Intel on Thursday posted its financial results for the first quarter of 2025. The company's earnings were flat year-over-year; however, its losses deepened, and its gross margin declined despite lower operating expenses. While sales of the company's data center grade products demonstrated signs of growth, sales of client CPUs declined compared to the same quarter a year ago. Perhaps more importantly, Intel gave a bleak outlook for the second quarter due to macro challenges. 

In the first quarter of 2025, Intel reported flat year-over-year revenue of $12.7 billion, with a net loss of $821 million, nearly twice the amount compared to the same quarter a year ago. The company's gross margin declined to 36.9%, pressured by a product mix, startup costs for the 18A ramp-up, and uncertainties (which Intel referred to as macroeconomic headwinds).

The company's operating expenses — including research and development (R&D) as well as management, general, and administrative costs (MG&A) — declined to $4.8 billion in Q1 2025 from $5.9 billion in Q1 2024. However, despite this decline, the company's losses increased. 

"The first quarter was a step in the right direction, but there are no quick fixes as we work to get back on a path to gaining market share and driving sustainable growth," said Lip-Bu Tan, Intel CEO. "I am taking swift actions to drive better execution and operational efficiency while empowering our engineers to create great products. We are going back to basics by listening to our customers and making the changes needed to build the new Intel." 

Perhaps the most alarming sign is that Intel's Client Computing Group (CCG) revenues fell 8% year-over-year to $7.6 billion. This drop was attributed to weaker-than-expected PC demand, particularly in the consumer segment, competitive pricing, and unfavorable product mix that includes a plethora of products made by TSMC. Interestingly, many of Intel's customers favored older-generation products like Raptor Lake over newer, higher-cost platforms such as Meteor Lake, Arrow Lake, and Lunar Lake. 

Despite these challenges, Intel noted demand for AI PCs from business customers, as well as enterprise fleet upgrades and Windows 10 end-of-service migrations, although this was insufficient to offset the broader softness in consumer sales. 

Intel's Data Center and AI (DCAI) business unit reported $4.1 billion in revenue in Q1 2025, achieving an 8% year-over-year increase, making it one of the few growth areas for the company. The performance was primarily driven by strong demand from hyperscalers for host CPUs in AI server deployments. However, the segment faced margin pressure due to competitive dynamics from AMD, product mix, and elevated demand for older-generation parts rather than newer offerings. 

Despite the revenue growth, Intel acknowledged macroeconomic uncertainty, potential spending pullbacks, and competition from AMD and Arm-based server solutions as risks that could affect DCAI performance in the coming quarters. The company remains focused on stabilizing market segment share and increasing average selling prices (ASPs) while preparing for the ramp of its next-generation server products. 

Intel Foundry reported $4.7 billion in revenue, reflecting a 7% year-over-year increase driven mostly by internal demand, particularly from Intel's own product groups for wafers and advanced packaging services. Despite revenue growth, the Foundry segment continued to operate at a significant loss, posting an operating loss of $2.3 billion, which remained roughly flat compared to the previous quarter. 

Intel's Lip-Bu Tan reiterated at the conference call that the company's Foundry success hinges not just on manufacturing capabilities but also on building customer trust, improving process design enablement, and supporting a broader range of customer flows. For now, the key mission of Intel Foundry is to ramp up production of Intel 18A-based Panther Lake and then Clearwater Forest processors in late 2025 – 2026 to prove that IF has a node that is competitive with TSMC's N2. 

According to China's Ministry of Finance, the 2025 central budget will allocate ¥398.12 billion yuan ($55 billion) for science and technology, a 10% increase from 2024. This allocation is the third-largest item in the budget, surpassed only by national defense and debt interest payments.

The increase in spending on science and technology by 10%, or $5 billion, emphasizes that China wants to accelerate its national R&D this year, which will speed up its plans for self-reliance in sectors such as semiconductors. $5 billion will not build the country a breakthrough but will rather help with existing projects, particularly in fields such as semiconductors, AI, space exploration, and quantum computing.

Also, remember that China's economy is slowing, and the government frequently disguises economic stimulus plans within large-scale initiatives like this, allowing it to avoid directly labeling it as a stimulus.

In 2024, China allocated ¥361.9 billion for science and technology expenditures, achieving 97.6% of the budgeted target. The government increased support for fundamental research to strengthen China's capabilities in cutting-edge scientific discovery and technological innovation. Investment was directed into major national initiatives, particularly in strategic sectors such as semiconductors, artificial intelligence, and space exploration. Last year, China also introduced support for Small and Medium Enterprises (SMEs), including special financing programs to assist innovative SMEs with risk-sharing mechanisms through national financing guarantee funds. In addition, tax reductions and subsidies were offered to tech enterprises to encourage innovation.

China plans to channel its science and technology spending on 'Science and Technology Innovation 2030' major projects targeting integrated circuits, artificial intelligence, and quantum computing technology. Governments tend to invest money into projects that may not pay off for years, so expect China to invest in fundamental research in the aforementioned areas. This will strengthen China's global competitiveness in these key industries in the coming years, which is particularly important for China's ongoing rivalry with the U.S.

On Monday, TSMC announced plans to invest $100 billion to expand its manufacturing capacity in the United States. The funds will go toward three additional fabs, two advanced packaging plants, and a major R&D facility. Tom's Hardware spoke with the company to learn more about its plans.

The extra $100 billion investment adds to TSMC’s $65 billion commitment for its Fab 21 site near Phoenix, Arizona. This makes TSMC, the world’s largest contract chip manufacturer, one of the biggest foreign investors in the U.S. to date.

Given the titanic proportions of TSMC's $165 billion total investment, a deeper understanding of where and how the funds are being used across TSMC's various U.S. initiatives is warranted. Let's take a look at how this fits in with TSMC's overall strategy.

New Fabs, Packaging Facilities, and an R&D Center

Although TSMC said it would invest an additional $100 billion in its U.S. operations, the company has not disclosed specific details regarding the timing, locations, or technologies for its expanded U.S. investment. But it appears to have enough space to build new facilities at its Fab 21 site.

"We have not announced details on timing, locations, or specific technologies for our intended new investments yet," Nina Kao, head of public relations at TSMC, told Tom's Hardware. "We are committed to moving as fast as possible to meet our customers’ needs, and we expect to share more information as our plans are finalized."

TSMC's Fab 21 campus near Phoenix, Arizona, is around 1,100 acres in size (4.5 km^2), which is more than twice the size of Monaco or roughly equivalent to 630 football fields placed side by side. The company originally intended to build six fab modules (or phases) there, making the facility one of the largest semiconductor production sites in the world.

When TSMC finalized its CHIPS deal with the U.S. government last year, it outlined plans to build three Fab 21 phases by 2030. Phase one includes equipment to fabricate N5 and N4 process nodes, which are already in mass production. Phase two is set to become operational in 2028 with N3 capabilities; Phase three will introduce N2 and A16 process nodes by 2030.

The new announcement adds three more Fab 21 phases, two advanced packaging facilities, and an R&D center. TSMC hopes to build everything at its Fab 21 site, making it one of its major production hubs.

"We originally selected the site in Phoenix, Arizona, and purchased a piece of land that is bigger than 1,100 acres because we would like to accommodate several operating fabs and support future expansion to scale for the economics," Kao told us. "We will work closely with the City, the State, federal government and our local infrastructure and education partners to ensure that our expansion plans can be supported."

While TSMC has not formally announced any timing for its new facilities, its latest estimate of 40,000 construction jobs over four years suggests a significant increase over the earlier projection of 20,000 unique jobs by the end of the decade.

TSMC indicates that some projects will likely proceed in parallel, leading to higher labor demand, but has not specified whether this means doubling production capacity for N3 and/or N2/A16 technology in the U.S.

"While we have not announced details of timing yet, we would expect some of these projects to happen in parallel, which would increase the construction demands," said Kao.

Building fabs in parallel could impact their timing. For example, if TSMC secures enough tools to equip its N3 (3nm-class) and N2/A16 (2nm-class, 1.6nm-class) fabs from ASML, Applied Materials, KLA, and Lam Research earlier than planned, and hires (or relocates from Taiwan) enough qualified personnel to install them, it may be possible to accelerate the completion of Fab 21 phase two and/or Fab 21 phase three.

Massive investments

Given the gargantuan investment, in addition to the projected doubling of workers at the Fab 21 site in the next four years, it's safe to say that TSMC is accelerating the number of workers at the Arizona campus. The increased construction effort is unlikely to mean a doubled investment from $65 billion to $130 billion over the next four years, however.

This is because the company might want to scale its other efforts worldwide, namely in Taiwan, Japan, and Germany. TSMC is expected to spend $38 billion to $42 billion in 2025, and while it will dramatically increase its investments in the U.S., it remains to be seen whether the company will allocate more to its Arizona-based Fab 21 than to its global facilities in Germany, Japan, and Taiwan combined.

TSMC is currently building a fab in Germany (albeit in its ESMC partnership with Bosch, Infineon, and NXP), and is about to start construction of its second fab in Japan (in its JASM collaboration with Sony and Toyota).

As for the company’s operations in Taiwan, TSMC is preparing to ramp up its N2-capable Fab 20 in the coming months. The facility is located adjacent to the R1 R&D center—which developed TSMC’s N2 nodes and their successor—near Baoshan in Hsinchu County.

TSMC’s second N2-capable fab is in the Kaohsiung Science Park, a part of the Southern Taiwan Science Park near Kaohsiung. Production at this site is expected to start around 2026. TSMC is also building two advanced packaging facilities in Taiwan. Additionally, there are rumors that TSMC is planning a 1nm-capable Fab 25—for post-N2/A16 nodes—in the Southern Taiwan Science Park near Tainan.

TSMC's leading-edge in the U.S.? 

Building out a gigafab-class site in the U.S. along with two advanced packaging facilities nearby will certainly affect where TSMC builds its chips for American companies, namely Apple, AMD, Broadcom, Nvidia, and Qualcomm. However, the question is whether is whether TSMC would produce chips using its latest technologies in the U.S. or not.

Earlier this year, Taiwan's government changed its export rules, and now TSMC is allowed to export its leading-edge production nodes to facilities overseas. Formally, this opens doors for TSMC to export its most advanced process technologies to the U.S. and perhaps Japan.

However, as TSMC develops its fabrication technologies in Taiwan, it is optimal to perform yield ramp (improvements) and production ramp-up in Taiwan, where the developers of these manufacturing processes are located. It should be noted that engineers continue to refine production nodes and reduce defect density for quarters after mass production is initiated.

Last year, TSMC gave a peak at its Global GigaFab program that enables the company to port a process technology from one fab to another quickly while maintaining achieved continuous process improvements (CPI) to increase yields, as well as statistical process control (SPC) to reduce performance variations. So, the company seems able to tune its nodes in Taiwan and simultaneously get the same results in the U.S. However, it does not mean TSMC can port a new node to a new fab overnight.

Process porting involves porting a fab layout, its settings, and raw materials. The new fab must have (or install) equipment that meets the same specs (i.e., be tuned appropriately) as the original tools. Also, the new fab must use the same raw materials as the original fab. Even slight differences in deposition methods, etch profiles, or temperature uniformities can force re-qualification of multiple steps, which renders achievements of the original fab obsolete and requires another lengthy yield ramp process.

Overall, porting a brand-new technology process from one fab to another may take 12-18 months, provided they are configured similarly. With the Global GigaFab program, TSMC can probably cut down that time by several quarters. The good news is that once a fab is configured for a process design kit (e.g., N5, which includes N5P, N4, N4P, and N4X), making chips on other nodes from the same PDK is relatively easy.

While several months delay means that Apple will continue to make its iPhone processors in Taiwan, its subsequent processors based on the same PDK and aimed at more expensive devices could be made in the U.S. By contrast, AMD and Nvidia use proven fabrication technologies, so a significant part of their products could be made in the U.S. in the second half of this decade.

It should be noted that TSMC has historically ramped up its new process technologies in Taiwan because that is where its R&D facilities are. But now that TSMC is adding an American R&D center, it might use the new center to develop certain production nodes in the U.S., then ramp them in Arizona, and volume produce on them in Arizona.

U.S. manufacturing comes at a premium

But this manufacturing will come at a cost. According to unofficial information, chips built on TSMC's N4 and N5 process nodes in the United States could command a 20% – 30% premium over their Taiwan-made counterparts. Meanwhile, more mature processes produced at the Kumamoto facility in Japan — such as N28/N22 and N16/N12 — are expected to cost 10% – 15% more when compared to similar chips manufactured in Taiwan.

That 30% premium is larger than a potential 25% tariff that the Trump administration threatened to impose on Taiwan-made chips. Of course, the situation would be different if the tariffs were higher. However, imposing a 50% import tax on Taiwan-made chips and making those products 50% more expensive for American customers is unlikely.

Nonetheless, a 20% to 30% premium over Taiwan-made chips means that not all American companies will be interested in making chips at Fab 21 unless absolutely necessary, though the company has indicated that its production capacity is sold out in the US until 2027. During its recent investment announcement, the company also thanked Apple, Nvidia, AMD, Broadcom, and Qualcomm for supporting its new US operations, implying that those companies are all customers of the Arizona fabs (specific customers' production locations are closely guarded secrets that TSMC does not reveal directly).

However, considering the premium, TSMC is less incentivized to port older fabrication technologies to its U.S. facilities. It remains to be seen how Apple, AMD, Broadcom, Nvidia, and Qualcomm will compete against rivals that will not use TSMC's services in the U.S. However, managers at those companies will likely have ideas on how to manage those additional costs. It's also possible that the Trump administration will further loosen some of the existing regulations that lead to increased costs.

Analysis

TSMC is expanding its U.S. manufacturing investment by an additional $100 billion, bringing its total commitment to $165 billion. This expansion includes three new fabs, two advanced packaging facilities, and an R&D center, primarily at its Fab 21 site in Phoenix, Arizona.

The company can potentially run projects in parallel, which could speed up the deployment of TSMC's fab in the U.S. However, despite Taiwan now allowing the export of leading-edge nodes, TSMC's preference for ramping up new technologies domestically means that U.S. fabs may experience several months of delays in adopting the latest process nodes until the appropriate capabilities are firmly established in the US. That could be the impetus for the company's new R&D facility at the Arizona campus, but only time will tell if that is the purpose; options abound.

While the investment significantly boosts U.S. semiconductor capacity, manufacturing in the U.S. will come at a premium, with chips produced at Fab 21 expected to cost 20% – 30% more than those made in Taiwan. This higher cost could limit how many companies manufacture their chips in the U.S. unless absolutely necessary.

Intel plans to reduce its workforce by several hundred employees at its Israeli research and development centers, following similar job cuts at its facilities elsewhere, reports DigiTimes. This move is part of the company's general cost-cutting measures amid financial challenges, and it opens opportunities for competitors to attract Intel's talent. There is a catch, though, as dozens of Intel employees already left the company for Nvidia earlier this year, according to Globes.

Intel's Israeli operations employ around 11,700 people, including 7,800 in R&D roles and 3,900 in manufacturing, with the latest layoffs expected to focus on R&D while leaving manufacturing staff largely intact as Intel readies for the completion of Fab 38 in Kiryat Gat, the report says. The exact number of people that will either be proposed to leave voluntarily, or retire, or just laid off is not known, but Globes reports that Intel is set to cut its Israeli workforce by several hundred positions.

Intel has three R&D sites in Israel. Each of these Israeli centers has a specialized focus: Haifa works on CPUs, AI hardware, and software; Petah Tikva develops communications and AI solutions; and Jerusalem is involved in communications, software, and cybersecurity. The report does not specify which R&D sites will see more cuts, other than saying that layoffs are expected in these R&D centers. But let us try to detail at least one thing.

Intel's Israeli R&D team is responsible for multiple breakthrough microarchitectures, such as Banias, Yonah/Merom, and Nehalem, just to name a few. Each of these was strategically important for Intel at some point. In fact, the Banias processor was the heart of Intel's Centrino platform, the company's first platform developed specifically for laptops, which pretty much revolutionized the market. Yonah/Merom put Intel back on the map of high-performance PCs and replaced the power-hungry Netburst microarchitecture that powered Pentium 4 processors.

