AI windfall, the two chip giants smashed money to break the game, betting on the 2025 group warfare

From last year to date, we have witnessed Chat GPT, Sora, Kimi and other powerful generative AI applications detonated the wind. For the chip industry, in the consumer electronics downturn, automotive electronics tend to be weak, AI has become the only most important "lifesaving straw".

The next performance of chip companies is to see whether they can share more opportunities under the AI wave. Throughout the industry, SK Hynix's HBM memory, Broadcom's switches, NVIDIA's GPU chips, are all powerful knock on the door of the AI era. But for the two giants Samsung and Intel, the areas involved are wide but do not form a direct competitive advantage. To chase the AI windfall to consolidate the advantage, a deeper metamorphosis is needed.

Samsung: two major areas to face the challenge of raising funds to break the game

Samsung is a South Korean and global electronics giant, its semiconductor business in the memory and foundry occupy a pivotal position, but in the era of AI precisely also face the greatest intensity of competition, and even there is no room to avoid the sharp edges of rivals, must be met head-on.

HBM memory product form first defined by SK Hynix and AMD, samsung in this field does not have a first-mover advantage. HBM in the development of the beginning of the application field is not suitable, but the rise of AI has changed all this, SK Hynix therefore occupy a dominant position. Samsung, the world's No. 1 memory supplier, its comprehensive product lineup instead limits its play in a single area of AI.

At NVIDIA's annual GTC conference just past, Jen-Hsun Huang announced that he would purchase 12-layer HBM3 memory from Samsung alone. The market was quite surprised by this, because reports from a while ago also rumored that Samsung's HBM3 production yields were only 10%-20%, compared to SK Hynix's 60%-70%. NVIDIA's certification and procurement, there may be the introduction of the second supplier, to maintain the right to speak in the supply chain considerations, which will give Samsung a certain opportunity, but Samsung must still significantly improve the yield.

In the chip industry, every bit of progress has to be exchanged for a high cost of capital, just recently, samsung from the shareholding of samsung display to obtain a huge dividend, but also sold all the photolithography major ASML's stake in $6.5 billion, in order to obtain more sufficient funds. ai wind mouth is not so good to stand in the past samsung habitually counter-cyclical investment, these investments will often be in the cycle after the cycle turns to the right to recover even with interest, but In the field of HBM, samsung's investment is to catch up with the posture, which means that the scale of investment can not be measured. Similarly in the field of wafer foundry, Samsung to grab more share from the hands of TSMC, I am afraid that the investment required is more.

In TSMC 3nm began to contribute to revenue at the time, Samsung and its counterpart 3nm GAA is still suffering for the yield, although it has recently been raised from 10%-20% to 30%-60%, but still lagging behind TSMC. The key to competition in the wafer foundry is the yield, if the yield can not reach a certain level, there is even no room for price competition. In February of this year, the report rumor samsung 4nm process real yield of only 35%, resulting in Qualcomm will be in the 3nm next-generation chip comprehensive turn single TSMC.

For a long time, Samsung against TSMC can only play differentiated competition, through the "cost-effective" win. But in the AI era, TSMC in 5nm within the continuous accumulation of advantages, firmly hold the main customers, samsung difficult to have a chance, I am afraid that only in the head of the customer decentralized supply chain, get part of the order. Wafer foundry next big node of competition will unfold next year, TSMC will also enter the GAA process, when Samsung's pressure will only be greater. Last year, Samsung's R & D spending reached 28 trillion won, accounting for 13% of the proportion of sales, while in 2022 this proportion is 8%. This year to prepare for the process showdown in 2025, R&D investment will only get bigger, and if the current is at the beginning of a new AI-led upcycle, then these investments can create even more value.

Intel: into the game against the wind, with a large investment for time

Recently, Intel's most notable news is its FPGA company officially independent operations, and restore the name of Altera. The same was acquired by the processor manufacturers of FPGA vendors, Xilin Si in AMD's development is far better than Altera, which also shows that Intel's original acquisition did not realize the organic integration. This is just a microcosm of the mediocre performance of Intel in recent years, the giant missed the opportunity in the mobile field in the early years, and now come to the AI era, Intel can "turn around" is a suspense.

Processor for the IDM factory's existing genes, as well as in the early years of the 14nm long pause, resulting in the face of Intel AI opportunities difficult to quickly correspond. In the field of arithmetic, CPU is not as good as GPU, Nvidia set up the advantage can not be shaken. And in the field of wafer, the most important thing right now is to use the AI opportunity to grab the top chair in the field of advanced process from TSMC. Coupled with the dilemma of double-digit revenue declines for two consecutive years, all making Intel eager to break the game.

Comprehensive factors, CEO Pat Gelsinge pointed out that the planning of the "5N4Y" process roadmap (i.e., in four years time to launch five process nodes), will only be more determined to implement. And the key battle of the wafer process will break out in 2025. At that time 3 / 2nm level process collision, Intel will also bring 2nm level, the introduction of GAA transistors 18A process to join the fray. Previously Pat Gelsinge said in an interview, "has bet the entire company on the 18A node above". But the face of pure foundry genes, TSMC has been in a number of nodes to keep the industry's key customers, although Intel chip giants, but also can only be a challenger to the identity of the wind into the game.

Foundry essentially belongs to the high-end manufacturing services, technology is the core competitiveness, to fight for customers and to maintain the same to pay extra efforts, TSMC's success has proved this point. As a U.S. company, there are chip manufacturing back to the "name" in the Intel pull together local customers in the United States is naturally logical. Recently, Pat Gelsinge in the social media to Musk issued an invitation to visit the fab, this move undoubtedly shows that Intel has been across the two key areas of automotive and intelligent Tesla heart. Even for Sam Altman, who wants to build his own fab to produce chips, Pat Gelsinge also tried to contact. If we can get OpenAI's order in 18A and later nodes, the significance of Intel's wafer ecosystem is self-evident.

Chip manufacturing return to the "righteousness" in, Intel also from the U.S. government to obtain huge subsidies, recently announced that the U.S. Department of Commerce, will provide up to $ 8.5 billion to Intel's huge grants and $ 11 billion in loans, which is the largest amount of chip subsidies since the establishment of the largest amount of foreign enterprises such as TSMC is bound to be no such treatment. This roughly $20 billion in financial support will leverage $100 billion in investment from Intel. Intel plans as soon as 2027, will be in Columbus, Ohio, to build the world's largest artificial intelligence chip manufacturing base, the total investment is expected to be $ 28 billion, the rest of the funds will also be used respectively for the construction of a number of projects, as well as the purchase of equipment and so on.

In recent years as the situation changes, the chip industry, especially in the field of advanced process has long been not purely commercial competition, there are too many factors outside the business in the play influence. Based on this, more and more U.S. customers intend to create a complete "in the U.S. production chain", which is a favorable factor for Intel. Intel's overall strategy is to recognize this opportunity and act on it quickly, trading money for lost time.

Giants finding the right direction will be able to take advantage of it

Before the recovery of consumer electronics, the recovery of the whole industry will depend on AI, which will inevitably cause a round of industrial reshuffling, one after another. Giant companies have the advantage of huge volume and wide layout, but this also means meeting high-intensity competition in all aspects, and Samsung and Intel are facing such a situation.

AI opportunities rise too quickly, but also in the case of total demand downturn suddenly unfolded, specialized enterprises are easy to achieve competitive advantage, comprehensive giants face multiple lines of competition, smashing money to break the game is a way to play the advantage. After finding the right direction and adjusting the pace, Samsung and Intel will also achieve new development under the infusion of AI opportunities.