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Japan Sees Peril in US Chip Hub to Counter China

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By Reuters | Updated: 18 August 2021

Japan is worried that US plans to pour billions of dollars into chip manufacturing to fend off China could finish off what’s left of a Japanese semiconductor industry that once dominated the world.

After “three lost decades”, according to Japan’s industry ministry, the country’s share of global chip manufacturing has fallen from a half to a tenth as it leaked customers to cheaper rivals and failed to maintain a lead in cutting edge production.

As China and the United States, driven by a trade war and security concerns, ramp up support for the manufacturing of chips that run everything from smartphones to missiles, officials worry Japan will be squeezed out altogether.

“We can’t just continue what we have been doing, we have to do something on a completely different level,” former Prime Minister Shinzo Abe told fellow ruling LDP party members in May at a first party meeting to discuss how the country can be a leading digital economy.

Illustrating Japan’s fear of being left out of a new technology world order, documents distributed by the Ministry of Economy Trade and Industry earlier this year showed a thick red dotted line over a bar graph pointing to the possibility of a zero chip industry share by 2030.

A major concern is the future of the country’s still world-leading firms that supply chipmakers with items such as silicon wafers, chemical films and production machinery.

Officials fear that by luring Asian chip foundry giants such as Taiwan’s Semiconductor Manufacturing Co (TSMC) to its soil, the United States could tempt these firms to follow.

“It’s possible for companies to build in Japan and export, but the closer you can be as a supplier the better, it’s easier to exchange information,” said Kazumi Nishikawa, director of the IT industry at METI.

While the shift may not come immediately, “it could happen over the long term,” he said.

The companies Nishikawa worries about include wafer makers Shin-Etsu Chemical and Sumco photoresist supplier JSR Corp and production machinery builders Screen Holdings and Tokyo Electron.

“We are always prepared to respond to policy changes in each country,” said a spokesperson for JSR, which makes light sensitive photoresist coatings used for engraving chips in Japan, Belgium and the United States.

When asked by Reuters, none of the companies said they currently plan to shift production to the United States.

Tech war

To retain them, Japan needs chip foundries that will buy their wafers, machinery, and chemicals, and will also ensure stable supplies of semiconductors for the country’s car companies and electronic device makers.

TSMC, which is looking to expand overseas amid concern about the potential vulnerability of its Taiwan operations to mainland China’s territorial ambitions, has established a research and development centre near Tokyo. It is also reviewing a plan to build a fabrication plant in Japan.

However, its biggest foreign venture by far is a $12 billion (roughly Rs. 89,140 crores) plant it is constructing in Arizona in the United States.

In a bid to keep up in the technology race, Prime Minister Yoshihide Suga’s government in June approved a strategy devised by Nishikawa’s team at METI to ensure Japan has enough chips to compete in technologies that will drive future economic growth, including artificial intelligence, high-speed 5G connectivity, and self driving vehicles.

One initiative is to turn Japan into an Asian data centre hub. Such hubs generate huge demand for semiconductors, which in turn will lure chipmakers to build plants nearby.

Spending support

The success of its industrial policy, however, will depend on money.

So far the country has allocated JPY 500 billion (roughly Rs. 33,900 crores) to reinforce technology supply chains to help companies grapple with shortages of chips and other components during the coronavirus pandemic, and to promote a shift to 5G.

That’s only a fraction of spending proposed by other countries.

“At the current level of support, it’s tough for Japan’s semiconductor industry, and we want government incentives that are comparable with elsewhere in the world,” The Japan Electronics and Information Technology Industries Association (JEITA) said in an email.

The US Senate has approved a bill authorising $190 billion (roughly Rs. 14,11,490 crores) of public money for new technology, including $54 billion (roughly Rs. 4,01,160 crores) on chips, while the European Union plans to spend EUR 135 billion (roughly Rs. 11,75,840 crores) on nurturing its own digital economy.

To equal this spending, Japan would have to earmark large sums of public money that the greying nation might otherwise spend on health and welfare. METI has yet to say how much it believes it needs.

“Given Japan’s financial situation it will be difficult to match” the United States, the EU, and China, former economic revitalisation minister, Akira Amari and leader of the LDP group looking to “make Japan number one again,” told Reuters.

© Thomson Reuters 2021

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Laptops

Apple’s Rumoured MacBook Pro Models Could Receive Higher Resolution Screens, macOS Beta Leak Suggests

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By ANI | Updated: 25 September 2021

The latest beta build of Apple’s macOS Monterey has recently provided clues about the resolution of the company’s rumoured 14 and 16-inch MacBook Pros.

According to The Verge, the seventh beta of the upcoming operating system contains references to ‘3456 x 2234 Retina’ and ‘3024 x 1964 Retina’, which are two resolutions not supported in any of Apple’s current Macs.

This theorises that the two new resolutions correspond to Apple’s much-rumoured 14- and 16-inch MacBook Pros, which are widely expected to launch this year with new designs and a new Arm-based Apple processor called the M1X.

For reference, the current 16-inch MacBook Pro has a resolution of 3072 x 1920, while the current 13-inch MacBook Pro’s display sits at 2560 x 1600. If the new resolutions are accurate, both laptops should see an increase in pixel density as well as screen resolution.

Along with the improved screen resolutions, both laptops are rumoured to feature a revived magnetic MagSafe laptop charger and the return of useful ports like an SD card slot and HDMI.

