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Intel’s $20-Billion Ohio Factory Could Become World’s Largest Chip Plant

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By Associated Press | Updated: 22 January 2022

Intel said on Friday it would invest up to $100 billion (roughly Rs. 7,44,200 crore) to build potentially the world’s largest chip-making complex in Ohio, looking to boost capacity as a global shortage of semiconductors affects everything from smartphones to cars.

The move is part of Chief Executive Officer Pat Gelsinger’s strategy to restore Intel’s dominance in chip making and reduce America’s reliance on Asian manufacturing hubs, which have a tight hold on the market.

An initial $20 billion (roughly Rs. 1,48,800 crore) investment – the largest in Ohio’s history – on a 1,000-acre site in New Albany will create 3,000 jobs, Gelsinger said. That could grow to $100 billion (roughly Rs. 7,44,200) with eight total fabrication plants and would be the largest investment on record in Ohio, he told Reuters.

Dubbed the silicon heartland, it could become “the largest semiconductor manufacturing location on the planet,” he said.

While chipmakers are scrambling to boost output, Intel’s plans for new factories will not alleviate the current supply crunch, because such complexes take years to build.

Gelsinger reiterated on Friday he expected the chip shortages to persist into 2023.

Dubbed the silicon heartland, it could become “the largest semiconductor manufacturing location on the planet,” he said.

While chipmakers are scrambling to boost output, Intel’s plans for new factories will not alleviate the current supply crunch, because such complexes take years to build.

Gelsinger reiterated on Friday he expected the chip shortages to persist into 2023.

“China is doing everything it can to take over the global market so they can try to out-compete the rest of us,” Biden said.

US Commerce Secretary Gina Raimondo said at the event the current semiconductor supply chain is “far too dependent on conditions and countries halfway around the world.”

Gelsinger said without government funding “we’re still going to start the Ohio site. It’s just not going to happen as fast and it’s not going to grow as big as quickly.”

THE CHIP FEAST AND FAMINE

Intel ceded the No. 1 semiconductor vendor spot to Samsung Electronics in 2021, dropping to second with growth of just 0.5%, the lowest rate in the top 25, data from Gartner showed.

As part of its turnaround plan to become a major manufacturer of chips for outside customers, Intel broke ground on two factories in Arizona in September. The $20 billion (roughly Rs. 1,48,800 crore) plants will bring the total number of Intel factories at its campus in the Phoenix suburb of Chandler to six.

Gelsinger told Reuters he still hoped to announce another major manufacturing site in Europe in the coming months.

It is not just Intel ramping up investments. Rivals Samsung Electronics and Taiwan Semiconductor Manufacturing Co or TSMC also have announced big investment plans in the US And that’s raising questions about a glut in chips going forward.

“We still have years in front of us before we’re even having a semblance of supply-demand balance,” said Gelsinger. “Ask yourself what portion of your life is not becoming more digital.”

“Yes, the industry is growing, and maybe the metaverse solves world hunger for the semiconductor industry. But there is a big bubble coming,” said Alan Priestley, an analyst at Gartner.

US-CHINA TECH WAR

The US build-up comes as a tech war between the US and China is causing a decoupling of certain technologies, such as chips. Companies looking to sell technologies to China are considering basing outside of the US to avoid being snagged by US export control rules. China is also investing heavily in its semiconductor manufacturing capacity.

While Gelsinger also touted the security and economic benefits of boosting US chip production on Friday, Bloomberg reported in November that the Biden administration pushed back against a prior plan by the company to boost silicon wafer production in China over national security concerns.

Intel has drawn fire for its decision to delete references to Xinjiang from an annual letter to suppliers after the chipmaker faced a backlash in China for asking suppliers to avoid the sanctions-hit region.

When asked about it in a briefing last month, White House press secretary Jen Psaki said she could not comment on the company specifically, but said “American companies should never feel the need to apologize for standing up for fundamental human rights or opposing repression,” reiterating a call to industry to ensure that they are not sourcing products that involve forced labour from Xinjiang and urging companies to oppose China’s “weaponizing of its markets to stifle support for human rights.”

Intel’s Ohio investment is expected to attract partners and suppliers. Air Products, Applied Materials, LAM Research and Ultra Clean Technology have shown interest in establishing a presence in the region, Intel said.

Construction of the first two factories is expected to begin late in 2022 and production in 2025.

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Taiwanese Legislators Seek to Pass Bill to Protect ‘Core’ Technologies From Chinese Espionage

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By ANI | Updated: 9 May 2022

In order to prohibit Chinese espionage to steal information about Taiwan’s ‘core’ technologies, its legislators are seeking to pass bills for harsher punishments. The amendments would increase prison time and fines for people who work with foreign entities to steal information about ‘core’ technologies, reported Taipei Times.