But while Intel itself is slashing its R&D talent in Israel, it should be noted that people are leaving the company, too. Nvidia has been hiring former Intel employees: in 2024 alone, at least 30 Intel employees moved to Nvidia's offices in Yokneam and Tel Aviv, with total hires from Intel estimated to range from 60 to 90, according to the Globes report which analyzed LinkedIn profiles. Nvidia is expected to hire more Intel employees as the layoffs continue, possibly bringing the number to about 100. As of June 30, Nvidia reported a workforce of 4,000 employees in Israel, reflecting the company’s growing presence in the region.

Many Intel employees who moved to Nvidia are benefiting from more attractive compensation packages. For instance, a junior hardware engineer at Nvidia can expect a starting annual salary of NIS 566,000 (around $151,500), about 33% higher than the equivalent role at Intel. Nvidia also offers significantly more valuable share options compared to Intel, with packages starting at NIS 56,200 annually ($15,045).

In addition to Nvidia, other major tech companies are also drawing former Intel employees. Apple, Amazon, and Intel's subsidiary Mobileye have recently hired from Intel's workforce in Israel. Some groups have joined Microsoft, Google, and Huawei, which operates a development center in Haifa.

The Biden White House is investing $825 million in Albany, New York, to build the flagship facility of the National Semiconductor Technology Center (NSTC). The NSTC is America’s premier research and development center; it aims to bolster innovations in semiconductor technology, develop a skilled workforce to support these new developments, and collaborate with the private sector and academe.

The U.S. Department of Commerce says that the site will focus on extreme ultraviolet (EUV) lithography — technology for manufacturing the most advanced nodes required for the next generation of chips and processors.

NSTC’s first facility, to be called CHIPS for America Extreme Ultraviolet (EUV) Accelerator, will take shape within the Albany NanoTech Complex—a high-tech site boasting over 1.65 million square feet of space—operated by the non-profit New York Center for Research, Economic Advancement, Technology, Engineering, and Science (NY CREATES). As the name suggests, this development is funded under the CHIPS and Science Act, which is America’s most significant investment in its semiconductor industry over the past 28 years combined.

“With this first proposed flagship facility, CHIPS for America is providing access to cutting-edge research and tools to the NSTC and its launch represents a key milestone in ensuring the United States remains a global leader in innovation and semiconductor research and development,” said Secretary of Commerce Gina Raimondo.

Raimondo states that “the research and development component of the CHIPS and Science Act is fundamental to our long-term national security and ensuring the U.S. remains the most technologically competitive place on earth. Thanks to President Biden and Vice President Harris, we are not just producing the world’s most advanced semiconductors; we are building a resilient ecosystem that will power everything from smartphones to advanced AI, safeguarding U.S. national security and keeping America competitive for decades to come.”

EUV technology enables companies to push the boundaries of Moore’s Law, which states that the number of transistors in an integrated chip doubles every year. As the latest processors have already hit over 100 billion transistors on a single chip, we need further advancements in EUV lithography to allow us to pack in even more transistors in the same amount of space.

The investment comes as the U.S. aims to bolster its semiconductor supply chain to safeguard its chip sources while also fostering innovation in the semiconductor industry. Currently, the Netherlands-based ASML is the only company in the world that produces the EUV machines needed to make the latest generation of chips. The new center aims to further research and development by giving researchers access to EUV technology to help reduce the costs and time to prototype new chip designs while also fostering a semiconductor workforce. 

AMD and Nvidia's R&D budgets were quite similar ten years ago, but in recent years, Nvidia has been leaving its GPU rival behind in investment in this critical activity. According to the latest figures, Nvidia's spending on new technologies is about two times higher than that of AMD, according to Tech Fund. But while Nvidia's R&D spending easily eclipses AMD's, it is still way behind Intel and Qualcomm, and they all pale behind Apple's R&D expenditure.

Regarding R&D spending, Nvidia invests in data center GPUs for AI and HPC (now its bread-and-butter business), client PC GPUs, networking gear, and DPUs that are used to support its data center products. Given how fast Nvidia's H100/H200 and B100/B200 datacenter GPUs are selling, the company can afford to fire up its research and development department on all cylinders to develop new GPUs.

Also, now that the company has set the stage with a yearly cadence of AI product releases, it is reasonable to expect it to increase its R&D spending. Indeed, it skyrocketed this year: as of July 28, Nvidia spent $3.090 billion on R&D this fiscal year, up a billion from last year.

As for AMD, it develops client and data center CPUs, client and data center GPUs, FPGAs, Pensando DPUs, and networking gear, which means the company can spend less than Nvidia on its product categories. Remember that AMD invests significantly in fundamental R&D technologies, such as high-bandwidth memory (HBM). As of June 29, AMD spent $1.583 billion on research and development this fiscal year. Yet, AMD is committed to releasing new AI GPUs every year.

While nowadays we tend to compare AMD to Nvidia and Nvidia to Intel, back in the day, we used to compare Intel to AMD, as these are the leading producers of processors based on the x86 instruction set architecture (ISA). Intel spends tremendous money on R&D: it spent over $16.5 billion in 2023, more than AMD and Nvidia combined.

Yet Intel spends on CPUs, GPUs, FPGAs, networking gear, quantum computing, and many other products. Even though the current chief executive, Pat Gelsinger, has reduced the number of product categories and projects that Intel is pursuing, Intel still manages dozens of product categories and thousands of SKUs.

But more importantly, Intel spends billions on new semiconductor production process technologies. Every new manufacturing process typically requires billions in upfront research and development investments. Intel also develops packaging technologies, which require a lot of R&D money.

Qualcomm is, of course, another high spender on R&D. The company invests in system-on-chips for client devices like smartphones and PCs, RF technologies, and fundamental research for next-generation radio technologies (6G, 7G, etc.). Perhaps the most interesting part about Qualcomm is that among all the high-tech companies mentioned in this news story; it is the only one with a working 5G modem.

And yet, the biggest R&D spender is Apple. Apple is not precisely a semiconductor company, and it has to invest in various projects, from Ion-X glass for the entry-level Apple Watch to premium M-series Max and Ultra processors for high-performance MacBook Pro laptops and Mac Studio desktops. Depending on how you count (based on the company's filings with the SEC following its fiscal year or based on approximated calendar spending), Apple spent around $27 billion or $29.915 billion on R&D in 2023, which is more than AMD, Nvidia, and Qualcomm combined.

Japan's National Institute of Advanced Industrial Science and Technology (AIST) is partnering with Intel to establish a new research and development center focused on advanced chip production, reports Nikkei citing sources with knowledge of the matter. This facility is expected to be operational within three to five years and will focus on process technologies that use EUV lithography. 

The new R&D center will cost hundreds of millions of dollars (as each EUV litho machine costs around $200 million) and will provide an opportunity for various industry players in Japan to collaborate with AIST and Intel by jointly using EUV equipment for prototyping and testing. The move will enable chip designers in Japan to adopt the latest process technologies, such as those relying on EUV tools, which will ultimately make them more competitive with industry peers based elsewhere. 

Currently, many Japanese companies must rely on foreign research centers, such as Belgium's IMEC, to access EUV equipment for product development. By establishing a domestic facility, Japan aims to reduce this reliance on overseas resources, thereby speeding up the development process and improving the competitive standing of its semiconductor industry. 

Notably, Japanese companies like Lasertec and JSR are already global leaders in several areas of EUV technology. Lasertec dominates the market for EUV inspection equipment, while JSR excels in photoresists used in chip production. Through the new research center, Intel aims to strengthen its collaboration with these companies to solidify its own capabilities while also strengthening Japan's position in the global semiconductor supply chain.   

Another advantage that Intel gets by working closely with Japanese companies is to ensure that its existing rival TSMC (and upcoming rival Rapidus with a presence in Japan) can't secure key strategic advantages, such as customer relations or better tools and/or raw materials. 

Nikkei also believes that a joint R&D center between an American company and Japan’s AIST is strategically significant given the increasing tensions between the U.S. and China. The U.S. has imposed stricter export controls on EUV-related technologies to China, complicating the process of transferring research data back to Japan. A domestic EUV facility will help Japan circumvent these challenges, providing greater security and efficiency in semiconductor development.

In a virtual meeting this morning, employees at IBM's China-based research and development department were told of the impending closure of the regional operations. The current China-based R&D and testing functions will be moved to other overseas facilities, they were told. According to a Wall Street Journal report on the news, citing people who had attended the virtual meeting, the China function closure will affect over 1,000 people.

Readers will likely know the growing geopolitical tensions between the U.S. and China and their respective tech firms. Trade and equipment sanctions and stories about getting around these barriers are often in our news. However, IBM did not mention geopolitics when explaining its decision to employees.

The executive who hosted the virtual meeting, Jack Hergenrother, instead pointed at IBM's declining infrastructure business as the root cause behind the firm's China exodus. This bad news took some IBMers by surprise. The WSJ reports a swell of optimism at IBM China recently, with talk of the firm benefitting from its cloud computing and AI expertise and the current enthusiasm for such products. Nevertheless, improved competition from domestic suppliers and government directives such as Document 79, colloquially known as 'Delete America,' seems to have taken a heavy toll on the company.

Pondering over IBM's yearly revenue charts shared by the source makes the firm's China operations look unsustainable. Over the last ten years, Big Blue has consistently made less and less revenue in China. There was a slight rise in revenue in the post-Covid era, but in 2022, China's revenue was down 22.7%, and it fell a further 19.6% in 2023. Meanwhile, IBM's global revenue has seen positive growth.

IBM's China R&D operations are scattered across several major cities in China, including Beijing and Shanghai, and the source report suggests that they will all be closing, resulting in 1,000+ job losses. The WSJ hints that the staff may be able to continue their work for Big Blue by telling some of the employees that it is looking to expand R&D in other regions, such as in Bengaluru, India. With the complications involved, we don't think such a seismic change will appeal to many IBMers in China.

It isn't just foreign-owned businesses that have recently had financial troubles in China. Last December, we reported on a record number of Chinese chip-related companies shutting down during 2023 – around 30 a day on average throughout the year. This summer, a major Chinese semiconductor company went bankrupt, too, with billions in investments down the drain. And remember, this is all happening while markets are tech and AI are crazy worldwide. However, some well-placed Chinese firms are thriving, with companies like SMIC thriving as the chip war intensifies.

Advanced Micro Devices (AMD) is discussing building two new R&D centers in the island nation with the Taiwanese government. Unlike rival Nvidia, which is establishing a new R&D center in Nangang, Taipei, AMD is shifting its development away from north and central Taiwan because of recent power supply constraints.

The Taiwanese government hopes to build an “AI island” in Taiwan, fostering collaboration between industry leaders, government resources, and academia to attract investment worth around NT$15 billion ($469.26 million) in the region. The new AMD R&D centers are said to be part of this initiative.

Earlier this week, an AMD delegation, including senior vice president and Taiwanese native David Wang, met with mayors in Tainan and Kaohsiung and then with Taiwan’s Minister of Economic Affairs, Kuo Chih-hui. A Tainan City Hall official said AMD plans to establish an R&D center in the Shalun Smart Green Energy Science City in Tainan’s Guiren District.

The Tainan Center will partner with National Cheng Kung University. Meanwhile, AMD will team up with two local universities in Kaohsiung City to set up a second R&D center in that city’s Asia New Bay Area.

After meeting with the city mayors, AMD visited the Taiwanese government’s Ministry of Economic Affairs. Speaking with Minister Kuo Chih-hui, AMD confirmed its intent to establish the R&D centers in the southern cities of Taiwan.

Sources familiar with the discussions said that AMD will invest NT$8.64 billion ($270 million) in the project and receive NT$3.31 billion ($103.24 million) in support from the Ministry of Economic Affairs’ Global Innovation Partnership Initiative. That program supports collaborative research and development between global and Taiwanese companies.

The new R&D centers will employ around 400 people, including 200 from outside Taiwan. The company will explore topics such as AI, silicon photonics (SiPh), and heterogeneous integration and promote collaboration with 33 Taiwanese companies.

Applied Materials was denied funding from the U.S. CHIPS & Science Act for its proposed $4 billion research and development center in Sunnyvale, California, reports Bloomberg. This decision is significant setback to the company's efforts to establish a major facility in Silicon Valley. 

Applied Materials had been promoting this project for over a year, hoping to secure U.S. government support to build a large-scale R&D center that would develop next-generation chipmaking tools. The rejection came from the U.S. Commerce Department, which concluded that the project did not meet the necessary criteria for the funding program designed for large manufacturing projects. The Bloomberg report does not specify why Applied's project does not meet U.S. government's criteria for support; the Commerce Department didn't comment to the publication with any specificity. This could mean that makers of wafer fab equipment will unlikely get support under the CHIPS Act in general, the Bloomberg report suggests. 

Originally, Applied Materials had intended to seek funding through a separate initiative focused on commercial research and development facilities. However, this program was abandoned after disagreements within Congress and the administration over a separate focus on military chip technology. Yet, the Commerce Department has indicated that the commercial R&D initiative could be revived if additional funding becomes available. But then, efforts to increase the CHIPS Act grant program by $3 billion have stalled in Congress, casting doubt on the availability of further funding. 

There is also a separate $11 billion fund under the CHIPS Act dedicated to research and development in the semiconductor field. The Commerce Department has been working on this initiative, hosting summits and opening applications with the first awards expected in the fall. It is unclear whether the government can fund Applied under this program. 

The report says that despite many efforts conducted by the U.S. government, there are concerns about the strategic direction and leadership within the Commerce Department's R&D office. The office has faced criticism for a lack of clear strategy and has been without a designated director since December, when Lora Weiss left the position. 

In addition to funding, the Commerce Department is planning to establish government-backed entities for things like prototyping and advanced chip packaging. 

When Pat Gelsinger rejoined Intel in 2021 and proclaimed the IDM 2.0 model, he mentioned that the company would incur losses in the short term but prosper in the long term. However, because of huge investments in its U.S. production capacity and ramping up products made on the latest nodes, the company's profit margins are thin—apparently too thin, as Politico reports Intel is halting some of its European projects in favor of others. 

Intel has paused several significant investment projects in Europe due to 'financial losses,' Politico reports. This changed policy affects planned projects in France and Italy, redirecting Intel's focus to its efforts in Ireland, where it has a leading edge fab; Germany, where it is about to start constructing one of the most advanced fabs in the world; and Poland, where Intel is set to build an advanced packaging facility. However, Intel's plans in other European countries are no less ambitious. 

In France, Intel had planned to establish a new research and development hub for AI and HPC near Paris. This project, set to open by the end of the year with 450 employees, is now on hold due to changing economic and market conditions. Despite the pause, Intel maintains that France remains a future candidate for the R&D hub. 

Italy faces a similar situation. Intel's proposed €4.5 billion manufacturing plant has been shelved. This facility would have created 1,500 jobs at Intel and 3,500 for suppliers. Intel's expansion in Italy was further hampered by the collapse of its deal to acquire Tower Semiconductor, an Israeli company with connections to Italy's STMicroelectronics. This acquisition fell through due to the lack of approval from Chinese authorities, which impacted Intel's plans to strengthen its presence in Italy. 

But while some of Intel's projects might have been postponed, Germany and Poland are proceeding, but not without hiccups. In Germany, Intel is constructing a massive factory complex with investments for the first phase amounting to €30 billion. Still, Politico says various delays have pushed the production start date to late 2028. In Poland, Intel is planning a €4.6 billion advanced chip packaging plant in Wroclaw, which will work in combination with the German facility: the latter is set to make chiplets, and the former will package them.

DARPA has selected the Texas Institute for Electronics (TIE) at The University of Texas (UT) at Austin to develop 3D-integrated multi-chiplet advanced 'semiconductor microsystems' for the U.S. Department of Defense. This project involves creating a national R&D and prototyping facility to produce high-performance, energy-efficient, lightweight, and compact defense systems. 

A $1.4 billion project

The project is part of DARPA's Next Generation Microelectronics Manufacturing (NGMM) program, which aims to design 3D packaging technologies and build appropriate facilities for military and civil use. The project involves a $1.4 billion investment, with DARPA contributing $840 million and the Texas Legislature pouring in another $552 million in TIE.  

This funding will be used to modernize two UT fabrication facilities that are set to foster dual-use innovations in the 3DHI multi-chiplet integration for both the defense sector and the semiconductor industry. These facilities will be self-sustained and accessible to academia, industry (including startups), and government. 

