01. Vietnam Plans to Implement a Subsidy Policy to Incentivize Semiconductor Production
Vietnam is crafting incentives for chip manufacturers, including tax breaks, fast-tracked exports, subsidies, and expedited visas, as it attracts global players like Nvidia and Besi. The proposed Digital Technology Industry Law (DTI) suggests allowing a 150% deduction on research expenses and offering 10-year rent-free land usage. These efforts aim to leverage the U.S.-China tech rivalry and attract semiconductor investments while ensuring compliance with the global minimum tax treaty. Recent visits from U.S. chip executives, including Intel's Pat Gelsinger and Nvidia's Jensen Huang, have fueled investment discussions. Vietnam plans to enhance its semiconductor hub status through investments in energy, infrastructure, and workforce training, even as it lags behind more advanced nations.
The DTI bill proposes expedited approvals and tax exemptions for projects worth $160 million or more, with an aim for completion by October and potential rollout by mid-2025. However, compliance with the OECD's 15% global minimum tax could strain the national budget, as noted by Deloitte's Thomas McClelland. Despite challenges like power shortages and skill gaps, Vietnam remains an attractive destination for the chip industry, with companies like Besi and Nvidia already investing.
02. US Urges South Korea to Tighten Chip Export Controls to China
At the Korea-U.S. Economic Security Conference on September 10, 2024, U.S. Deputy Commerce Secretary Alan Estevez urged South Korean chipmakers Samsung and SK Hynix to limit advanced chip exports to China, especially high-bandwidth memory (HBM) chips critical for AI accelerators. Estevez stressed the importance of export controls to China, particularly for AI and military applications, urging South Korea to align with U.S. policies on cutting-edge technologies like quantum computing and gate-all-around (GAA) transistors. In response, South Korean Trade Minister Chung In-kyu stated that while South Korea will discuss the matter with the U.S., they cannot fully align with American policy due to significant reliance on exports to China. He emphasized the need for U.S. flexibility and incentives to mitigate the impact on South Korean businesses, highlighting the close economic ties between South Korea and China.
03. NXP Semiconductors Commits Over $1 Billion to Enhance R&D and Strengthen India's Semiconductor Industry
NXP is investing over $1 billion in India to boost R&D and support the country's growing semiconductor sector. CEO Kurt Sievers announced the plan to double R&D spending at the Semicon India conference. With four design centers and 3,000 employees in India, NXP is engaging with local industries. India's semiconductor market is expected to hit $63 billion by 2026, with the government's $10 billion incentive program to compete with chip hubs like Taiwan.
Other chipmakers like Nvidia and AMD have also set up in India. In February, India approved $15 billion for three semiconductor plants, and Applied Materials plans a $400 million investment for a new engineering center. However, NXP recently reported a significant revenue drop and lower-than-expected forecasts, indicating potential challenges in the automotive chip market.
04. Intel to Establish Advanced Chip Research Center in Japan with EUV Technology
Intel will partner with Japan’s research institutions to establish an advanced semiconductor R&D center. This center aims to boost Japan's chip manufacturing capabilities in equipment and materials, where Japan excels. Expected to open in three to five years, it will be the first in Japan to allow industry access to cutting-edge extreme ultraviolet (EUV) lithography equipment for prototyping and testing, enhancing sector collaboration.
The National Institute of Advanced Industrial Science and Technology (AIST) will manage operations, with Intel providing EUV chip manufacturing expertise. This project could involve several hundred million dollars in investment. EUV machines are vital for producing semiconductors at 5nm and smaller, crucial for optimizing chip performance, yet their cost, over 40 billion yen ($273 million) each, hinders individual suppliers.
Many Japanese firms currently rely on international hubs like Belgium's Imec for EUV development. While Japan's Rapidus initiative seeks to introduce EUV for mass production soon, domestic access to advanced equipment remains limited. Establishing EUV facilities in Japan could ease challenges posed by stringent U.S. export controls on EUV technology to China, which complicates the return of research data.
The global EUV lithography market is led by ASML, but semiconductor manufacturing involves over 600 steps, making the development of related tools critical. Japan has key players like Lasertec in EUV inspection equipment and JSR in photoresist materials. Through this new center, Intel aims to strengthen ties with these Japanese suppliers, solidifying its position in the semiconductor supply chain.
05. TSMC's Revenue Surges 33% in August Amid Strong AI Chip Demand
Taiwan Semiconductor Manufacturing Company (TSMC) reported a 33% year-over-year rise in August revenue, totaling NT$250.9 billion (around $7.8 billion). This reflects strong AI chip demand and a rebound in the smartphone market, signaling positivity for investors. Although this growth lags behind July's 45%, analysts predict a 37% revenue increase for TSMC in Q3, continuing 2023's post-pandemic recovery.
Over half of TSMC's revenue stems from high-performance computing (HPC), fueled by AI needs. As NVIDIA's primary chipmaker, TSMC has greatly benefitted from AI-related orders. Despite NVIDIA's disappointing September earnings causing a $279 billion market drop, TSMC's strong performance eases concerns about AI investment sustainability.
TSMC also manufactures Apple's iPhone processors. The new iPhone 16 series is designed for AI, with features expected in future software updates. Analysts foresee Wi-Fi 7 in the iPhone 16 and Pro enhancing market penetration, boosting demand for TSMC's advanced 7nm and 5nm processes used by firms like Broadcom and MediaTek. Performance improvements in Apple's A18 processors align with projected boosts for TSMC's N3E (second-generation 3nm) sales.
As the market recovers, TSMC is aggressively expanding globally. The company is progressing on its Arizona project, contemplating a third fab in Japan, and has launched a €10 billion fab in Germany. These moves highlight TSMC's aim to strengthen its position in the global semiconductor landscape.
06. AI Demand Drives 25% Quarterly Increase in Enterprise SSD Contract Prices
In Q2 2024, Enterprise SSD procurement surged due to the ramp-up of NVIDIA GPU platforms and AI applications. This demand led to supplier shortages, with average prices rising over 25% and revenues up over 50%. In Q3, continued demand from North American CSP clients and stable orders from server brand companies will likely push Enterprise SSD procurement further, with contract prices expected to rise 15% and revenues nearly 20%.
Samsung leads the market with a full product line, reporting Q2 revenues of $2.48 billion and anticipating over 20% growth in Q3. Solidigm, SK Group's largest QLC Enterprise SSD supplier, benefited from AI growth, with Q2 revenues reaching $1.824 billion and a slight market share increase to 32%. Solidigm's shipments and revenues are expected to rise in Q3.
Micron achieved significant Q2 revenue growth to $780 million, shifting focus to PCIe interface products. Kioxia's Q2 Enterprise SSD revenues rose to $490 million due to increased server brand demand. WDC reported Q2 revenues of $164 million, shifting focus to PCIe product development and expanding partnerships to launch QLC high-capacity products.