Apple and Google’s AI Alliance

?? We welcome you to the Tenth Edition of yieldWerx Insights as we continue to explore key advancements in the global semiconductor industry, including strategic expansions, groundbreaking innovations, and international partnerships.

Here's what we cover in this edition:

1) Apple used Google' custom chips for its AI models.

2) Amkor Technology and Sk hynix Get Chips Act Funding Approval.

3) Intel to Slash 15% of Jobs.

Apple States its AI models Were Trained Using Google's Custom Chips

Apple announced that its AI system, Apple Intelligence, was pretrained using Google's Tensor Processing Units (TPUs), signaling a shift among Big Tech companies to seek alternatives to Nvidia's dominant GPUs for AI training.

Apple's technical paper detailed the use of these TPUs and introduced a preview version of Apple Intelligence, featuring enhanced Siri, improved natural language processing, and AI-generated summaries. Future updates will include image and emoji generation and a more advanced Siri.

Nvidia's GPUs have been the market leader for AI training chips, but their high demand has made them scarce. Companies like OpenAI, Microsoft, and Anthropic rely on Nvidia's GPUs, while Google, Meta, Oracle, and Tesla also use them for their AI systems.

Recently, Meta CEO Mark Zuckerberg and Alphabet CEO Sundar Pichai discussed the risks of overinvesting in AI infrastructure but emphasized the necessity to stay competitive.

Also, a federal judge ruled against Google in a significant antitrust case, citing its illegal monopoly in search. This ruling could impact Apple due to its deal with Google, where Google pays Apple billions annually ($20 billion in 2022) to be the default search engine on iPhones.

Amkor Technology and Sk hynix Get Chips Act Funding Approval

SK hynix , the leading High Bandwidth Memory (HBM) market player, announced a preliminary agreement with the U.S. Department of Commerce to receive up to $450 million in direct funding and $500 million in loans through the CHIPS and Science Act.

This funding will support the establishment of a semiconductor packaging production base in Indiana. SK hynix’s rapid capacity expansion is driven by its role as a key HBM supplier to NVIDIA, particularly for the NVIDIA Blackwell B200 GPUs.

Moreover, Amkor Technology, Inc. also announced a preliminary agreement with the U.S. Department of Commerce to receive funding under the CHIPS and Science Act. The funding will support the construction of Amkor's first domestic OSAT facility in Peoria, Arizona, with an estimated $2 billion investment, creating around 2,000 jobs.

Meanwhile, 应用材料公司 was reportedly denied CHIPS Act funding for a $4 billion R&D center in Silicon Valley, planned for completion in 2026.

Intel to Slash 15% of Jobs, Suspend Dividend Amid Turnaround Efforts; Shares Plummet

Intel announced it would cut over 15% of its workforce, around 17,500 jobs, and suspend its dividend starting in the fourth quarter as part of a turnaround focused on its struggling manufacturing business. The company also forecasted lower-than-expected third-quarter revenue due to reduced spending on traditional data center semiconductors and its lag in AI chip development. This news led to a 20% drop in Intel's shares, wiping out more than $24 billion in market value.

CEO Pat Gelsinger emphasized the need for more customer support roles and a focus on strengthening the balance sheet. Intel aims to cut operating expenses and capital expenditures by over $10 billion by 2025. The company's turnaround strategy includes developing advanced AI processors and expanding its contract manufacturing capabilities to compete with Taiwan's TSMC.

Despite a 9% growth in its PC chip business, Intel's profitability has been pressured by high costs and a 3% decline in its data center business. CFO David Zinsner highlighted weaker consumer and enterprise spending, particularly in China, and the impact of revoked export licenses on its sales. Intel plans to significantly reduce investments, expecting capital expenses to stay flat in 2024 and cut by 17% in 2025.

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