The program spans two phases, each lasting 2.5 years. In the first phase, TIE will focus on building the center's infrastructure and foundational capabilities. The second phase will involve creating 3D-integrated (3DHI) hardware prototypes crucial to the DoC and automating various processes. Additionally, TIE will collaborate with DARPA on other separately funded design challenges.  

"By investing in leading-edge microelectronics manufacturing, we are helping secure this vulnerable supply chain, boosting our national security and global competitiveness, and driving innovation in critical technologies," said U.S. Sen. John Cornyn. "The next generation of high-performing semiconductors these resources will enable through DARPA's partnership with UT TIE will help not only bolster our defense but also pave the way for the U.S. to reclaim its leadership role in this critical industry, and I look forward to seeing more Texas-led advancements in the years to come."

Military-grade 3D packaging

Modern military applications rely on several discreet chips, which usually complicates these systems and makes them more expensive. The reason why jets or unmanned aerial vehicles use many chips is simple: each chip is responsible for a certain application (e.g., radar is one high-power chip made using GaN, aiming assistance is a typical high-performance made on an enhanced bulk silicon fabrication process) and is produced using a process technology that is best fit for this particular workload. The new project will attempt to build multi-chiplet designs that integrate different logic into one package and make that package as small as possible. As a result, these system-in-packages (SiP) will enable smaller, lighter military devices.  

While most of the process technologies offered by companies like Intel, GlobalFoundries, or TSMC (now that it is in the U.S.) are good enough for many uses, some aerospace and military applications demand more rigidity, which is why specialized process technologies will still be in use for at least a while. Still, Intel's 18A is going into some military applications, and this is just a start for the leading-edge nodes to enter this space.  

When it comes to multi-chiplet packaging technologies, things are similar. Advanced packaging technologies must be aerospace and military-grade, and they do not look like 'off-the-shelf' methods from existing manufacturers that meet all of the U.S. DoC's needs. This is where DARPA's NGMM program, introduced in late 2023, comes in.

Summary

While sophisticated multi-chiplet processors will enhance U.S. national security and global military leadership, the labs and manufacturing capability in Texas developed as part of the project will be accessible to developers and producers of civil applications too, which means a potential boost to the scientific innovation and the industrial might of the USA.

In 2023, Google and Microsoft each consumed 24 TWh of electricity, surpassing the consumption of over 100 nations, including places like Iceland, Ghana, and Tunisia, according to an analysis by Michael Thomas. While massive energy usage means a substantial environmental impact for these tech giants, it should be noted that Google and Microsoft also generate more money than many countries. Furthermore, companies like Intel, Google, and Microsoft lead renewable energy adoption within the industry. 

Detailed analysis reveals that Google's and Microsoft's electricity consumption — 24 TWh in 2023 — equals the power consumption of Azerbaijan (a nation of 10.14 million) and is higher than that of several other countries. For instance, Iceland, Ghana, the Dominican Republic, and Tunisia each consumed 19 TWh, while Jordan consumed 20 TWh. Of course, some countries consume more power than Google and Microsoft. For example, Slovakia, a country with 5.4 million inhabitants, consumes 26 TWh. 

This comparison highlights the massive energy requirements of high-tech companies: data centers operated by Google and Microsoft have a considerable environmental impact. But what if we compare the power consumption and money generation of Google and Microsoft to some of the countries mentioned?

In 2023, Google generated $305.6 billion in revenue, while its economic impact, including tools like Google Search, Google Cloud, and YouTube, contributed approximately $739 billion to the economy, according to Google itself. 

Microsoft posted a revenue of $211.9 billion for 2023. Keeping in mind that the vast majority of the world's population uses Microsoft Windows and Microsoft Office and loads of online applications run on Microsoft Azure, the economic impact of Microsoft's products is probably counted in trillions of dollars.

Comparing this to countries with the same ballpark energy consumption, Azerbaijan's GDP was about $78 billion, Slovakia's GDP was around $127 billion, and Iceland's GDP was approximately $30 billion in 2023. 

The economic output of Google and Microsoft by far exceeds these countries' GDPs, highlighting the vast financial scale of these tech giants relative to their substantial electricity consumption.

While substantial electricity consumption by Google and Microsoft underscores the need for discussions around sustainability and the adoption of renewable energy within the tech industry, these companies lead the industry's adoption of renewable energy sources. 

In fact, Google has long been a pioneer in using renewable energy. The company has been carbon neutral since 2007, and aims to operate on 24/7 carbon-free energy across all its data centers by 2030. In 2023, Google announced its continued investments in renewable energy projects, expanding its portfolio to include a variety of wind, solar, and other renewable energy sources.  

As for Microsoft, it has committed to becoming carbon-negative by 2030, which means it aims to remove more carbon from the environment than it emits. The company is also targeting zero waste production and positive water usage by the same year. In 2023, Microsoft increased its contracted portfolio of renewable energy assets to over 19.8 gigawatts, covering projects in 21 countries. The company is also working on reducing its direct operational emissions and addressing its indirect emissions, particularly those associated with the construction of new data centers and hardware components.

Huawei just completed its Shanghai Qingpu project and was given the official name of Huawei Lianqiu Lake R&D Center. EE Times China (via machine translation) says this sprawling facility costs over 10 billion Yuan (almost $1.4 billion) and covers 2,600 acres. The company also constructed over 40,000 offices, which is expected to house 35,000 Huawei personnel.

The Lianqiu Lake R&D Center is located about 30 miles West-Southwest of the center of Shanghai, and it’s expected to gather all of Huawei’s research and development efforts, including work on HiSilicon, wireless technologies like 5G-A/6G, Huawei smartphones, automobiles, and digital energy research. The R&D Center is divided into eight districts and will have roads, trains, and elevated overpasses to connect each one to another.

The project started in September 2021 and took the company over three years to complete. Huawei CEO Ren Zhengfei said that the company used the Chicago Lakeside Complex as inspiration for the project. He added that the Yangtze River Delta is a beautiful environment suitable for foreigners, where the seven or eight hundred foreign scientists working at Huawei won’t feel like they are in a different country.

The Huawei Lianqiu Lake R&D Center is the highlight of the Xicen Science and Technology Innovation Center, situated in the Yangtze River Delta Integration Demonstration Zone. This is part of China’s push to develop its homegrown technologies as it tries to separate itself from the West.

Huawei needs to strengthen its research and development, especially as it bore the brunt of America’s sanctions in the ongoing chip war between Beijing and Washington. By combining many of its R&D centers into one monolith, the company could streamline its operations and make collaboration between different departments much easier.

This flagship project also shows how much Huawei is investing in future technologies. The Huawei Lianqiu Lake R&D Center is so large that it eclipses the facilities of some of the biggest tech companies in the world. The massive area covered by the project is larger than Apple Park and the Microsoft Redmond Campus combined, which only measure 175 acres and 502 acres, respectively.

Aside from investing in office and real estate, Huawei is also doing its best to attract top talent. Huawei is offering competitive salary packages, especially as it can no longer hire American citizens and green card holders. As other foreign high-tech companies are also slowly being pushed out of China because of U.S. bans and sanctions, the company must now offer deals to attract Chinese talent from abroad and get them back home.

The China Association for Science and Technology (CAST) recently listed the challenges the country faces in its semiconductor industry, and lithography is notably not among the listed issues. However, according to DigiTimes Asia, the exclusion of lithography is more likely a political consideration to downplay the impact of American sanctions on China's indigenous chip manufacturing rather than a local innovation that allows the Chinese to build their own lithography tools.

This isn't the first time the country has disregarded lithography, as Xi Jinping told the Dutch Prime Minister that China doesn't need ASML, the leading lithography tool manufacturer, to advance its technologies. There currently is one China-based lithography tool maker — Shanghai Micro Electronics Equipment Group (SMEE) — with another company, Naura Technology, aiming to develop its lithography tools for the first time in April 2024.

However, China's domestic production rate for chip-making tools for the entire semiconductor manufacturing process is only around 20%, with domestic lithography tools comprising less than 1% (compared to ASML's 93% global market share).

EUV lithography tools are crucial for building the next generation of chips, and even though a company may have acquired them before America's sanctions, they still need consistent maintenance and servicing for continuous use. However, as U.S. bans now include servicing these tools, even lithography tools already in use will eventually stop working.

Unless China has made a significant breakthrough in its lithography tools industry, this would likely be the biggest hurdle Chinese tech firms must go through to produce their high-end chips. This has even reached the point that some industry leaders are asking their semiconductor companies to focus on legacy chips and 3D packaging instead of trying to remain on the cutting edge of process nodes.

Nevertheless, many companies still spend time and effort creating innovations that will help sidestep Washington's sanctions. For example, Huawei is building a significant R&D center on lithography and fab equipment, while other Chinese firms are experimenting with open-standard technologies like RISC-V.

Even if organizations leave one technology or another out of their list of challenges, words cannot change the reality of the challenges that the Chinese semiconductor industry is facing. It would take years, if not decades, of research and development for the country to catch up with mainstream lithography makers. So, unless they could magically create a lithography machine that matches ASML's latest High-NA EUV tools, excluding lithography tools in the list of challenges the Chinese semiconductor industry faces is likely a political accommodation.

Several Taiwanese news outlets have reported on the possibility of Nvidia opening a second AI research and development center on the island. The company set up its first AI Innovation R&D center in Neihu, Taipei in 2022. Now a rumor is circulating that the green team will work with Foxconn to build a second research center in Kaohsiung Software Park, in the south.

Taiwan Television reported that Nvidia CEO Jensen Huang arrived early for Computex 2024 for a meeting with TSMC leadership and other key supply chain leaders. There were also whispers that he met with Taiwan's new President, William Lai, to talk about a second R&D center in Tainan or Kaohsiung.

While we don’t have any confirmation yet, this could be a possible answer to AMD’s recently divulged plans to open an R&D center in Taiwan. These developments may be quite surprising, as Taiwan is currently at the center of the US-China chip war, to the point that TSMC, the island’s top corporation, has equipped a remote self-destruct function to its factories in case of war.

It still makes sense for companies to build research and development centers in Taiwan, though, especially as it makes 90% of the AI servers deployed around the globe. Setting up near major suppliers, like TSMC, could make logistics easier and streamline operations.

However, Zhou Chongbin, the Deputy Director of the Industrial Technology Department says that Nvidia currently has just one AI R&D center in Taiwan, and that there are no official plans, or ongoing talks, regarding a second one. According to the Commercial Times, Chongbin said that Nvidia is slated to build the ‘Taipei-1’ AI supercomputer in Kaohsiung, which is not an R&D center. The R&D center rumor might thus be a simple misinterpretation of the plans to build Taipei-1 with Foxconn.

But even if the talk about a secondary Nvidia research center news may not be substantiated yet, Taiwanese officials are already happy to hear that the company is considering more inward investment. And with the AI boom fueling Nvidia’s growth, it’s not farfetched for it to invest in another facility to help the company grow even further. After all, Nvidia has to put its money somewhere after hitting record results in 2023 and 24Q1 amid the surge in demand for GPUs.

AMD has plans to open a research and development center in Taiwan, reports the Central News Agency. We have yet to officially learn the scale of the facilities planned or the amounts AMD is willing to invest. However, Taiwan’s Ministry of Economic Affairs (MOEA) confirmed AMD’s application, which will be assessed under the auspices of the government's "A+ global R&D and innovation partnership program.”

The Taiwanese government wants to promote the island as a global R&D tech hub, which will be beneficial to its already established chipmaking prowess. To do this, the aforementioned partnership program is being used to target three major fields of innovation. Specifically, the Taiwanese are aiming to attract R&D in the fields of AI, an 5G, as well as high-power and high-frequency processors.

The partner program comes with other conditions. For example, AMD will need to bring in 20% of its R&D workforce from overseas, and it will also have to work with Taiwanese universities to culture new homegrown talent. If a firm like AMD can meet all the requirements of the program it will benefit from a subsidy worth up to 50% of its investments, says the CNA.

Interestingly, the news source said that it has heard from a government insider, tipping them off that AMD’s initial plans are to invest about NT$5 billion (US$155 million) in the new R&D center in Taiwan.

Of course, AMD already works closely with various Taiwanese companies and the R&D center could streamline communications and developments going forward. AMD CEO Dr. Lisa Su will be at Computex in early June, and is likely to be in discussions about this new partner project with Taiwan government officials.

Taiwan’s AI innovation and R&D center program opened its doors to prospective partners in 2020. Companies like Nvidia, ASML, and Applied Materials have already invested via this and similar programs.

The timing of this AMD news is somewhat interesting, coinciding with the inauguration of President Lai Ching-te (賴清德). Lai spoke about transiting Taiwan from a 'silicon island' to an 'AI island,' and also spoke to calm Chinese worries regarding any change from the ‘One China’ geopolitical status quo.

China, unable to access leading-edge wafer fab tools from American, European, and Japanese manufacturers, has to develop its own fab equipment. Huawei is building a giant research and development (R&D) center near Shanghai, where it plans to develop chipmaking tools that will have to be competitive with systems designed by ASML, Canon, and Nikon, reports Nikkei. 

The R&D center will focus on developing lithography machines, which are essential for making chips on leading-edge nodes. For now, Huawei's partners SMIC and Hua Hong cannot get litho tools that allow them to make logic chips on 14nm/16nm FinFET-based process technologies and more advanced processes, but they can still obtain 28nm-capable lithography systems. Therefore, Huawei-developed machines will have to be at least 28nm, or better 14nm/16nm-capable. For now, ASML controls well over 90% of the lithography tools market. 

The R&D center is strategically located in the Qingpu district of Shanghai, part of a larger campus that includes facilities for Huawei's chip design unit, HiSilicon T, as well as R&D centers for wireless technologies and smartphones. The total investment for this campus is estimated at ¥12 billion ($1.66 billion), covering an area equivalent to approximately 224 football fields. Once completed, it will have the capacity to accommodate over 35,000 employees. 

To attract top talent, Huawei is offering competitive salary packages and has already hired engineers with experience in leading chip tool builders and chipmaker. Huawei (and other China-based companies) can no longer hire U.S. citizens and holders of U.S. green cards to lead its projects. Now that ASML, Applied Materials, KLA, and Lam Research have to cut down their presence in China, Huawei and other companies in the country can hire experienced talent with Chinese citizenship. 

Huawei's R&D spending reached a record high of ¥164.7 billion ($22.756 billion) in 2023, accounting for 23.4% of its total revenue. This significant investment underscores the company's commitment to innovation and the increase can be attributed to growing investments in the development of wafer fab tools.  

Before being added to the U.S. trade blacklist, Huawei primarily focused on chip design, collaborating with major contract chipmakers, such as TSMC and GlobalFoundries. However, following restrictions on access to American technologies, the company shifted its focus to working with China-based contract chipmaker SMIC, the report claims. Huawei is now reportedly venturing into chip production itself, partnering with entities backed by local governments in multiple Chinese cities, including Shenzhen, Qingdao, and Quanzhou, which essentially means that it pours money into fabs operated by Huawei and co-owned by local and federal governments. Additionally, Huawei has invested in numerous local providers of chip materials in a bid to use local suppliers and invest in domestic alternatives.

Due to the 'overwhelming' interest in CHIPS funding, the Commerce Department has temporarily halted its plans to provide financial support for semiconductor research and development facilities, reports the American Institute of Physics. 

The Commerce Department has put a hold on its plans to offer financial support for R&D fabs. This pause is attributed to the unexpectedly high interest in the $39 billion incentive initiative under the CHIPS and Science Act, as well as changes brought by the final requisitions bill for fiscal year 2024. Despite this setback, the department remains committed to investing $11 billion in semiconductor R&D through other programs established by the Act. 

The overwhelming response for funding from the semiconductor industry has led to this strategic pause. The CHIPS Program Office, responsible for managing the incentive program, announced this decision in a newsletter. It highlighted the intense demand that far exceeded initial expectations. This demand surge reflects the semiconductor sector industry's eagerness to expand and modernize its R&D facilities with federal funding. 

In the face of this high demand, the Commerce Department has decided to continue its support for semiconductor R&D, albeit through different avenues. Specifically, it has earmarked $11 billion for R&D activities, separate from the facility incentive program. This continued investment aims to assist U.S.-based chip developers and producers even as the government reassesses its funding strategy for facility upgrades and expansions.

