Semiconductor Shake-Up: Bold Moves, Big Breaks, and New Frontiers

?? We welcome you to the Twelfth Edition of yieldWerx Insights as we continue to explore key advancements in the global semiconductor industry, including strategic partnerships, product launches, and sinking giants.

Here's what we cover in this edition:

1) OpenAI and Apple partner with TSMC for advanced chip manufacturing

2) Netherlands set to block ASML services in China

3) IBM unveils Telum II Processor and Spyre Accelerators

4) Intel's abrupt cost-cutting strategy

5) Pitfalls of 'Portfolio Theory of Firm'

6) Infineon opens semiconductor fab in Malaysia

OpenAI and Apple Partner with TSMC for Advanced Chip Manufacturing

OpenAI has joined 苹果 as a lead customer for TSMC’s upcoming 1.6nm manufacturing process, set to begin production in 2026. While Apple’s involvement was expected, this marks a significant shift for OpenAI, traditionally a software-focused company, as it moves towards chip manufacturing.

Earlier reports indicated that OpenAI CEO Sam Altman was keen on producing its own chips, with negotiations for a dedicated 台积公司 wafer fab. However, the company has now shifted plans and is working with Broadcom and Marvell to develop its own ASIC chips.

These chips will first be produced using TSMC’s 3nm process before transitioning to the A16 process. The A16 is expected to offer enhanced performance and power efficiency through TSMC’s Super Power Rail (SPR) system, which optimizes logic density and power delivery.

Apple and OpenAI’s growing collaboration, alongside rumors of a potential $100 billion investment by Apple in OpenAI, suggests a closer alignment between the two companies. Apple’s newly introduced personal intelligence system, powered by generative AI models like ChatGPT, further indicates this strategic partnership.

Netherlands Set to Block ASML Services in China

The Netherlands is expected to limit ASML 's ability to service and repair its semiconductor equipment in China, dealing a blow to China's chip industry ambitions. The Dutch government may not renew licenses for ASML to maintain its advanced deep ultraviolet (DUV) lithography machines in China when they expire later this year. Without these essential maintenance services, some of ASML's machines in China could become inoperable by 2024.

This move follows pressure from the U.S., which has implemented strict export controls to curb China's chip sector growth. The U.S. government has pushed allies, including the Netherlands, to align their export restrictions with its policies, citing national security concerns. ASML and the Dutch foreign trade ministry have declined to comment on the matter, but this decision could significantly impact China's chip manufacturing capabilities.

Chinese state media and officials have threatened to retaliate against the Netherlands and Japan, urging them not to accept Washington’s requests to strengthen their chip export controls targeting China.

President Joe Biden’s top national security aide, Jake Sullivan, met with Chinese leader Xi Jinping last week, along with other top Chinese officials, as Washington and Beijing look to address bilateral tensions.

IBM Unveils Telum II Processor and Spyre Accelerator for AI-Powered Mainframes

IBM has introduced the Telum II Processor and Spyre Accelerator, designed to enhance AI capabilities in its next-generation Z mainframes. Telum II features a 40% cache increase, integrated AI acceleration, and a Data Processing Unit (DPU) to eliminate I/O bottlenecks. This ensures improved performance in handling 70% of global financial transactions.

The Spyre Accelerator, delivered on a PCIe card, supports advanced AI workloads, including large language models (LLMs), while consuming less than 75W per card. Each chip features 32 compute cores optimized for low-latency AI processing. With up to 1TB of memory, Spyre enables seamless integration of AI models across IBM Z mainframes, allowing enterprises to run secure and efficient AI applications.

IBM’s latest innovations are aimed at boosting transaction processing, fraud detection, and compliance, positioning the IBM Z as a leader in AI-driven financial operations.

Intel's Bold Cost-Cutting Strategy: CEO Plans Asset Sales and Factory Cuts to Revive Growth

According to a Reuters report, Intel CEO Pat Gelsinger, along with other top executives, is preparing to present a strategic plan to the board of directors in mid-September aimed at cutting costs and selling off underperforming business units.

One of the key proposals includes selling Intel’s programmable chip unit, Altera , which the company acquired in 2015 for $16.7 billion. Intel has also retained 摩根士丹利 and 高盛 to advise on potential asset sales.

Additionally, the plan may involve reducing capital spending, including possibly halting Intel’s $32 billion factory project in Germany. This move comes as Intel faces financial struggles, with a sharp decline in market value and an ongoing attempt to regain competitiveness in the AI chip market, dominated by rivals like 英伟达 .

Intel’s leadership hopes that shedding non-core businesses and cutting costs will help stabilize the company’s future, following a difficult second quarter and a broader company-wide restructuring.

However, Intel stock price dropped further as news broke that Broadcom tested Intel's finest, 18A wafers, and concluded that the manufacturing process hadn't achieved the required yield to move to high-volume production.

The Pitfalls of 'Portfolio Theory of Firm': Why Long-Term Innovation Beats Short-Term Gains

In a recent analysis of leadership trends at major corporations like Intel, Boeing, and Sony, a critical observation emerges: the appointment of non-technical leaders, particularly those focused on financial gains, has led to missed opportunities and stagnation.

For instance, when Intel’s first non-engineer CEO, Paul Otellini, declined Apple's offer to produce chips for the iPhone, it allowed competitors like 三星电子 and Arm to dominate the mobile computing space. Boeing faced a similar fate under James McNerney, an MBA, whose cost-cutting strategy led to the disastrous 737 MAX crashes. At Sony, the shift away from engineering-driven leadership under Nobuyuki Idei resulted in a loss of innovation.

This brings us to the "Portfolio Theory of the Firm," where companies are managed like financial portfolios, focusing on short-term profits and asset restructuring rather than innovation and long-term value creation. While this approach might stabilize profits temporarily, it often undermines the very core of what makes companies competitive—breakthrough innovation.

Companies that fail to prioritize product specialization and technical leadership become fragmented, with leadership treating various divisions as interchangeable assets rather than cohesive, value-driven entities.

Visionary companies must focus on creating long-term value through continuous innovation, ensuring that leadership aligns with their core strengths—something the "portfolio theory" approach tends to overlook.

Infineon Opens World's Largest SiC Power Semiconductor Fab in Malaysia

英飞凌 AG has launched the first phase of its new silicon carbide (SiC) power semiconductor fab in Malaysia, which will become the world’s largest of its kind. This €2 billion facility will produce SiC power semiconductors and gallium nitride (GaN) epitaxy, key components for high-power applications like electric vehicles, renewable energy systems, and AI data centers. The project is expected to create 900 jobs in its first phase, with up to 4,000 jobs in total as the facility expands.

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