Legislators aim to pass three readings of draft amendments to the National Security Act and the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area this month, sources said.

A proposed bill to amend the National Security Act, which passed a preliminary review on April 7, would prohibit people from helping China, Hong Kong, Macau, foreign countries or overseas hostile forces, or companies, organizations or people controlled by them, to infringe on the business secrets of the nation’s “core” technologies.

Offenders under the law could face five to 12 years in prison or a fine of New Taiwan dollar (NTD) 5 million to NTD 100 million (roughly Rs. 1.3 crore to Rs. 25 crore).

The amendment would also prohibit people from using and infringing on business secrets of the nation’s core technologies in China, Hong Kong, Macau and foreign countries, adding that offenders could face three to 10 years in prison or a fine of NTD 5 million to NTD 50 million (roughly Rs. 1.3 crore to Rs. 13 crore), reported Taipei Times.

To expedite prosecution, the amendment requires that the High Court hear the first instance of cases concerning national security, and the Intellectual Property and Commercial Court hear the first instance of economic espionage cases.

A draft amendment to the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area, which passed a preliminary review on March 25, would forbid Chinese businesses or Chinese-funded entities based outside China from engaging in business activities in Taiwan without government approval, reported Taipei Times.

Offenders would face up to three years in prison and fines of up to NTD 15 million (roughly Rs. 4 crore), while anyone who allows Chinese-funded businesses to use their name to operate in Taiwan would face fines from NTD 120,000 to NTD 2.5 million (roughly Rs. 3 lakh to Rs. 65 lakh), the draft amendment said.

Under the bill, legal persons, groups, and members of entities commissioned, subsidised, or invested to a certain extent by government agencies to engage in businesses involving the nation’s core technologies would need government approval to travel to China, reported Taipei Times.

The requirement would remain for three years after the commission, subsidy or investment ends, or three years after the person has left their position, and offenders could face fines of NTD 2 million to NTD 10 million (roughly Rs. 50 lakh to Rs. 2.6 crore), it said.

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Germany Wants to Invite Chip Makers for Local Production, Offers EUR 14 Billion as State Aid

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By Reuters | Updated: 6 May 2022

Germany’s government wants to attract chip makers with EUR 14 billion (roughly Rs. 1,13,132 crore) in support, Economy Minister Robert Habeck said on Thursday, adding that the lack of semiconductors used in everything from smartphones to cars was a massive problem.

A global chip shortage and supply chain bottlenecks have created havoc for car makers, healthcare providers, telecoms operators and others.

“It’s a lot of money,” Habeck told a gathering of family businesses in Hanover.

In February, the European Commission set out plans to encourage chip manufacturing in the European Union due to a boom in demand, with proposed new legislation to ease state aid rules for chip factories.

In March, US chipmaker Intel announced it had picked the German town of Magdeburg as the site for a huge new EUR 17 billion (roughly Rs. 1,37,358 crore) chipmaking complex. Government sources said at the time the state was promoting the project with billions of euros of funds.

Habeck said there would be further examples like Magdeburg even though companies in Germany would remain dependent on producers elsewhere for components like batteries.

“We must develop our own strategy to secure primary materials,” he said.

The US chipmaker is spreading its investments in Europe around half a dozen countries, including boosting its existing factory in Ireland, setting up a design and research facility in France, and a packaging and assembly site in Italy.

The initial spending will total EUR 33 billion (roughly Rs. 2,76,294 crore), including EUR 17 billion (roughly Rs. 1,42,337 crore) in Germany, where the auto industry is likely to be a prime customer for cutting-edge chips that could use technology as small as 2-nanometers.

German automaker Volkswagen highlighted the pain caused by chip shortages on Tuesday, saying it sold 2 million fewer cars than planned last year due to the issue.

© Thomson Reuters 2022

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ISMC Said to Invest $3 Billion in India’s Karnataka to Set Up Chip-Making Plant

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By Reuters | Updated: 2 May 2022

International semiconductor consortium ISMC will invest $3 billion (roughly Rs. 22,940 crore) in India’s southern Karnataka state to set up a chip-making plant, the state government said on Sunday.

ISMC is a joint venture between Abu Dhabi-based Next Orbit Ventures and Israel’s Tower Semiconductor. US chip giant Intel has announced plans to acquire Tower.

India’s first semiconductor fabrication unit is expected to generate more than 1,500 direct jobs and 10,000 indirect jobs, the state’s investment promotion division said in a tweet.