Commerce Secretary Gina Raimondo elaborated on the funding dilemma in a recent speech, noting the challenge in allocating the program's funds amidst requests that have significantly surpassed the available budget. 

"The bad news is that we’ve received over 600 statements of interest and the reality is that a significant majority of those who are expressing interest are not going to receive funding – including many strong proposals by excellent companies," Raimondo said. "I have also said many times that the point of this program was never to provide the semiconductor industry with every dollar it requests; it is to make targeted investments for our national security objectives. At the outset, we said that we expected to invest about $28 billion of the program’s $39 billion in incentives for leading-edge chip manufacturing. But leading-edge companies alone have requested more than $70 billion, meaning we’re having many tough conversations." 

To address these challenges and outline future directions, the CHIPS Program Office is set to host a webinar on April 9. The session will focus on the National Semiconductor Technology Center and aim to clarify the office's strategy for supporting the semiconductor industry's R&D efforts.

China has a grand plan to become completely self-sufficient for chip production. This will require the domestic companies to build their own wafer fab tools. While there are rather successful tool manufacturers in China for etching and deposition — Advanced Micro-Fabrication Equipment Inc. China (AMEC) and Naura Technology — there is only one notable manufacturer of lithography tools, Shanghai Micro Electronics Equipment Group (SMEE). That's arguably not enough, and it looks like Naura is now going to enter this market as well, according to the South China Morning Post.

Naura Technology is already a successful manufacturer of etching and chemical vapor deposition tools. Now it has started its initial research into developing lithography systems, the report says. The dedicated program was initiated back in December 2023, and as of March the company has assembled a small group of engineers to to explore lithography systems. This is an area that extends beyond its conventional focus on etching and film deposition, SCMP reports, citing sources familiar with the matter.

These R&D efforts are being carried out with utmost secrecy to prevent additional sanctions from the U.S., which perceives them as attempts to bypass existing export controls. A representative from Naura told SCMP on Monday that the reported information was not accurate, but did not provide further details.

Although there is no guarantee that Naura's lithography research initiatives will become successful, they reflect the determination of China's chip industry to overcome sanctions imposed by the U.S. The sanctions aim to restrict China's progress in chip manufacturing, AI, and HPC, citing national security concerns.

According to Bloomberg, the U.S. government is considering adding several Chinese semiconductor companies associated with Huawei Technologies to its Entity List, after Huawei and SMIC managed to build a smartphone processor on SMIC's second generation 7nm-class process technology. Among the potential targets is SiCarrier, a government-supported chip tool manufacturer collaborating with Huawei, which received a patent related to quadruple patterning.

G. Dan Hutcheson, vice-chairman of U.S.-based IC research company TechInsights, said China’s SAQP research is likely to involve companies like Naura and SMEE. SMEE is China's most successful manufacturer of lithography tools, and it has developed a 28nm-capable scanner. Hutcheson says that SiCarrier's technology substitutes steps in optical lithography with etching and deposition steps, which reduces reliance on advanced lithography tools produced by ASML. This gives Chinese companies an opportunity to produce chips on advanced nodes without using the latest machines from American, European, or Japanese companies.

The U.S. government has published its five-year strategy for using CHIPS Act funds to bolster the American semiconductor industry. The 61-page paper (PDF link) outlines four key, broad goals that the National Science and Technology Council hopes to achieve within five years: speedy and successful research for future microelectronic technologies, transforming research into manufacturable products, growing and educating the semiconductor workforce, and building ties among different industry players both private and public.

The strategy paper, titled the National Strategy on Microelectronics Research, was written by the Subcommittee on Microelectronics Leadership from the National Science and Technology Council (NSTC), an organization that's part of the White House. The NSTC helps facilitate the science-related goals of the federal government and the President. Since the CHIPS Act and national competitiveness in the semiconductor industry have been a key priority of the Biden administration, it's no surprise that the NSTC published a paper on what goals it would like to meet.

A five-year-long strategy might evoke the five-year plans of China and the late Soviet Union. However, unlike those economy-focused plans, the NSTC's paper doesn't provide hard numbers it needs the industry to hit, and focuses on a wider variety of topics rather than just the economy. The NSTC describes its paper as "the framework for federal departments and agencies, academia, industry, nonprofits, and international allies and partners" that will help "shape the semiconductor field," presumably to the benefit of the U.S. and friendly countries.

Four primary goals in five years

There are four primary goals that the U.S. government wants to achieve within the next five years, which are to "Enable and Accelerate Research Advances for Future Generations of Microelectronics"; "Support, Build, and Bridge Microelectronics Infrastructure from Research to Manufacturing"; "Grow and Sustain the Technical Workforce for the Microelectronics R&D to Manufacturing Ecosystem"; and "Create a Vibrant Microelectronics Innovation Ecosystem to Accelerate the Transition of R&D to U.S. Industry."

The paper is quite long and complicated but to put it concisely, it says how the CHIPS Act's funds should be used to improve research and development (R&D), manufacturing, and education. The first goal is focused on R&D for semiconductor materials, tools, packaging, and turning "innovations into production-worthy fabrication processes." As a counterpart to goal one, goal two seeks to address the "lab-to-fab gap," as research on its own isn't very useful. In particular, the NSTC prioritizes small businesses and academia gaining access to resources necessary for fabbing and testing chips.

Education and the semiconductor industry workforce is the concern of the third goal. One part of this is getting educators and students to know about all of the different disciplines that are relevant to the field, even down to the K-12 level. The NSTC also recommends enhancing the curricula of undergraduate and graduate college students, saying "coursework is not enough."

The paper also recommends engaging with the public at large to raise awareness and curiosity in silicon, and suggests creating museum exhibits and using competitions to get the public interested. The obvious model for these efforts would be NASA, as many Americans learn from an early age about the planets, astronauts, and other space-related topics.

The fourth and final goal focuses on the semiconductor ecosystem and promoting collaboration across its various groups. The NSTC envisions deeper collaboration between entities of all sorts in the public and private sectors, including government agencies, academic institutions, and companies. The paper also puts a particular focus on assisting start-ups, as they require lots of money to get going but may not turn a profit for some time.

It's clear that the industry is currently very far from reaching the NSTC's goals outlined in the paper. Right now, most of the focus of the CHIPS Act is funding large corporations like Intel and TSMC so that their American fabs can be completed in a timely manner. Presumably, that's why the paper assumes five years will be necessary to meet all of these goals, which may be even harder and more important to meet than building fabs.

The U.S. Department of Commerce is now accepting applications for multiple awards worth as much as $300 million in total in R&D funding for packaging technology. This marks the third funding opportunity from the CHIPS Act and the first from the R&D part of the CHIPS Act, which according to a press release, has an allocation of $11 billion. According to current plans, the awards totaling up to $300 million are expected to be given out in July.

The CHIPS Act has a total budget of $52 billion, most of which is going towards subsidies for companies such as Intel, but $11 billion of those funds are earmarked for R&D. Per a funding opportunity notice from the Commerce Department, up to $300 million of R&D funds will be awarded and spread across multiple awards depending on each applicant's budget requirements. 

The funds are specifically for researching new substrate technologies and materials, which are necessary "to support the breadth of new semiconductor applications" per a press release from the Commerce Department. Commerce Secretary Gina Raimundo remarked that "within a decade, research and activities funded by this advanced packaging program, coupled with CHIPS manufacturing incentives, will establish a vibrant, self-sustaining, and resilient onshore packaging industry, helping ensure our country is a leader in advanced semiconductor manufacturing.”

The funding opportunity focuses on R&D for substrates made of out organic, glass, or semiconductor-based materials and outlined 11 different technical targets that applicants are expected to consider in their applications. Given the focus on chiplets and advanced materials, we should probably expect solutions that are similar to, or even improve upon the latest innovations, such as Intel's upcoming glass substrates. 

The U.S. government is taking applications from many types of domestic organizations, from regular companies to non-profits to state-sponsored groups to academic institutions. However, since the application form explicitly says co-funding is preferred, it's likely at least one of the awards will be given to an organization that can rely on its own money in addition to a multi-million dollar award. That doesn't necessarily mean a giant like Intel will get an award though, especially since we can't know whether it will apply.

Concept papers, which presumably detail preliminary research proposals, are due on April 12. Full applications are due on July 3, though the Commerce Department may change that date with a 60 day notice.

Alongside the funding opportunity notice was a statement saying the Commerce Department intends to announce further funding opportunities for packaging R&D and for the Advanced Packaging Piloting Facility (APPF), which aims to bring the fruits of research to actual volume production. Additionally, we also expect a funding opportunity for a Manufacturing USA Institute by the end of June, which also uses CHIPS Act R&D funds like these packaging and substrate programs.

China's market for client and datacenter computers is vast and growing, but Chinese fabless chip designers that build processors for these applications are struggling and bleeding money, reports the South China Morning Post. Cambricon Technologies, a developer of artificial intelligence (AI) accelerators, and Loongson Technology, a CPU designer, are expected to lose tens of millions of dollars in 2023.

Loongson, one of the leading CPU developers in China, faces a drastic downturn with anticipated full-year revenue of ¥508 million ($71.524 million), a 31% year-over-year decrease, and an expected loss of ¥310 million ($43.36 million). This contrasts sharply with a profit of ¥51.8 million yuan in 2022. This decline is attributed to a sluggish market for industrial chips and significant expenditures on research and development. 

Cambricon Technologies, an AI chip specialist, has been in red for years and is also bracing for a tough year. It is projecting a full-year loss of up to ¥924 million ($129.3 million). Although this figure represents a 40% improvement over its losses in 2022, thanks to aggressive cost-cutting strategies, its losses still exceed its revenue. Cambricon's sales for 2023 are anticipated to be slightly down from ¥722 million ($101.05 million) in 2022. Cambricon did not elaborate on the reasons for its weak performance, though there are two obvious ones. Huawei, once its largest client, no longer buys its AI processors, and Nvidia was particularly strong in China last year with its AI GPUs. 

One of the biggest problems for Cambricon and Loongson is that they can address only a fraction of the market due to their narrow product lineups. Meanwhile, government procurements fail to provide the necessary scale to sustain these businesses amid international sanctions and market pressures. 

"It is not just them [Loongson and Cambricon], everyone struggled a bit last year," said Stewart Randall, head of electronics and embedded software at consultancy Intralink, in a conversation with the SCMP. "A lot of companies like Loongson and Cambricon, they do not really sell into the mass market, and that is where semiconductor companies make real money."  

Loongson and Cambricon are also hampered by their inclusion on the US Commerce Department's Entity List, which severely limits their ability to procure advanced American-origin technologies and address certain customers. The U.S.'s tightening of sanctions against China's semiconductor and supercomputer sectors has significantly affected these industries. These measures have disrupted the supply chain and stifled the progress of the People's Republic semiconductor development.

The U.S. Department of Commerce issued two notices of intent today concerning the distribution of the $11 billion R&D money from the CHIPS Act. $300 million is to be made available across multiple awards of up to $100 million (not including voluntary co-investment) for research on advanced packaging, while another $200 million or more is set aside to create the CHIPS Manufacturing USA Institute. Companies will have to compete for the funds by filing an application.

Although the CHIPS Act has $52 billion of funding behind it, it's largely divided into two categories: $39 billion goes directly towards fab construction, while the remaining $11 billion is to be spent on R&D. The two notices of intent take at least a combined $500 million out of the $11 billion R&D budget. That's just 4% of the R&D funds and just under 1% of all CHIPS Act funding, though those values could go up as the $200 million for the CHIPS Manufacturing USA Institute is a minimum amount.

To be clear, a notice of intent isn't legally binding and is simply a declaration that the Department of Commerce plans to make the funds available. According to the notices, the competitions will be announced via a notice of funding opportunity; the competition for the advanced packaging awards will be announced by March, while the CHIPS Manufacturing USA Institute competition will happen in the first half of the year.

We spoke to a policy expert from the Department of Commerce, who explained that these notices, though not a legal commitment, exist to give potential applicants time to prepare to apply. This is especially important for the CHIPS Manufacturing USA Institute competition, which envisions partnerships applying instead of individual organizations. These partnerships won't just include private corporations but also academic institutions, federal labs, and local- to state-level government per the notice of intent. That's consistent with other Manufacturing USA institutions, so there are no big surprises.

Interestingly, the CHIPS Act permitted the creation of up to three Manufacturing USA institutes, but just one will be founded. According to the policy expert, funding is a key motivation for focusing on a single institute. Normally, $75 million goes into creating a Manufacturing USA institution, but with $200 million set aside for this part of the CHIPS Act, one single institute can be backed by a much higher budget than normal. Additionally, the sole CHIPS Manufacturing USA Institute can enjoy the advantages of centralization, making its semiconductor simulation models much better.

Unfortunately, we couldn't get clear details on the companies and organizations who might win the funds from either the $300 million in packaging or the $200 million for the CHIPS Manufacturing USA Institute. It is too early to tell, especially as the application window isn't yet open.

The Commerce policy expert implied that 2024 would see many more of these sorts of announcements. 

Intel's fab near Magdeburg, Germany, will not only be the most advanced semiconductor production facility in Europe, but, according to CEO Pat Gelsinger, the most advanced fab in the world when it comes online. The fab will process wafers using post-18A process technologies and will be used to make products both for Intel as well as its Intel Foundry Services customers.

"This will be not only the most advanced manufacturing fab in Germany, the most advanced [chip] manufacturing in the world will occur at the Magdeburg site," Gelsinger said at the World Economic Forum in Davos, Switzerland, broadcast by CNBC. "We are quite excited about getting that underway."

The head of Intel did not specify which of Intel's post-18A process technologies will be adopted in its Magdeburg facility, but only vaguely said they will be on the order of 1.5nm.

 "[The Magdeburg fab will be] a cutting-edge fab when it comes online," Gelsinger said at the World Economic Forum in Davos, Switzerland, broadcast by CNBC. "Our most advanced process technology, which are just soon to bring into manufacturing, what we call 18A, sub-2nm. [The Magdeburg fab] will be beyond that. So, this will be on the order of 1.5nm devices that we will build in Magdeburg." 

Intel is set to disclose its post-18A fabrication process roadmap in late February, which is probably when the company will also outline which of its fabs (or rather sites) is set to first adopt one node or another. For now, we can only speculate regarding successors of what comes after Intel 18A, but rumor mill indicates that we might see both Intel 16A and Intel 14A.

What is important is that Intel is determined to bring its leading-edge manufacturing to Europe, a rare occurrence in the semiconductor industry. Currently Intel's Fab 34 near Leixlip, Ireland, is producing chips on Intel 4nm-class class process technology and is expected to start making Intel 3nm-class processors in the coming quarters. While for now Intel 4 and Intel 3 are the company's most advanced nodes, they are behind TSMC's N3 (3nm-class). By contrast, Intel expects its 18A and its successors to be ahead of the industry in terms of power, performance, and area characteristics.

The Taiwanese government has enacted the Industrial Innovation Act, commonly referred to as the Taiwanese version of the U.S. CHIPS Act. The new Taiwanese law allows semiconductor companies to get tax breaks for research and development and wafer fab tools installment costs, reports TechNews. But there are some things to consider.

Under this act, eligible companies can benefit from a 25% tax deduction on R&D expenses and a 5% deduction on expenditures for new machinery used in advanced processes. Companies like TSMC, MediaTek, Realtek, Novatek, Phison, Delta Electronics, Nanya Technology, and Winbond already meet the specified criteria based on their 2022 financial reports, as reported by TechNews. 

These deductions apply to the current year's business income tax; the eligibility criteria for these deductions are quite specific: R&D expenses must reach at least 6 billion NTD ($193,25 billion), R&D intensity must be at least 6%, and expenditures on equipment for advanced processes must amount to at least 10 billion NTD ($321 million). 

The Ministry of Economic Affairs is responsible for reviewing applications to ensure they meet the necessary criteria. This includes assessing whether the applying companies hold a key position in the international supply chain, among other factors. The report claims that the review process is thorough, ensuring that only qualifying companies can benefit from these tax incentives. 

The act is part of a strategy to encourage investment in R&D and advanced technology sectors. By offering these tax incentives, the Taiwanese government aims to stimulate innovation and maintain the country's competitive edge in the global technology market. 

