the pending regulations, the company's rising revenue from Singapore—reaching 22% in the latest quarter—highlights the region's growing significance in the global semiconductor trade and underscores the urgency of the new controls.
Chinese chip industry braces for 2025 downturn as oversupply looms
China's semiconductor sector is heading toward a significant market correction in 2025, with major international equipment suppliers like ASML and KLA projecting sharp declines in their Chinese revenue amid mounting oversupply concerns and tightening US sanctions. While China currently operates 40 12-inch wafer fabs with a monthly capacity of 1.55 million wafers and plans to add 30 more production lines, industry analysts warn that persistent oversupply will likely slow capacity growth and equipment demand.
This shift is particularly significant as Chinese fabs, which had stockpiled equipment to counter US restrictions, now face challenges in maintenance and parts supply, with international providers like KLA anticipating up to 30% reduction in service revenues. Although Japanese and Dutch firms maintain certain exemptions, and second-hand equipment providers are emerging as alternatives, the industry's restructuring is forcing China's semiconductor ecosystem to adapt to new supply chain dynamics while seeking local solutions for critical components.
Intel CEO's sudden exit deepens company's structural challenges
Intel's sudden leadership vacuum following CEO Pat Gelsinger's retirement on December 1, 2024, has intensified the chipmaker's existing struggles, with interim co-CEOs David Zinsner and Michelle Johnston Holthaus stepping in as the board searches for a permanent successor. The departure, widely seen as involuntary, comes amid Intel's challenging transition to separate its design and foundry businesses while facing fierce competition from rivals AMD, Nvidia, and Qualcomm.
The company's instability has sent shockwaves through Taiwan's tech supply chain, disrupting long-established partnerships in motherboards, PCs, servers, and IoT sectors, while benefiting competitor TSMC, which has seen increased orders as Intel's dependency on external foundry services grows.
With ongoing organizational restructuring and layoffs, coupled with unreliable product roadmaps and potential delays in key technological developments, the company faces a critical juncture in maintaining its market position while its board works to identify a leader capable of addressing these mounting challenges.
Japan's Rapidus faces steep climb in 2nm chip production race
Japanese chip venture Rapidus confronts three major hurdles in its ambitious pursuit of 2nm semiconductor production, according to chairman Tetsuro Higashi in a Nikkei interview. The company must overcome technical challenges in leaping from Japan's current 40nm manufacturing capability to 2nm, establish market differentiation through specialized chips for robotics and AI applications, and address funding concerns with its heavy reliance on government support.
While Higashi expresses confidence in achieving mass production through partnerships with IBM and equipment manufacturers, the venture requires an estimated JPY5 trillion (approx. US$32 billion) investment. Currently backed by JPY920 billion in government subsidies, Rapidus aims to transition toward private funding for roughly half of its equipment costs, though industry observers remain skeptical about the state-backed semiconductor initiative's effectiveness and sustainability.
TSMC, Samsung gear up for 2nm chip battle as production nears
TSMC and Samsung Electronics are intensifying their competition in the 2nm chip manufacturing space, with both companies targeting mass production in 2025. While TSMC maintains a slight edge in development and has secured premium clients like Apple, Samsung is mounting an aggressive challenge by restructuring its leadership and securing initial customers. The South Korean giant has appointed two president-level executives to strengthen its foundry division and has already partnered with Japanese AI startup PFN for 2nm AI accelerators.
TSMC plans to begin trial production in April 2025 with wafer prices potentially reaching $30,000, double that of current 4nm and 5nm processes, while Samsung aims to establish full production by the fourth quarter of 2025. The heightened competition comes amid unexpectedly strong demand for 2nm technology, prompting both companies to expand their production capacity and technological capabilities.