ISMC and Indian conglomerate Vedanta have applied for Prime Minister Narendra Modi’s $10 billion (roughly Rs. 76,473 crore) incentive plan to push companies to set up semiconductor and display operations in India, the government’s next big bet on electronics manufacturing.

Vedanta told Reuters on Saturday it was in “advanced talks” with Gujarat and Maharashtra in west India and Telangana in the south to choose a site by mid-May. It has a planned investment outlay of $20 billion (roughly Rs. 1,52,973 crore) for its semiconductor and display push.

Modi and his IT ministers outlined plans on Friday for investment incentives in the sector, saying they want India to become a key player in a global chip market dominated by manufacturers in Taiwan and a few other countries.

India’s semiconductor market is forecast to grow to $63 billion (roughly Rs. 4,81,865) by 2026 from $15 billion (roughly Rs. 1,14,729) in 2020, the government says.

© Thomson Reuters 2022

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Microsoft Expects Double-Digit Growth for This Year as Demand for Cloud Computing Services Rise

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By Reuters | Updated: 27 April 2022

Microsoft on Tuesday forecast double-digit revenue growth for the next fiscal year, driven by demand for cloud computing services, and its shares jumped about 4 percent.

Microsoft forecast Intelligent Cloud revenue of $21.1 billion (roughly Rs. 1,61,695 crore) to $21.35 billion (roughly Rs. 1,63,611 crore) for its fiscal fourth quarter, driven by strong growth in its Azure platform. That compared with a Wall Street consensus of $20.933 billion (roughly Rs. 1,60,427 crore), according to Refinitiv data.

“If there is any macro headwind, where you have more value for less price means you win. In our case, when it comes to our commercial cloud offerings, we have significant advantages on that across the stack,” Microsoft’s chief executive, Satya Nadella, said when asked how the company was projecting double-digit growth for the next fiscal year.

TECHnalysis Research chief analyst Bob O’Donnell noted Microsoft’s ability to buck industry trends.

“Despite current gloom and doom around big tech, Microsoft’s strong revenues and robust forecast highlight that not all tech is at risk,” O’Donnell said. “For companies that focus on delivering products and services that businesses need to modernize their operations … there’s still plenty of upside.”

Microsoft on Tuesday reported profit and revenue for its fiscal third quarter that beat Wall Street expectations, also benefiting from demand for its cloud-based services.

Microsoft results indicate that it can keep its pandemic-fueled sales growing as economies reopen and businesses shift to a hybrid model of allowing staff to alternatively work from office and home.

That trend is also helping drive up revenue of Windows products, said Brett Iversen, Microsoft’s general manager of investor relations. “Strength in the commercial PC market drove Windows OEM revenue up 11 percent,” he told Reuters. Third-quarter Azure annual growth of 46.0 percent was steady from the previous quarter and in line with estimates of 45.6 percent growth compiled by Visible Alpha. Still, Azure growth has showed a steady drop from fiscal 2020 when it was in the 60 percent range.

In contrast, Google parent Alphabet Inc on Tuesday reported that Google Cloud’s growth rate in the first quarter fell slightly to 43.8 percent, from 44.6 percent in the 2021 fourth quarter. Alphabet’s first-quarter revenue came in below expectations, and its shares were down 2 percent in after-hours trading.

Microsoft’s Nadella said the number of $100 million-plus (roughly Rs. 766 crore) Azure deals more than doubled year-over-year in the third quarter.

“These numbers show that customers continue to turn to Microsoft as they accelerate their shift to cloud computing and the current unsettling economic environment has not yet impacted the company’s main growth driver,” said Haris Anwar, senior analyst at Investing.com.

Still, Microsoft chief financial officer, Amy Hood, said the company’s business could be impacted if China’s shutdown over the pandemic extends into May, although the current impact of the shutdowns is already reflected in Microsoft’s outlook.

“However, extended production shutdowns that reach into May would further negatively impact our outlook across Windows OEM, surface, and Xbox hardware,” she told investors.

The company reported revenue of $49.36 billion (roughly Rs. 3,78,270) in the third quarter, compared with $41.7 billion (roughly Rs. 3,19,567 crore) a year earlier. Analysts on average had expected revenue of $49.05 billion (roughly Rs. 3,75,895 crore), according to Refinitiv IBES data.

Net income rose to $16.73 billion (roughly Rs. 1,28,210 crore), or $2.22 (roughly Rs. 170) per share, in the quarter ended March 31, from $15.46 billion (roughly Rs. 1,18,470 crore), or $2.03 (roughly Rs. 150) per share, a year earlier. That topped analyst targets of $2.19 (roughly Rs. 150).