The initiative will have a particular impact on TSMC, whose process technologies cost billions to develop but whose development is funded by a single alpha customer, Apple. Meanwhile, even Apple, the world's largest electronics supplier, probably cannot afford a full-scale 3nm, which costs well over $20 billion. Here come government funds.

Although China cannot flood the global market with chips produced using cutting-edge fabrication technologies, strong government subsidies for the semiconductor sector make it possible for the country to flood the market with chips made on legacy process technologies -- undercutting much-needed sales revenue that is vital for R&D at Western firms. This tactic could spur the U.S. government to impose tariffs on products using mature processing nodes, reports Bloomberg.

The U.S. Commerce Department's Bureau of Industry and Security is set to survey over 100 companies in sectors like automotive, aerospace, and defense to figure out how much the U.S. relies on the older but essential semiconductors made in China. The survey is designed to find out how chips made on legacy process technologies (e.g., 40nm and older), which are still important for various industries, are bought and used by American companies.

China is known for providing hefty funds to its chipmakers. For example, SMIC invested $24 billion in capital expenditures from 2020 to 2023 with support from banks, local governments, and state-controlled funds, far exceeding its earnings in the period, according to Nikkei. Other semiconductor companies also have generous support from the government, which is how they can quickly expand production capacity using tools that they can procure without any limitations. This lets them easily start producing chips such as display driver ICs (DDICs) or power management ICs (PMICs) that are sold in billions of units every year.

This situation isn't unnoticed by the U.S. Commerce Department; as China ramps up production of these so-called legacy chips, the system makes it tough for U.S. companies to keep up. The U.S. government is formulating a strategy to counteract this tactic, Bloomberg reported, and tariffs are definitely on the table.

The survey's findings will guide U.S. response, potentially including  the imposition of tariffs or the use of other trade tools to counteract China's aggressive semiconductor expansion. Commerce Secretary Gina Raimondo has already indicated that the U.S. is ready to use every tool it has to stop China from flooding the market with low-cost legacy chips. The most stringent export controls would remain reserved for more advanced process technologies and not for these older generation nodes, she clarified, so Chinese companies will still be able to procure legacy chipmaking tools.

Kingston, the world's No. 1 supplier of retail memory modules and storage devices, has formed a joint venture with Longsys Electronics to operate in China. The move will combine the strengths of Kingston and Longsys, and lower risks for the former. In addition, the partnership will better address the Chinese retail memory market and avoid any potential problems caused by the U.S.-China tensions. 

Under the terms of the deal, Kingston will hold a 49% stake in the joint venture, whereas Longsys will own the majority with a 51% stake. The joint venture will function as an independent entity with full corporate governance and management capabilities. Its focus will be on offering 'diverse and high-end embedded storage solutions' to customers in mainland China. The joint venture will handle its own product planning, R&D management, supply chain management, and sales. Meanwhile, Longsys will conduct R&D and technical support, whereas Kingston will be responsible for core resource procurement and branding.

By forming a joint venture with a Chinese company, Kingston opens its doors to work with virtually any entity in China that needs embedded storage. Given how keen the U.S. government is to place China-based companies in its Entity List, Kingston saves time and effort by not directly working with certain China-based customers and partnering with a local company to handle these clients. 

Kingston is the world's No. 1 supplier of branded memory modules and solid-state drives. Its lineup also has plenty of embedded storage and memory products, though it is hard to say how successful the company is in this territory.

This joint venture is a response to the ongoing political and business tensions between the U.S. and China. DigiTimes says this represents a bigger trend where American tech companies are teaming up with local firms to stay strong in China. This partnership could also be great news for the supply chain, with companies like Phison Electronic, which works with Longsys, likely to benefit from the deal.

The U.S. government is kicking off its $3 billion National Advanced Packaging Manufacturing Program (NAPMP) to help shore up domestic chip manufacturing deficiencies. Modern advanced chip packaging technologies, such as Intel's EMIB and Foveros 3D, require clean rooms and sophisticated tools, which makes contemporary packaging facilities as expensive as fabs were some 15–20 years ago. The importance of complex packaging techniques are hard to overestimate for future chips, as the ability to make chips without packaging is only part of the whole process.

"Making substantial investments in domestic packaging capabilities and R&D is critical to creating a thriving semiconductor ecosystem in America," said Gina Raimondo, the U.S. Secretary of Commerce. "We need to make sure new leading-edge chip architectures can be invented in our research labs, designed for every end-use application, manufactured at scale and packaged with the most advanced technologies. This new vision for advanced packaging will enable us to implement President Biden's Investing in America agenda and make our country a leader in leading-edge semiconductor manufacturing."

The NAPMP is a strategic initiative designed to cultivate a working advanced chip packaging industry that will include fundamental research, technology development, manufacturing, and workforce training. One of the things that the program is particularly focused on is making different companies to work together to establish a sound supply chain.

One of the key elements of the NAPMP will be the Advanced Packaging Piloting Facility (APPF), which will have six top priority research investment areas, including materials and substrates, equipment tools and processes, power delivery and power management, as well as photonics and connectors. The APPF is set to serve a critical role in bridging the gap between research, development, and large-scale advanced chip packaging, which is crucial for ensuring that scientific innovations are not only theoretically viable but also practically applicable in a high-volume manufacturing environment.

The APPF is set to work in tandem with other initiatives under the CHIPS and Science Act, ensuring a cohesive approach to advancing the U.S. semiconductor industry in general. This will be particularly important to building a robust chiplet ecosystem in the U.S., which will be crucial for the competitive positioning of the American semiconductor industry in general.

"Within a decade, we envision that America will both manufacture and package the world’s most sophisticated chips," said NIST Director Laurie E. Locascio. "This means both onshoring a high-volume advanced packaging industry that is self-sustaining, profitable and environmentally sound, and conducting the research to accelerate new packaging approaches to market."

The NAPMP effort is a part of the CHIPS and Science Act, so it will be funded in accordance with the rules of the whole act. The first grants of the program are expected to be announced in early 2024 with a focus on materials and substrates.

Driven by government subsidies and support, China's domestic developers of electronic design automation tools (EDA, or software used for designing integrated circuits and circuit boards), are witnessing a surge in sales, and can therefore increase their R&D investments.

After the U.S. restricted sales of advanced EDA programs to Chinese entities last year, Chinese chip designers had to increase the adoption of domestic EDA tools. As a result, Empyrean Technology and Primarius Technologies have reported sales jumps of over 30% in the first three quarters of 2023, reports DigiTimes.

Empyrean Technology is more financially successful than its rival, primarily because of massive subsidies from the government. For the nine months that just ended, Empyrean Technology earned ¥171 million ($23.523 million), but the government subsidies totaled a whopping ¥129 million ($17.745 million). This subsidy was a crucial factor in the company's profitability. On the other hand, Primarius Technologies, despite receiving ¥9.38 million ($1.29 million) in grants, has not been able to curtail its financial losses, which have increased to ¥28 million ($3.851 million).

With ample government help, Chinese EDA tool developers can invest massive amounts of money in research and development, so Empyrean and Primarius allocated 70.56% and 67.47% of their sales to R&D, respectively, in 2023. These figures dwarf the relative R&D spending of Synopsys and Cadence, which have maintained their R&D spending at a more conservative 30-40% of their sales. 

The Chinese EDA market is still dominated by international giants. Cadence, Synopsys, and Siemens EDA control over 80% of the market, which is even higher than their market share globally (78%). The Chinese government wants domestic EDA developers to capture 22% of the local EDA market by 2025, and to introduce EDA tools for 14nm and 28nm process technologies by that time. This goal is set amid stringent U.S. export controls, which have forced Synopsys and Cadence to tailor their offerings for the Chinese market, specifically excluding GAAFET support.

The Chinese government has pledged increased support for the country's EDA sector, aiming to reduce dependence of the local semiconductor sector on foreign tools. However, it admits that gaining a foothold in the market will be a gradual process as chip designers value reliability of their software more than its lower cost. 

Morris Chang, the founder of TSMC, has recently expressed his views on the future challenges and strategic positioning of the company. Chang stressed the increasing difficulties that TSMC is likely to face due to geopolitical shifts and increased competition, despite its historical success attributed to operational efficiencies and significant R&D investments. Meanwhile, he does not see Intel as a major threat, reports money.UDN.com. 

Chang noted that despite Intel receiving considerable support and endorsement from the U.S. government, it does not pose a substantial threat to TSMC unless it manages to enhance various facets of its foundry operations like technological leadership, yield rates, and competitive pricing. Meanwhile, even if Intel Foundry Services is successful, it will still be a shadow of TSMC, according to Chang.

The founder of TSMC highlighted the diminishing trends of globalization and free trade in the semiconductor sector. Emphasizing that the focal point in global policies and business strategies is gravitating toward national security concerns, he illustrated the important role that TSMC has come to play as a necessity in the tech supply chains of various countries, including Japan and Germany, underscoring its strategic importance in the broader geopolitical landscape.

Chang also pointed out the challenges that TSMC is poised to confront due to the intensified competitive atmosphere aggravated by geopolitical tensions. Meanwhile, he noted that because other tech giants use geopolitical nuances to gain competitive advantages over TSMC, the foundry is destined to face more challenges than ever before. 

However, Chang noted that the cornerstones of TSMC's historical success are delivering extensive production capacity, cost-efficiency, and robust R&D. Therefore, the world's largest foundry should press on with its current strategy to retain its competitive advantages, at the same time increasing the scale of its investments in both production capacity and process technologies.

Officially, Huawei ceased selling consumer electronics and telecom gear in Russia in 2022 after the country started a full-scale war against Ukraine. Unofficially, the company is hiring skilled individuals and supplying Russian government agencies and state-controlled companies with technology. Apparently, unlike its Western peers, the China-based multinational has also kept it R&D operations in Russia intact and spends hundreds of millions of dollars a year, according to a Forbes report. 

As it turns out, Huawei has strategically navigated the shifting IT landscape in Russia, expanding its workforce and investment amidst a withdrawal of Western companies following the start of the war. The company hired available talent, focusing on robust research and development (R&D). As a result, Huawei company fortified its presence and increased the staff of its Russian Research Institute (RRI) by two-thirds since the pandemic. In addition, it invested heavily in partnerships with Russian universities and research institutions. The company now invests about $1 billion annually in its Russian operations, which includes its own R&D division and collaborations with universities. 

"The money [Huawei spends in Russia] is substantial," a source close to the company said. "Huawei's annual investments in Russian science [amounts] hundreds of millions of dollars. It is a huge amount. Huawei's overall annual R&D budget in Russia is about $1 billion."

Such collaborations ensure a continuous flow of innovation and technological advancement. This investment plays a crucial role in Huawei's sustained operations and its ability to remain resilient and innovative amid turmoil.

After companies like Intel, Siemens, and Nvidia shut down their research centers in Russia, their employees either relocated to other countries, or stayed in Russia and had to find themselves a new job. Yadro (a Yandex subsidiary), Sber, T1, and Huawei capitalized on this opportunity, absorbing a substantial number of these skilled individuals who preferred to remain in Russia.

Specifically, Huawei successfully attracted professionals from Western companies that exited Russia, such as Siemens and Deutsche Bank. This strategy allowed Huawei to enrich its workforce with experienced and specialized individuals, enhancing the company’s competitive edge and operational capacity in the region.

Huawei's commitment to Russia’s academic and research institutions remains steadfast, with significant investments channeled towards collaborations with these entities. Investments reaching $1 billion annually signify Huawei’s intent to tap into Russia’s extensive technological and scientific potential, solidifying its footprint in the Russian IT landscape and ensuring a synergy that fosters innovation and technological advancement. In the end, Huawei bolsters its R&D prowess, whereas Russia retains skilled professionals.

The Made in China 2025 strategic plan to develop the national chip industry has stimulated the establishment of tens of thousands of fabless semiconductor developers in the People's Republic in just a few years. However, around 10,000 of such companies have not survived, despite help from federal and local governments. Apparently, China is now prepping another major incentive campaign for semiconductor companies, one that will provide sizable compensation for R&D expenses.

Central to this policy is an enhanced deduction scheme for semiconductor R&D expenses. Companies that channel funds into R&D activities and generate tangible assets from these expenditures will be rewarded with generous pre-tax deductions. Specifically, they can anticipate a deduction of 120% of the actual amount spent between 2023 and 2027. Conversely, for companies whose R&D investments culminate in the creation of intangible assets, there's a provision to amortize these assets pre-tax at a substantial rate of 220% of the asset's cost over the same five-year period.

These benefits will be provided for a wide range of semiconductor companies, including actual chipmakers; fabless chip designers; IC packaging and testing companies; and those involved in the production of materials used in chipmaking. In addition, companies that develop and build wafer fab equipment will also get the deductions.

While these deductions significantly reduce the tax burden on companies, making R&D activities more financially appealing, they don't mean the government is directly paying companies for their R&D activities. Instead, the government is simply forgoing potential tax revenue to incentivize companies to invest more in R&D.

For example, if a company spends $100 on R&D activities that result in tangible assets, they can deduct $120 (120% of $100) from their taxable income. This means they get a tax break on an amount greater than what they actually spent, reducing their taxable income and, consequently, their tax liability. 

If the R&D expenses lead to the creation of intangible assets, the company can amortize (spread out) the cost of that asset over time. In this case, if the intangible asset costs $100, they can deduct $220 (220% of $100) from their taxable income over the specified period.

The companies’ eligibility for the aforementioned tax benefits is determined by their alignment with national encouragement criteria and specific regulatory announcements. Meanwhile, the tax preferential policies are structured in a way that qualifying enterprises are listed annually, with a verification mechanism for those not on the list.

China has made significant strides in its semiconductor sector development, with over 40% of its manufacturing equipment now being locally produced, according to a DigiTimes report that cites data compiled by Bloomberg. This growth, fueled by significant R&D investments and governmental support, has doubled in just two years. However, there's still a reliance on foreign lithography tools, as Chinese companies can barely produce competitive scanners.

Recent reports from Korean media 'Ddaily' highlight that China's push for self-reliance in the semiconductor equipment sector has seen its localization rate surge to over 40%, a significant uplift from 21% in prior years. This rate has extended to over 50% in specific areas like physical vapor deposition (PVD) and oxidation.

The growth in China's semiconductor industry is not just about numbers. To achieve them, massive investments have been made. Among the various segments of China's semiconductor manufacturing chain, equipment manufacturers stand out with the highest investment in R&D. Over the past two and a half years, these manufacturers have consistently invested more than 10% of their revenues in R&D. 

Two companies, in particular, Advanced Micro-Fabrication Equipment Inc China (AMEC) and Naura Technology, have been at the forefront of this R&D push. AMEC has maintained an average R&D ratio of over 13% in the past two and a half years, while Naura Technology has allocated 11% of its revenue towards R&D activities. Both AMEC and Naura specialize in tools for etching and deposition. By contrast, contract chipmaker SMIC and outsourced semiconductor assembly and test (OSAT) tend to limit their R&D spending to 10% of revenue.

While China's semiconductor sector has seen impressive growth, the key challenge to replace lithography scanners from Dutch and Japanese companies has not been resolved. Shanghai Micro Electronics Equipment Group (SMEE), a state-backed firm, earlier this year promised to introduce its first scanner capable of producing chips on a 28nm process technology by the end of 2023, but it remains to be seen when the company can make these scanners in volume and when they replace those made by ASML, Canon, and Nikon. For now, the localization rate for lithography equipment in China is in the single-digit percentage range, the source report claims.

Several factors have been instrumental in China's semiconductor advancements. A vast domestic market, combined with strong governmental backing, has provided the necessary impetus. Additionally, the country's robust R&D capabilities and financial support from the capital market have further propelled its journey towards semiconductor self-reliance.

The European Council on Tuesday formally approved European Chips Act, a regulation aimed to strengthen semiconductor sector in the bloc and increase market share of chips produced in Europe from around 10% today to approximately 20% by 2030. The program will provide €43 billion ($47 billion) to chipmakers building new fabs in Europe. This is the final step in the decision-making procedure.

The European Chips Act is meant facilitate development of the European semiconductor industry by providing subsidies, attracting investments, and encouraging research and development. The program is designed to 'mobilize' €43 billion, including €3.3 billion from the EU budget, in public and private investments to achieve these goals.  

The ultimate objective is to double the EU's global market share in semiconductors from the current 10% to 'at least' 20% by 2030. In addition, the initiative also aims to strengthen the domestic semiconductor supply chain and prevent chip shortages in critical sectors such as the automobile industry, something which happened in 2020 – 2021.

The very decision of the European Union to provide incentives to chipmakers has already made chipmakers to revisit their position regarding building chips in Europe. Intel has committed to build a leading-edge fab near Magdeburg, Germany, and an advanced chip packaging facility in Poland, whereas TSMC is expected to announce a specialty fab producing MCUs for automakers on the German soil in the coming weeks.

"With the Chips Act, Europe will be a frontrunner in the world semiconductors race," said Héctor Gómez Hernández, Spanish Minister for Industry, Trade and Tourism. "We can already see it in action: new production plants, new investments, new research projects. And in the long run, this will also contribute to the renaissance of our industry and the reduction of our foreign dependencies."

Among other things, the European Union is aiming to reduce dependence on foreign-made advanced processors for supercomputers. Nowadays such CPUs and SoCs are produced in the U.S., Taiwan, or South Korea. 

To do so, the European Chips Act is intended to attract companies like Intel, Samsung Foundry, and TSMC to make such advanced products in Europe. Meanwhile, contrary to initial plans to fund solely state-of-the-art fabrication facilities, the EU authorities have broadened their focus to include the entire supply chain, supporting mature chip production and research and development centers too.

The regulation, already adopted by the Council and the European Parliament, will come into force three days after being published in the Official Journal of the European Union.

Over 300 semiconductor companies are seeking to get support from the U.S. CHIPS and Science Fund, according to a Bloomberg report that cites data from the U.S. Department of Commerce. Only a relatively small number of these companies actually produce chips, but without hundreds of other semiconductor supply chain participants, this industry could never function.

The CHIPS Program Office has already received over 300 statements of interest (SOIs) from a variety of applicants from 37 states, an Everglade Consulting report claims. These inquiries include requests for incentives associated chip production, packaging, and R&D facilities, as well as from companies providing raw materials and wafer fab equipment.

The submitted applications detail an array of projects relevant to semiconductor manufacturing. These projects range from provisioning vital materials and chemicals, to building advanced manufacturing hubs, and from the manufacturing of legacy chips for important industry sectors to establishing research facilities centered on new technologies.

The CHIPS initiative, designed to reinvigorate the U.S. semiconductor sector, continues to accept SOIs for all suitable projects, including applications from R&D facilities and from various participants of the semiconductor supply chain.

The team is assessing proposals for the inaugural financing opportunity associated with the establishment of commercial manufacturing facilities, evaluated on a first-come-first-served basis, EverGlade claims, which essentially means that applications from companies like Intel will be reviewed among the first.

The CHIPS and Science legislation enables the U.S. government to grant domestic semiconductor manufacturers approximately $52 billion in subsidies and additional incentives. It also determines a 25% investment tax credit for new manufacturing plants valued up to $24 billion. Furthermore, the law designates more than $170 billion over the upcoming five years for different scientific research endeavors within the United States.

According to the Semiconductor Industry Association, discussions of the CHIPS and Science Act have motivated various companies to invest some $200 billion in the U.S. semiconductor industry.

The Made in China 2025 national strategic plan to develop the domestic semiconductor industry inspired the establishment of tens of thousands of fabless chip designers in the People's Republic in just a few years. However, it seems many of them were unfit to survive intense competition between each other and global players, which is why about 10,000 such chip companies went out of business during 2021–2022, reports DigiTimes.

Market observers now wonder whether the massive shuttering of Chinese IC design companies is a result of tighter U.S. export control imposed in 2020–2022, or the ongoing global semiconductor industry downturn. While both factors contributed to the closures, there were a number of issues specific to China that drove around 10,000 homegrown chip companies out of business.

The Made in China 2025 program implemented several policies to meet its goals, including lower taxes for high-tech companies, encouraging acquisition of foreign tech company, supporting R&D funding by large manufacturers, and direct state R&D funding, among other things. The results were inspiring to say the least. The number of Chinese chip developers increased from 736 in 2015 to 1,780 in 2017, according to China Renaissance Securities. Then in 2020–2021 as many as 70,000 chip companies were registered, according to DigiTimes.

The report admits that the escalation of the U.S.-China trade war in 2018 further inspired the Chinese government to fund high-tech companies, with many of the IC design houses established due to subsidies from federal or local governments. In addition to subsidies, a rush of speculative capital drove the establishment of similar IC design firms developing commodity chips that were poised to crash for multiple reasons.

The semiconductor industry is well known for being capital intensive, but the sector is heavily dependent on talent, skillful management, and knowledge. Even if a company has ample resources, it still needs to attract talent, invest in research and development, and ensure sufficient production capacity from foundries for sustainable long-term development. Without engineering talent and proper management, the chances of success are not high. While there are loads of engineers in China these days, there are not enough managers to run these IC designers successfully.

Meanwhile, an investment bubble emerged. Ding Xing Quantum, a private equity firm based in China, has been investing in domestic IC designers since 2017. The company observed that at the onset, the worth of such a company ranged between RMB 200–300 million ($28–$43 million). However, by 2019, the valuation of startup companies in this sector ballooned to over RMB 1–2 billion ($145–$190 million), which clearly points to an investment bubble, and such bubbles tend to crash.

There was another factor that contributed to the shortfall of Chinese IC design companies. Underperformance of the Chinese consumer market transitioned into a structural imbalance of supply and demand starting Q3 2021, and then the global semiconductor industry faced inventory correction in the second half of 2022 and entered its own downturn. As a result, the demand for chips dropped in general, and China-based developers that produced commodity ICs went bankrupt since they could not offer anything special.

The sanctions against the Chinese semiconductor industry clearly affected development of the sector, as it is evident from the problems faced by companies like Alibaba, Biren, HiSilicon, and YMTC. Meanwhile, the global semiconductor downturn and the inability of many Chinese chip designers to compete played a far bigger role in the dissolution of 10,000 semiconductor entities in the People's Republic, the story by DigiTimes concludes.

K. S. Pua, chief executive of Phison Electronics, said at a recent conference that further NAND price cuts were not viable and warned of potential bankruptcies among suppliers if the market does not recover. Despite the challenging market conditions, Phison remains focused on the development of NAND controllers, and will keep investing heavily in research and development, DigiTimes reports

Leading makers of 3D NAND — Kioxia, Micron, Samsung, SK Hynix, and Western Digital — lost over $10 billion in flash memory as the companies had to cut down prices of already produced ICs, according to some estimates. Pua asserts that further price cuts are infeasible and cautioned that some suppliers may face bankruptcy if prices continue to decline, though he did not elaborate on whether he expects 3D NAND producers or SSD suppliers that buy flash memory to become insolvent. 

The head of Phison also suggests that there is a good chance that 3D NAND makers will further cut output to stabilize or even increase prices. In particular, Pua sees Micron's decision to stop cutting NAND prices as a collective effort among suppliers to stabilize the market. Phison, which develops controllers for some of the best SSDs available today, intends to refrain from future price cuts to maintain its gross margin, with a long-term goal of 27% (+/-3%), while continuing to expand its market share. 

Phison's Q1 revenue was NT$10.078 billion ($328.64 million), an 18% decrease from the previous quarter. However, due to a reduction of low-margin products and a better product mix, the company's gross profit reached NT$3.202 billion and the margin was 31.78%. Unfortunately for Phison, the company posted a loss of NT$550 million from its investment in Hosin Global Electronics, a supplier of SSDs and other NAND and DRAM-based products.

The chief executive of Phison anticipates losses of NAND suppliers to persist in the second quarter of 2023. But he sees them as a short-term challenge, so the company remains committed to maintaining its innovative edge and focusing on client services. To this end, the company will continue investing heavily in research and development, allocating over 80% of its annual expense budget to R&D. KS Pua reportedly said that while some of its rivals have cut their R&D spending, it has increased its investments in future products by 20%.

The European Union has agreed on the plan to invest €43 billion ($47 billion) in its semiconductor sector in a bid to significantly increase production of chips locally and bring in advanced fabrication processes to its member countries. The move is also designed to build up the local semiconductor supply chain and avoid chip shortages for important sectors such as automotive.

"We have a deal on EU #ChipsAct," Thierry Breton, European Commissioner on internal markets tweeted. "In a geopolitical context of de-risking, Europe is taking its destiny into its own hands. By mastering the most advanced semiconductors, EU will become an industrial powerhouse in markets of the future."

Nowadays only around 10% of chips produced globally are made in the European Union. Meanwhile, most of the chips for EU's automotive, IT, and telecom industries are made outside of Europe, which creates challenges for companies like Ericsson, Volkswagen, and Nokia. The European Chips act is designed to increase the share of chips produced in the EU to 20% (by value) by 2030.

One of the things that the European Union is particularly concerned about is that all advanced processors, such as those that power world's fastest supercomputers (including Finland's Lumi, the most powerful supercomputer in Europe) are made either in the U.S., Taiwan, or South Korea. The European Chips Act is designed to lure chip manufacturers with leading-edge process technologies to the bloc.

Meanwhile, it's not just leading producers who will get money from the EU. While originally the European Commission suggested financing solely state-of-the-art fabs, by now EU authorities and legislators have expanded the range to encompass the entire value chain, incorporating mature chip production and research and development centers, reports Reuters.

"The European vision to double our global market share by 2030 to 20%, and produce the most sophisticated and energy-efficient semiconductors in Europe, is already attracting substantial private investment," Breton said in a statement published by Bloomberg. "Now we are mobilizing considerable public funding and the regulatory framework to turn this vision into reality."

In the past, year EU member countries have already done quite a lot to attract leading chipmakers. Intel will continue to use its most advanced production nodes at its Ireland fabs and will build an all-new production campus in Germany, where it will make its most advanced processors.

"We have a Chips Act," said Margrethe Vestager, Executive Vice-President of the European Commission for a Europe fit for the Digital Age, in a Twitter post. "We need chips to power digital and green transitions or healthcare systems. Lots of promise and a lot of day-to-day convenience. Today's Trilogue agreement boosts EU capacity to produce our own chips. And to be a partner in the global chips supply chain."

By now, all major chip producing countries, including Taiwan, South Korea, Japan, and the U.S., have either legislated their semiconductor funding laws, or are about to pass them. As a result, it's not going to be easy for EU to catch up with the market leaders.

A high-ranking R&D executive with nearly two decades of experience at TSMC recently took up a position with Samsung. Semiconductor industry insiders speaking with Taiwan's DigiTimes described the senior executive's move as "rare" and one that may be a "threat" to TSMC's hegemony.

Lin Jun-Cheng started his long tenure at TSMC in 1999 after serving at Micron Technology. The exec worked in TSMC's advanced packaging and testing department and has been described as a driving force in advancing packaging technologies like CoWoS and InFO. Before leaving TSMC in 2017, Lin was the Deputy Director of the R&D department. In the interim, he worked as the CEO of Skytech, a semiconductor equipment company in Taiwan, accumulating production experience for packaging equipment. His new position at Samsung is as the VP of Advanced Packaging Business. 

Reports suggest Lin’s time at TSMC didn’t provide the opportunity to handle clients directly. Perhaps he got much more of that kind of experience in his most recent stewardship of Skytech. Nevertheless, his TSMC work in 3D IC packaging was highly popular with important foundry clients like Nvidia, Apple, AMD, and various HPC specialist companies. In addition, during his TSMC R&D career, Lin helped the firm secure more than 400 patents.

It is worth looking more closely at Lin’s most recent experiences at Skytech. The company actually makes foundry tools for supporting 2.5D and 3D packaging. Lin has helped Skytech secure over 100 patents.

According to Business Korea, Lin has been brought on board in the wake of Samsung setting up an advanced packaging commercialization task force in 2022. Samsung recognized this was an area where it could do better, and Lin is just the latest in a number of talents, with others hired from the likes of Intel, Qualcomm, and Apple.

Earlier in the week, and in a similar vein, we reported that Samsung has been putting in efforts to accelerate in-house CPU core development through high-profile hires, including a senior ex-AMD engineer. The South Korean tech giant obliquely responded to the story to say that its CPU development and optimization teams weren’t new and that it is continuously “recruiting global talents.”

Update 1/18 01:56 PT

In the original article we incorrectly located Haifa in the south of Israel. Haifa, the third largest city in Israel, is located in the north of Israel. This has been corrected in the story.

Updated Article:

Intel has confirmed that it has cancelled the building of a new development center in Israel. IDC21 was supposed to be built in the Matam Technology Park in Haifa, in the north of Israel. However, the ambitious plans for a modern workspace, offering great facilities for a blend of work and leisure, have fallen victim to a cost cutting exercise. The area is now to be used as a parking lot for use by workers in the technology park.

Israel’s Globes newspaper recounts the timeline of Intel’s IDC21 plans, from the announcement leading up to the present day. Shortly after Pat Gelsinger became CEO in early 2021 he visited Israel - surfing on a wave of optimism and propelled by a booming tech industry thirsty for new semiconductors. In May the same year Intel set out its plans for a new development center, covering thousands of square meters in Haifa – with some of its existing important Israel-based facilities like IDC9 nearby.

Intel’s $200M vision for the new IDC21 center was based around the proposition of a campus featuring; sophisticated laboratories, a visitor center, an auditorium, restaurants and cafes with workspaces, green spaces and sports areas, and even a roof-top health complex with a purported “amazing sea view”. As well as being a new site for serious work, the company thought it could be a health, wellbeing, and leisure facility for other Intel workers in the technology park, as well as locals.

Three months after Gelsinger’s visit, the plans for IDC21 were firmed up, with a visit of then SVP, Gregory Bryant, and the symbolic laying of a foundation stone. Less than 18 months after this formal development step, Intel confirmed the site will instead be converted to a car park to benefit other technology park workers and visitors.

Regular Tom’s Hardware readers will be well aware of the current pressures on the technology business. Semiconductor makers like Intel are being particularly hard hit by another contraction in the business cycle, and the wider recession. Confining our observation to Intel’s business, there have already been some signs foretelling this Israel decision. Over recent months Intel has delayed Magdeburg mega fab plans, cancelled construction projects in Oregon and India, and cut various smaller real-estate developments.

Intel’s Statement

Intel provided a statement to Globes which indicated that the ditching of IDC21 plans were part of a wider cost cutting exercise by the company. “Intel is acting to maximize the usage of its real estate with the aim of creating a dynamic and comfortable work environment for its employees, while cutting costs,” read the statement. “We therefore decided to halt construction of IDC12 and complete construction of the parking lot.”

If there is some encouraging news to be extracted from this, it is that Intel appears to be restricting its investment and expenditure cutting exercise to bricks and mortar. It is keeping existing employees, and that will be important to Israel where it is, according to Globes, the country’s largest employee with 12,000 employees plus 2,000 at Mobileye. We really hope that the industry will see green shoots soon, so that jobs and the pace of semiconductor R&D don’t get impacted by cuts.

Apple continues with its development center plans at the same Matam Technology Park industrial zone. Globes reports that the new Apple facility, with 46,000 square meters of space, will be formally opened for business “very shortly.”

Policymakers in Taiwan have passed laws to allow chip companies take 25% of  yearly research and development costs and turn them into tax credits, Bloomberg reports. This is part of an attempt to make sure that cutting-edge chip tech stays in Taiwan, as other nations have pushed incentives to strengthen their own supply chains.

"The Ministry of Economic Affairs stated that Taiwan is an important link in the global supply chain and a long-term reliable partner of international manufacturers, which is unique and irreplaceable," the Ministry of Affairs wrote in a release. It says that the move comes "In the face of huge incentive measures proposed by the United States, Japan, South Korea, and the European Union."

Chipmakers in Taiwan will also be able to file for tax credits on 5% of their annual costs for purchasing equipment for advanced nodes. (This equipment makes up some of the costliest parts of upgrading fabs or building new ones.) Bloomberg notes that credits earned can't surpass 50% of a company's annual income taxes.

The measures were introduced late last year and are likely to take effect this year.