© Thomson Reuters 2022

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Graphic Chip Price Drop Raises Questions on Whether End of Shortage Is in Sight

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By Reuters | Updated: 26 April 2022

A sharp drop in graphic chip prices could presage an unexpectedly quick ending to a global chip crunch that has crippled manufacturing from smartphones to cars, and the issue will be a central one for companies reporting results this week.

As Intel, Qualcomm and others report, investors will weigh how dampened consumer spending from inflation, China’s COVID lockdown and Russia’s invasion of Ukraine balance out supply chain blockages for microchips.

The trigger is a drop in prices of GPUs, or graphics processing units, which are the brains of gaming machines and are spreading to other uses.

Analysts at Baird recently downgraded GPU maker Nvidia to “neutral” after prices dropped. So far this year, Nvidia stock is down roughly 31 percent and rival Advanced Micro Devices has fallen about 37 percent compared with a roughly 22 percent drop on the Philadelphia SE Semiconductor Index. Both companies declined to comment.

GPU prices are still being sold at a premium, but a smaller one. Susquehanna analyst Christopher Rolland earlier this month said that the markup over manufacturer suggested retail price or MSRP has fallen to 41 percent from 77 percent.

Graphics chips and hardware news site 3DCenter, which tracks graphic chip prices in Europe, reported that the price of AMD’s Radeon RX6000 and Nvidia’s GeForce RTX30, both used for gaming, dropped steadily to less than 20 percent above MSRP from 80 percent at the start of the year.

Still, recent Reuters checks found that Nvidia’s GeForce graphics cards remained largely out of stock at retailers like BestBuy and Newegg Commerce.

Baird senior analyst Tristan Gerra told Reuters that if electronic companies that buy chips expect prices to drop further, they will cut fat inventories, further cutting purchases — and pressuring prices.

“It’s a vicious cycle.” Gerra said.

Demand for GPUs may also drop because cryptocurrency Ethereum is expected to change the way it operates late this summer, reducing the demand for graphics chips that power systems used to mine the cryptocurrency today, analysts say.

There is a debate over whether the lower prices will spread throughout the chip sector.

Softening demand from PC and smartphone markets is also resulting in price drops of other chips such as leading edge processors like CPUs and some memory chips, according to Summit Insights Group analyst Kinngai Chan, who expects the supply of some other chips made on older machines to face over-capacity in the second half of this year.

But Bank of America said the weakness in the gaming or cryptocurrency mining segments could be balanced by strength in data center demand for graphic chips and has reaffirmed its “buy” rating for Nvidia.

Meanwhile major chip manufacturers, including Intel and TSMC, plan multibillion-dollar expansions.

“Between all the fab investments and then all the bullishness that the shortage wasn’t going to end until 2023, 2024, we said we could see a glut coming,” that extends beyond graphics chips, said TechInsights’ Dan Hutcheson, who has been following chip supply and demand for over 40 years.

© Thomson Reuters 2022

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Ukraine Crisis: Acer Suspends Business in Russia

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By Agence France Press | Updated: 9 April 2022

Taiwan tech firm Acer said Friday it was halting all business in Russia after Taipei expanded sanctions over Moscow’s invasion of Ukraine.

Self-ruled Taiwan has been watching the conflict in Ukraine closely and swiftly joined the international sanctions against Russia.

The invasion has heightened fears that China might one day follow through on threats to annex its smaller neighbour.

Acer said in a statement it has decided to suspend its business in Russia “due to recent developments”.

“The company is focusing on the safety of all its employees, which includes ongoing efforts to help every individual and their families impacted by the current situation.”

Taiwan’s government recently listed 57 “strategic high-tech commodities” subjected to tighter export controls, including computers, telecoms and avionics devices, as well as equipment for making semiconductors.

Exporters must seek prior approval from the Bureau of Foreign Trade if they wish to ship the controlled items to Russia.

The island is a major manufacturing hub for microchips and home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC).

Last month, another leading Taiwanese computer maker Asus announced that its shipments to Russia were “at a standstill” due to the war.

Acer’s announcement came days after Ukrainian Vice Prime Minister Mykhailo Fedorov published a letter to Asus chairman Jonney Shih calling on the firm to “end any relationships” with Russia.

Fedorov — who is also Ukraine’s digital minister — has also urged multinational tech companies such as Intel, Microsoft and PayPal to halt operations in Russia.

A growing number of multinationals, from McDonald’s to Adidas and Samsung, have fully or partially halted business in Russia.

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