The United States passed the CHIPS and Science act in July to support domestic chip production. Since then, plans for a number of American fabs have popped up, including Intel spending over $40 billion on facilities in the U.S. in Arizona, Ohio, and New Mexico. Taiwan Semiconductor (TSMC) announced a 5 nanometer-capable fab near Phoenix in mid-2020, which could benefit. GlobalFoundries, Samsung and Texas Instruments are also set to upgrade or set up new plants in the United States. The Semiconductor Industry Association, a lobbying group for the industry, says the CHIPS act attracted $200 billion in private investments to the sector.

Abroad, Intel had planned for a "mega-fab" in Magdeburg, Germany, receiving roughly $7.3 billion in funds from the European Chips act. In December, Intel reportedly backed away from starting construction due to a "difficult market situation."

While having chips made domestically has long been considered important to national security, the world saw what happens when supply chains back up in the early phases of the Covid-19 pandemic, which created a shortage of chips for computers, cars and other goods. That, mixed with a dash of geopolitical tension, has had companies looking to diversify their supply chains, and it looks like several of them will be able to follow the money around the world.

The U.S. is the world's largest chip developer. But as semiconductors become more ubiquitous and important, other countries are gaining chip design prowess and market share. 

If the U.S. wants to maintain its position as the world's largest chip developer, the U.S. government will have to help fund local semiconductor R&D according to a report from the Semiconductor Industry Association and Boston Consulting Group.

Chip Development Is Expensive

American companies control approximately 46% of the global semiconductor design-related revenue — about 2.5 times higher than the closest competitor. The U.S. is particularly strong with logic chips, such as CPUs, GPUs, and various other complex SoCs, as companies like AMD, Apple, Intel, Nvidia, and Qualcomm dominate the processor, graphics card, and mobile SoC markets. 

But 46% is down — the U.S. controlled over 50% of the market in 2015, according to the SIA. This loss is because countries such as China, South Korea, and Taiwan have been gaining design-related share for years, thanks to federal- and local-government-supported semiconductor research and development activities, as well as domestic talent development. For example, in 2021 South Korea approved a $450 billion plan to develop local semiconductor industry over the next 10 years. That figure included $1.3 billion for AI and power chip design. 

If nothing changes and the U.S. continues its current downward trajectory, the U.S. share of chip design revenue could drop to 36% by the end of the decade, according to the report.

As logic and memory chips get more complex, they require more R&D investments and more engineering talent. Design cost of a fairly complex chip to be produced at a 5nm class process technology — which includes design of both physical integrated circuits and associated software — is estimated to exceed $540 million, according to International Business Research. American companies produce dozens of such system-on-chips every year spending billions on design-related R&D. In 2021 alone companies from the U.S. poured in around $40 billion in chip design. 

Analysts from the Semiconductor Industry Association estimate that the U.S. public sector is set to invest $400 billion to $500 billion over the next 10 years in R&D and workforce development. But they believe this is not enough to maintain chip design leadership for the whole country. 

Experts from the SIA and BCG warn that the U.S. semiconductor design industry already faces a shortage of skilled workers — and by 2030 that shortage might increase to 23,000 as science, technology, engineering, and mathematics (STEM) graduates leave the industry. 

Furthermore, things such as export restrictions for crème-de-la-crème processors for growing artificial intelligence and high-performance computing applications (e.g., AMD's Instinct MI250X, Intel's Ponte Vecchio, and Nvidia's A100 and H100 compute GPUs that sell for $10,000+ apiece) further threaten the ability of American companies to invest in R&D since such curbs limit their revenue growth.

Large OEMs Depend on Chips

Chip design prowess not only ensures the prosperity of American chip developers, it also ensures the success of adjacent original equipment manufacturers. In the U.S. this includes 34 world-class companies, including Apple, Dell, HP, and HPE. By contrast, there are 27 huge companies in China, including Huawei, Lenovo, BKK, and Xiaomi, that consume chips made in the People's Republic as well as elsewhere.  

The Chinese government understands how important it is to develop chips domestically — even if they're produced elsewhere — and has been nuturing its local design industry for years. Earnings of the top 25 Chinese fabless companies doubled from $12.2 billion in 2017 to $24.4 billion in 2020, according to data from the SIA.

Public Sector Chip Development Funding Needed

The CHIPS & Science Act passed earlier this year involves $11 billion spending on various R&D projects focused on new semiconductor production methods (i.e., new fundamental manufacturing technologies), advanced semiconductor research (transistor structures, materials), metrology research, and innovative chip packaging. 

But the act will not fund chip designers: while Micron and Western Digital will get some funding to conduct pre-competitive R&D for materials, transistors, manufacturing methods, analysis, and metrology, they will get nothing to design actual products that will compete against those developed elsewhere.

Developing actual products ahead of competition is dramatically important because it allows first movers to set new market standards that others have to follow. Companies that set their own standards also tend to directly benefit. For example, Nvidia's proprietary CUDA parallel computing platform and development environment is so far ahead of rivals that the company has enjoyed years of dominance in some AI and HPC sectors. 

At present, around 13% of semiconductor design R&D in the U.S. is funded by public investments. Around 20% - 30% of such R&D is funded by governments, local authorities, or through tax incentives in Europe, Taiwan, South Korea, and Japan. In China, a whopping 45% of chip design-related R&D is funded using direct public funding (government, local authorities, public universities, etc.), tax incentives, and other initiatives. 

To ensure U.S. leadership in chip design going forward, public sector investments are required, experts from the Semiconductor Industry Association and Boston Consulting Group believe. 

The good news is that each public dollar invested in design and R&D would induce additional private-sector investments and therefore increase sales of actual chips significantly, according to the analysts. 

They estimate that if the U.S. public sector invests $20 billion to $30 billion through 2030 in design and R&D (including a $15 billion to $20 billion design tax incentive), this would eventually generate design-related sales of around $450 billion over 10 years. It would also help train and employ 23,000 semiconductor design engineers and create 130,000 indirect jobs.

Summary

The U.S. still leads in advanced logic processors and other logic, but lags in memory, sensors, and optoelectronics. This is not going to change any time soon, but the chip design-related revenue share controlled by American companies may also drop in the coming years if the ongoing trends continue. 

Industry experts believe public sector funding of chip design and R&D in Europe and Asia will allow non-U.S. companies to expand their chip design-related revenue share if the U.S. does not act. 

Public investments in chip design R&D in the U.S. do not need to be extremely high, as the chip development ecosystem already exists — and there are dozens of competitive chip designers in the country. 

The report from the SIA and BCG indicates that if the U.S. public sector invests $20 billion to $30 billion through 2030 in design and R&D (including tax incentives), this would fuel private sector investment and generate incremental design-related sales of around $450 billion over 10 years. This would be more than enough for the U.S. to maintain its position as the world's leading chip developer. 

Now that Europe, Japan and the U.S. are luring chipmakers to their shores with incentives and tax breaks in a bid to disrupt Taiwan's and South Korea's monopoly on leading-edge chipmaking, Taiwan is fighting back. The Taiwanese government on Thursday approved tax breaks for high-tech companies that conduct research, development and manufacturing operations in the country.

High-tech companies that invest huge amounts of money in R&D in Taiwan will be able to lower their income tax by 25%, according to the new amendment approved by Taiwan's Ministry of Economy on Thursday, reports Bloomberg. Also, the government will give a 5% tax break to companies that purchase advanced manufacturing equipment. At press time it was unclear how much Taiwanese companies need to invest in R&D or production tools to get the tax cuts and which R&D and manufacturing equipment the government considers advanced enough to provide the tax breaks. 

By implementing new tax breaks, the Taiwanese government hopes to attract companies like TSMC, which does both R&D and manufacturing in Taiwan (and will therefore receive a 30% tax break). It also makes Taiwan more attractive to companies like Alchip, which designs chips in Taiwan (which is set to receive a 25% tax break if it invests enough in R&D), and Micron that operates two major fabs filled with boatload of expensive wafer production equipment (which is set to get a 5% tax cut).  

What is no less important is that the new tax breaks make Taiwan more alluring for huge high-tech companies like AMD, Intel and Nvidia, which invest huge amounts of money in R&D and have development centers in India because of low costs. If they establish similar operations in Taiwan, that will be a win for the country as engineers tend to earn good salaries. 

Taiwan's government does not exactly follow its peers from the U.S, Japan and Europe with direct subsidies and tax breaks for chipmakers. There are dozens of fabs on the island already, many of them are gargantuan TSMC's gigafabs (with production capacity of 100,000 or more wafer starts per month) and loads of them produce chips using leading-edge nodes. Those fabs are not going anywhere, companies like TSMC, Micron, UMC and other chipmakers will keep upgrading and expanding them for years to come. So, what Taiwan might need more is to lure more research and development operations to the country. More innovations will inevitably strengthen Taiwanese semiconductor production industry over time. 

When Morris Chang founded TSMC in 1987, he got $100 million from the Taiwanese government in exchange for a 49% stake. Other foundries that followed Chang's steps also got money from the government which understood importance of the semiconductor industry in general and contract chipmaking in particular. That was essentially Taiwan's analog of the CHIPS act implemented some 35 years before the U.S. Apparently, the government of Taiwan feels confident about semiconductor manufacturing industry in the country, but wants to lure in more scientists and engineers to strengthen it with innovations.

Large-scale Russian missile attacks on civilian Ukrainian buildings and infrastructure have drawn strong condemnation by the UN Secretary General António Guterres today. The wave of strikes was described as an “unacceptable escalation” by the UN chief.

In the wake of the barrage, there has reportedly been widespread damage to civilian areas, particularly in Kyiv, and sadly “dozens of people being killed and injured.” Illustrating the randomness of the destruction, a report from a Ukraine news outlet Mezha highlights a Russian rocket hit the building housing Samsung’s local offices and R&D center.

The Samsung facility is located quite centrally in Kyiv. Reports say a rocket hit the 101 Tower office center, where Samsung has offices and an R&D center, and the building shows damages across several floors. More images and a video of the scene have been shared by the Director of the Consumer Electronics Division at Samsung Electronics Ukraine, Andrii Skira, on his Facebook page.

Thankfully, all Samsung employees reportedly evacuated before the rocket hit the building. We hope those from other companies based in the building took heed of the warning alarms and got out and into shelters in good time. Unfortunately, we don’t have any other statements from Samsung representatives, but it is probably far too early to assess the damage and potential impact on the business.

There's a question as to why Russian missile attacks even came near to the Kyiv city center, as it's not generally considered a military target. In related news, over the weekend, a suspected truck-bomb partially destroyed a strategically essential and carefully protected bridge between Russian territory and the Crimean peninsula. A day later, rockets and cruise missiles pounded civilian centers in Ukraine. There's speculation that Russian troops are firing more indiscriminately, and Western news outlets are characterizing it as a revenge attack rather than a strategic initiative.

According to various reports, Chinese graphics accelerator technology firm MetaX Tech locally referred to as 沐曦 (mu xi), will have a gaming GPU ready for the domestic market by 2025. During a recent media interview, Dr. Yang Jian, co-founder, CTO, and chief software architect of the firm, reportedly shared the MetaX GPU roadmap, including some details of its high-performance GPUs ready to face foreign rivals.

Apparently, MetaX is currently enjoying excellent progress in terms of both financial backing and development. Earlier this year, its heterogeneous 7nm GPU was taped out, ready for manufacturing. Moreover, the manufacturing of this product is said to be starting “soon.” Its second flagship GPU for scientific computing, AI inference, and data center is now at the final stages of R&D, with plans to mass produce it in 2024.

However, none of those products fulfill MetaX’s goal of being a Chinese producer of high-performance GPUs that compete entirely with foreign flagship products. According to Dr. Yang, such a product is necessary as China’s GPU market accounts for 40% of the world’s consumption.

Unlike some other Chinese GPUs, the MetaX products reportedly wield a “self-developed core IP from scratch, and independently designed GPU architecture and instruction set.” This philosophy contrasts with Innosilicon, whose highly capable and efficient Fantasy GPUs were recently confirmed to be powered by Imagination Technologies (PowerVR) technology.

To seize the opportunity of being a leading Chinese GPU pioneer, the next step for MetaX will be to finish the development of a complete all-round GPU that will not just speed GPU computing calculations, or AI, or scientific computing, but make the big step into graphics rendering acceleration. Chinese tech site MyDrivers understood a segment of the interview with Dr. Yang Jian to mean that, by 2025, MetaX will have a fully capable gaming GPU ready. According to the MetaX website, we think the gaming GPU line will carry the “MXG” moniker.

MetaX 'Ex-AMD' Engineers vs Moore Threads 'Ex-Nvidia' Engineers

Last week UDN reported that the MetaX engineer team primarily consists of engineers who have previously worked at AMD. The same source asserts that China’s Moore Threads GPU development work is spearheaded mainly by ex-Nvidia engineers. Other Chinese firms with GPUs in development include the aforementioned Innosilicon and Zhaoxin with its GlenFly GPUs.

Increasing tech sanctions on China look likely due to high-tech weaponry concerns in the coming months, so the above development plans look sensible for replacing foreign GPUs, which may become scarce. While the worldwide GPU market is looking precipitous at the time of writing, we hope there may be a plentiful supply of Chinese home-grown GPUs by the time of the following GPU crunch (if it happens) to cushion any shortages.

The U.S. Department of Commerce (DoC) has revealed the strategy on how it will spend the $50 Billion from the CHIPS for America Fund. The U.S. government will share the funds between makers of logic and memory who use leading-edge fabrication technologies, manufacturers of chips on mature or specialty process technologies that are used by the military or critical industries, as well as advanced R&D facilities. Each of the CHIPS money beneficiaries will have to meet numerous requirements.

The CHIPS for America program has several strategic goals: to attract leading-edge semiconductor manufacturing to the U.S., build-up a top-to-bottom chip supply chain to support chip production, establish a constellation of R&D programs that will design next-generation semiconductor products and technologies in private-public collaboration, and create good-paying manufacturing jobs. On the operational sides of things,  the program is seeking to build strong public-private partnerships as well as attract private capital to the sector.

Leading Edge Manufacturing

Makers of chips who use the most advanced next-generation fabrication technologies will get the lion's share of the CHIPS for America Fund — $28 billion. 

The funds will not be provided to interested parties only as grants (even though these will be key instruments in enabling companies to build new leading-edge fabs in the U.S.), but will also be available for cooperative agreements, or to subsidize loans or loan guarantees. The DoC stresses that to get subsidies from the government, manufacturers will have to substantiate that they need the subsidies money to make their investments, not substitute their own budgets with money from the taxpayers' pockets. 

Under makers, the U.S. government considers not only companies that process wafers and fabricate silicon dies, but also OSAT (outsourced assembly and test) services providers. This is a particularly wise move as billion-dollar semiconductor facilities also require advanced OSAT plants and taking chips from the U.S. to Asia for test and packaging is not only expensive and time consuming, but is also risky given logistics and current geopolitical tensions. While classic/simple chip packaging services will mostly remain outside of the U.S. due to economic reasons, advanced packaging facilities (such as those that Intel intends to use with its EMIB and Foveros technologies) are encouraged to move to the U.S.

The DoC is seeking proposals for construction or expansion of the aforementioned manufacturing facilities and will give preferences to projects that involve multiple high-cost production lines and associated supplier ecosystems. Also, the DoC encourages companies seeking support from the Fund to get support from state and local authorities, get private investments or form collaborations with clients or suppliers. Actually, the department intends to prefer projects that receive state and local incentive packages to maximize economic effect.

In the recent quarters numerous companies, including Intel, Micron, Samsung Foundry, and TSMC announced plans to spend hundreds of billions of dollars to build new leading-edge fabs in the USA. In fact, Intel and Samsung have already begun building them and TSMC is on the finish line with its fab in Arizona. $28 billion will provide a great support to these companies, but the question is whether this will be enough?

Mature and Current Generation Manufacturing 

The second category of companies to get support from the CHIPS for America Fund are foundries and chipmakers that use existing, mature, and specialty fabrication processes to make chips for defense and commercial sectors, such as automobiles, information and communications technology, and medical devices. This includes various advanced analog chips, radiation-hardened chips, compound semiconductors, and countless emerging ICs. Over time new packaging technologies will also be used for these applications.

Makers of those chips as well as their OSAT partners can collectively get $10 billion from the U.S. government under the same terms and conditions as makers of chips using leading-edge production nodes. The DoC expects these companies to expand or re-equip existing or build new fabs. In fact, GlobalFoundries invested $1 billion in expansion of its existing Fab 8 in New York in 2021, whereas Texas Instruments is building and equipping two fabs in Texas and one in Utah.

R&D Initiatives

Supporting research and development (R&D) in the U.S. is by all means as crucial as supporting local semiconductor manufacturing as without fundamental scientific breakthroughs there will be no new applied devices to produce. To properly manage R&D projects, the DoC split them into four major initiatives focusing on chip manufacturing, advanced semiconductor research, metrology research, and innovative chip packaging, which will together receive $11 billion in total.

One of the key enablers of advanced semiconductor R&D in the U.S. will be the National Semiconductor Technology Center (NSTC) that will deal with research and prototype of advanced semiconductor technologies. One of NSTC's key goals will be bringing together industry, government, national labs, and academia to conduct advanced semiconductor research and prototyping. Essentially, the U.S. government wants to establish an innovation network across the USA that will work on important semiconductor-related research projects aimed at the mid-term and long-term future. Furthermore, NSTC will be able to partner with partners from friendly foreign countries.

"The Department expects the NSTC to focus on advancing semiconductor design, scaling new manufacturing processes, developing new tools and materials, and improving the lab-to-fab product flow," a statement by the DoC reads. 

The NSTC's role is to back development of standards and technical roadmaps to lead concurrent design of materials, production equipment, software, and actual products. While we expect companies to collaborate on pre-competitive R&D of materials, software, and tools, we do not expect them to work together on actual end-use applications. As demonstrated by joint development of 3D XPoint, not everyone can benefit from a new type of memory.

Another important direction organization that will be established will be the National Advanced Packaging Manufacturing Program (NAPMP). As the name implies, the program will focus on developing novel chip packaging methods and ensuring these methods are applied by fabs located in the U.S. Again, NAPMP will attempt to work together with scientists from academia and engineers from around the industry.

Both NSTC and NAPMP will be led by the director of the National Institute of Standards and Technology (NIST). Meanwhile, NIST will also be responsible for the nationwide Metrology Research program, which will focus on physical metrology required for next-generation semiconductors (including those that use various 3D transistors, such as gate-all-around FETs) as well as computational metrology that is used for application where traditional metrology methods are inapplicable. Also, it will work on virtualization and automation for for computationally intensive and data-driven aspects of semiconductor metrology. In addition, NIST's Metrology Research will also have to establish measurement and calibration services as well as measurement and documentary standards. 

Finally, NIST will establish Manufacturing USA Institute, a network of semiconductor manufacturing, government, and academic organizations focused on chip R&D. The key idea is to provide members of those organizations access to state-of-the-art facilities and equipment to encourage R&D as well as train the workforce. 

How Will It Work?

Given the scale of the CHIPS for America fund, there will be tens of companies seeking government subsidies (and other forms of support), so the DoC will have to build a mechanism to review applications and determine their benefits both in terms of technology and economics.

All requests will be reviewed by a team and the DoC is hiring around 50 people to review technical and financial merit of submissions, rationale for public funding, and operational capabilities of the applicant, according to NYTimes. The team is expected to begin seeking submissions within six months and is also expected to give feedback to potential recipients before they submit a complete applications.

The same team will monitor the use of funds and may recover funds if recipients fail to initiate or complete projects on time. Recipients will be prohibited to expand or build new semiconductor production capacity in China for 10 years after getting support from the CHIPS for America fund as well as use those money for stock buyback or dividend payments. The China issue may be a roadblock for Samsung's getting support from the CHIPS for America fund as the company has manufacturing capacity in Tianxia. Also, the DoC will track IP transactions of the fund's recipients as such deals may raise national security concerns. 

Since the CHIPS for America program is designed to lure leading semiconductor manufacturers to the U.S. and reinvigorate resilient chip supply chain in the country, the DoC will prefer funding established players as well as R&D projects backed by reputable academia and private companies. Meanwhile, NSTC will attract research partners from around the world to advance the U.S. semi-industry. 

Now that the strategy behind the CHIPS for America program is here and it is more or less understandable which companies are set to benefit from it, a new question that arises is how much those companies will get. We will learn this in the coming months.

Now that the Chips and Science act is signed into law, companies that are supposed to get subsidies on chip development and production in the U.S. can start proposing plans for their expansion. For example, Micron and Western Digital, two leading makers of DRAM and NAND memory, propose setting up a memory research and development coalition in the U.S. and then producing innovative types of memory in the country.

Bringing Memory Development and Production Back to the U.S 

While the U.S. produces only about 12% of the global semiconductor output, companies like Intel, GlobalFoundries, and Samsung Foundry produce relatively advanced chips in the country. They have been used worldwide since many of them are unique. But regarding computer memory production, the U.S. is far behind South Korea, Japan, and Taiwan mainly because of North America's high fab and labor costs. It is a bit odd as many innovative memory technologies and fabrication processes are developed either in the U.S. or in the U.S. and Japan. With funds provided by the Chips and Science act, Micron and Western Digital hope to correct this wrong.

"In order to secure U.S. leadership in the critical area of semiconductor memory and storage technology, the NSTC should develop and articulate a long-term (>5 years) vision and roadmap for the enablement of the next generation of these technologies," a joint statement between the two companies reads.

One of the public-private organizations that will be set up with the help of the Chips and Science funding as well as investments from interested parties will be the National Semiconductor Technology Center (NSTC), which will bring together industry, government, national labs, and academia to conduct advanced semiconductor research and prototyping, according to the Semiconductor Industry Association. For example, Micron and Western Digital propose to form the Memory Coalition of Excellence (MCOE), which will be a part of the NSTC and will focus entirely on new memory technologies. In addition, both companies expect to get subsidies to build new manufacturing capacity in the USA.

"A Memory Coalition of Excellence (MCOE) will support this era of transformation and new technological innovations required," the statement by Micron and Western Digital reads. "This MCOE should be a focused effort across industry, academia, and government with clearly defined objectives related to overcoming the challenges outlined in this paper and should be aligned with other key coalitions of excellence (COEs) to support the overall objectives of the NSTC."

New Types of Memory Required, Let's Work Together 

An avid reader of Tom's Hardware would justly note that 3D NAND and DRAM are commodities whose prices fluctuate and significantly affect the profitability of manufacturers, which is why it is crucial to make such types of memory in regions with the lowest costs and, obviously the U.S. hardly belongs there. Furthermore, both Micron and Western Digital already have DRAM and 3D NAND R&D operations in Japan, which is why MCOE in the USA may seem excessive. But there are several factors to be considered.

Firstly, next-generation compute devices, which Micron and Western Digital call domain-specific architectures (DSAs), will require all-new types of memory. In particular, the two memory manufacturers mention general purpose compute architectures that use different kinds of memory, accelerator-aware designs that use high-speed memory, and memory-centric architectures that tightly wed compute (logic) and memory. While traditional architectures will continue to use things like 3D NAND, DRAM, and HBM, emerging architectures will need new types of memory, which will have to provide across-the-board benefits in a variety of device metrics, including performance, power, area, functionality, cost, and complexity, according to the companies.

Secondly, those new memory types do not exist today, which means that companies like Micron and Western Digital have to invest in fundamental memory research in a bid to design them eventually. For example, Western Digital has been investing in ReRAM — a perspective storage class memory (SCM) type — for years, but without success. Meanwhile, Micron has not even adequately commercialized 3D XPoint that it co-developed with Intel. The industry has identified several promising technologies for SCM applications (PCM, MRAM, FeRAM, etc.), but none of these technologies has become widespread. That said, it makes a lot of sense to develop fundamental technologies behind innovative types of memory by R&D consortiums/coalitions in collaboration with academia to share costs and speed up time-to-market.

Thirdly, in many cases, innovative types of memory will require brand-new materials, new device structures, manufacturing technologies, and several other things that need heavy investments in fundamental research. Again, coalitions between commercial companies and academia generally represent a more comprehensive approach to basic science than in-house R&D operations. For example, IBM and SUNY Poly jointly conduct next-generation semiconductor R&D.

Fourthly, bringing memory close to compute logic is a significant challenge, so 2.5D and 3D packaging technologies will gain importance in the future. Developing them collaboratively will be beneficial for everyone.

Finally, there are fundamental challenges in developing and producing chips using leading-edge fabrication technologies. Therefore, Micron and Western Digital assert that it is essential to jointly develop simulation (TCAD) and electronic design automation (EDA) tools to speed up the development of next-generation solutions based on new materials, structures, and design. Furthermore, it is vital to accelerate the growth of innovative production equipment technologies, such as EUV mask and wafer patterning solutions, to increase the productivity of EUV tools and new metrology and materials analysis/characterization tools.

Micron and Western Digital expect MCOE to focus on the following activities:

• Advanced 'pre-competitive' R&D for materials, manufacturing technologies, and analysis techniques.
• Memory technologies for memory-centric computing (including in-memory compute, near-memory compute, and analog compute).
• Innovative 3D memory technologies.
• Advanced packaging and stacked memory solutions.
• Heterogeneous integration (functional and/or physical) at wafer and chip level.
• X-point array integrated with advanced CMOS for new concept validation. 
• Modeling methodologies and tools for rapid development and co-optimization of complex technologies and systems.

In general, while companies like Micron and Western Digital can come up with proprietary types of memory addressing specific applications (or rather DSAs, as they put it), they want to conduct fundamental R&D as well as production enablement together with other American companies. Therefore, if the NSTC and the MCOE organizations are successful, they will improve the competitive positions of participants and, consequently, the U.S. semiconductor industry in general.

Leading-Edge Memory Fabs Coming to the U.S. 

Discovering innovative materials and developing advanced memory technologies in the U.S. is one thing. But bringing memory production to the USA is a different challenge. On Tuesday, Micron announced plans to invest $40 billion in leading-edge memory manufacturing operations in the U.S. by the end of the decade.

"This legislation will enable Micron to grow domestic production of memory from less than 2% to up to 10% of the global market in the next decade, making the U.S. home to the most advanced memory manufacturing and R&D in the world."

Micron did not specify what kind of memory it plans to produce in the USA (e.g., 3D NAND, DRAM, SCM, etc.), but we can speculate that the company will attempt to create premium types of memory in the States.

Meanwhile, over the next seven or eight years, $40 billion invested in fabs could buy Micron one EUV-enabled fab that could produce virtually all types of memory or even a couple of moderate-sized EUV and High-NA EUV-enabled fabrication facilities (though we are speculating). In any case, it looks like Micron is looking forward to bringing leading-edge process technologies to the U.S. in a bid to make advanced and expensive memory devices.

Nowadays, manufacturers in South Korea, Japan, and Singapore use the most advanced memory fabrication processes. Micron plans to reverse this trend.

Apple is opening a new research and development site in Jerusalem, Israel. The new site will focus on the development of future Mac processors, indicating that Apple is fully long-term committed to the path it bravely took after its relationship with Intel began to look like a road to mediocrity. Elad Wertheimer, a recruitment specialist at Apple, announced the initiative via LinkedIn on Wednesday.

Wertheimer is specifically looking for engineers that are specialists in processor and associated hardware design. If you work in this field and are available to work in historic Jerusalem, Israel, then you can check out the full recruitment post at the link above, which also contains Wertheimer's email address.

Apple’s scale of R&D operations in Israel was already quite sizable. The Times of Israel notes that the Cupertino-based tech giant already has development centers in Herzliya and Haifa. Interestingly, the same source claims that Apple R&D teams in Israel were hugely influential in developing the M1 chips. It quotes Apple SVP of hardware technologies, Johny Srouji, as saying the “flagship M1 processor, including the M1Pro and M1Max… were built here in Israel while working with other teams worldwide.”

Currently, Apple’s Israel operations employ about 2,000 people. At the time of writing, there are over 100 vacant positions at the firm in Israel. How many the new research and development site in Jerusalem will add once it is fully up and running can only be speculated upon with the limited information we have. If we assume the two existing R&D centers mainly account for the 2,000 employees in Israel, then one could roughly guess a further center will add 1,000 more positions to fill.

Apple recently removed the last vestiges of Intel hardware in Macs. Apple’s Arm SoC transition gamble looks like it has paid off handsomely, and it recently launched the first devices packing the second-gen Apple M2. 

The Americas - more specifically, the United States - are still the globe's biggest investors into semiconductor R&D. According to updated global data from IC Insights, the Americas in 2021 led with their 55.8% slice of the total $80.5 billion sunk into technological research and development. But the data shows that Asia-Pacific countries have been increasing their spending at a much more radical pace, leading them to gain 11.5% of the pie. It would seem this market too is approaching a duopoly, setting trends for decades to come.

Even as the worldwide investment into semiconductor R&D almost doubled from 2011 ($50.8 billion) to 2021 ($80.5 billion), the US saw a mostly sideways growth, increasing its spending from 54.5% of the total towards 55.8% (a mere 1.3% increase). Intel, naturally, is one of the regions biggest spenders; it alone uplifted 19% of the total 2021 investment, at  $15.30 billion.

But the U.S. wants to accelerate its dominion on leading-edge tech; despite delays and languishings in Congress, the country has approved nothing less than a $52 billion-worth injection on local manufacturing capability. Intel too is heavily investing in its home country, but the company's patience is seemingly growing short. Some of its investments might even more towards seemingly greener European pastures, according to Intel's CEO. A portion of this money will undoubtedly be channeled towards refining the company's Integrated Device Manufacturing (IDM) 2.0 strategy, ushering us into the Angstrom-era.

The US is benefitting from being a leading-edge development hub - top R&D companies such as Intel, Nvidia and AMD all have significant R&D facilities within the US. But it's also taking dividends from geopolitical instability and security concerns surrounding both Russia and China. There's a reason (besides tax breaks) that Samsung is eyeing a $200 billion manufacturing investment in the country, alongside TSMC's similar investments. That reason stems from reducing operational impact in wake of aggressive moves from Russia - or China - that could impact their production, throwing the world's technological development into turmoil. China officials have even publicly described TSMC as if it were a juicy fruit, ripe for the taking.

Despite the U.S. holding the investment record, its last-decade growth is negligible compared to that of the Asia-Pacific region, which managed to capture an extra 11.5% of the total, leading it to achieve 29.5% of the pie. This growth has been mostly led by Taiwan - home to TSMC, which injected 14.4% ($11.52 billion) of the industry's total. A close second is South Korea - home to Samsung - who represented 11.9% ($9.9 billion) of the sum.

But China has been increasingly pulling its weight on the global market, as its aggressive investment strategy - buoyed by government funding - has captured 3.1% ($2 billion) poured onto its local R&D efforts - in a bid to divest itself from Western suppliers, strong-armed sanctions and leading-edge technology blockades. All this serves its aim of achieving a production market that's strong enough to furnish its territory with leading silicon - and then some. China's goals are helped by its control of most of the rare metal extraction and routing across the globe's supply chain.

Europe invested $5.89 billion in 2011 (11.6%), while its 8.1% cut in the 2021 numbers amount to $6.52 billion. So Europe didn't so much stop investing; it simply stayed on its spending lane. A big turn of events is in store for the next decade, however, as Europe is doubling down on technological development and in bringing volume production of the latest semiconductor technologies towards its shores. Its recently-announced Chips Act will see the European Union set aside some $43 billion worth of investment in local companies and facilities. While total independence from the US and Asia-Pacific has already been deemed impossible, reducing its vulnerability to global supply chain disruptions is a key element for Europe's renewed focus in this field.

Intel too is aiding Europe's effort with its announcement of Silicon Junction, a further $80 billion-worth investment that will see it increasing R&D and manufacturing facilities all across the continent throughout the same time frame. Together, these investments are expected to bring Europe's total share of the global semiconductor investment table to around 20% by 2030 - a 12% explosion in less than a decade.

All in all, the worldwide R&D investment hasn't changed too much in the last decade. But overclocked investments across the US and Europe could begin to stem the Asia-Pacific tide, which is sure to increasingly pivot towards Chinese investments. All these moves will surely be important from the perspective of geopolitics, but they'll have a primary effect of accelerating innovation throughout tech sectors - that's the proverbial cherry on top of the cake. The knock-on addition of increased resiliency to conflict and pandemics is but the filling. But we've seen stranger, more unexpected things happen.