As per The Verge, the widely disliked OLED Touch Bar is also reportedly on the way out. The new laptops are expected to be announced at an Apple event this year, although an exact date is yet to be made public.

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Computers

Intel Breaks Ground on $20-Billion Arizona Plants as US Chip Factory Race Heats Up

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By Reuters | Updated: 25 September 2021 

Intel on Friday broke ground on two new factories in Arizona as part of its turnaround plan to become a major manufacturer of chips for outside customers.

The $20 billion plants — dubbed Fab 52 and Fab 62 — will bring the total number of Intel factories at its campus in Chandler, Arizona, to six. They will house Intel’s most advanced chipmaking technology and play a central role in the Santa Clara, California-based company’s effort to regain its lead in making the smallest, fastest chips by 2025, after having fallen behind rival Taiwan Semiconductor Manufacturing.

The new Arizona plants will also be the first Intel has built from the ground up with space reserved for outside customers. Intel has long made its own chips, but its turnaround plan calls for taking on work for outsiders such as Qualcomm, Amazon.com’s cloud unit, as well as deepening its manufacturing relationship with the US military.

“We want to have more resilience to the supply chain,” Intel Chief Executive Pat Gelsinger, who earlier in the week attended a White House meeting on the global chip shortage, told Reuters in an interview. “As the only company on US soil that can do the most advanced lithography processes in the world, we are going to step up in a big way.”

Gelsinger said it was too early to say how much of the new plants’ capacity would be reserved for outside customers. He said the plants would produce “thousands” of wafers per week.

Wafers are the silicon discs on which chips are made, and each can hold hundreds or even thousands of chips.

Intel rival TSMC has also purchased land to build its first US campus in Phoenix, not far from Intel’s location, where TSMC plans up to six chip factories , Reuters previously reported.

Gelsinger said Intel plans to announce another US campus site before the end of the year that will eventually hold eight chip factories.

© Thomson Reuters 2021

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Laptops

Nvidia Seeks EU Approval for Arm Deal, Decision Due October 13: European Commission Filing

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By Reuters | Updated: 9 September 2021

Nvidia sought EU antitrust approval of its $54-billion (roughly Rs. 3,98,090 crores) takeover of Arm, according to a European Commission filing, with regulators likely to echo worries similar to those voiced by the UK watchdog last month.

The world’s biggest maker of graphics and AI chips announced the deal last year, triggering concerns in the semiconductor industry over whether Arm could remain a neutral player licensing key intellectual property to customers and rivals.

Worried customers include Qualcomm, Samsung, and Apple.

Arm customers Broadcom, MediaTek, and Marvell are backing the deal.

“We are working through the regulatory process and we look forward to engaging with the European Commission to address any concerns they may have. This transaction will be beneficial to Arm, its licensees, competition, and the industry,” Nvidia said in a statement.

It has previously said it would maintain Arm as a neutral technology supplie

The EU competition enforcer can clear the $54 billion (roughly Rs. 3,98,090 crores) deal with or without concessions after its preliminary review or it can follow up with a four-month long investigation if it has serious concerns.

Britain’s competition watchdog has warned that the deal could damage competition and weaken rivals, and required a further lengthy investigation.

Arm, owned by Japan’s SoftBank, is a major player in global semiconductors, key to technologies from artificial intelligence and quantum computing to 5G telecoms networks. Its designs power nearly every smartphone and millions of other devices.

© Thomson Reuters 2021

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Computers

Intel to Invest Up to EUR 80 Billion in Boosting EU Chip Capacity: CEO Pat Gelsinger

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By Reuters | Updated: 8 September 2021

Intel said it could invest as much as EUR 80 billion (roughly Rs. 6,97,050 crores) over the next decade to boost the European region’s chip capacity and will open up its semiconductor plant in Ireland for automakers.

Intel CEO Pat Gelsinger, speaking at Munich’s IAA auto show, also said the company would announce the locations of two major new European chip fabrication plants by the end of the year.

There is speculation about possible production sites, with Germany and France seen as leading contenders while Poland, where Intel also has a presence, also in the picture.

The CEO said the aim was for a “total project of EUR 80 billion (roughly Rs. 6,97,100 crores) over the next decade that would be a catalyst for the semiconductor industry… a catalyst for the entire technology industry.”

Intel, the biggest maker of processor chips for PCs and data centres, in March said it planned to open up its chip factories for outsiders to use.

Gelsinger told Reuters in April that the company wanted to start producing chips for automakers within six to nine months to help alleviate a shortage that has disrupted vehicle production around the world.

It is unclear whether the latest announcement means Intel will meet that goal.

“Cars are becoming computers with tires. You need us and we need you… The aim is to create a centre of innovation in Europe, for Europe,” Gelsinger said.

The “Intel Foundry Services Accelerator” is aimed at helping automakers learn to make chips using what Intel calls its “Intel 16” chip manufacturing technology and later move to its “Intel 3” and “Intel 18A” technologies.

Those manufacturing processes would be far more advanced than most of the processes currently used in the automotive industry. Intel said that nearly 100 automakers and key suppliers – including BMW AG, Volkswagen AG, Daimler AG, and Bosch – had expressed support for its programmes. An Intel spokesman declined to confirm whether any had committed to becoming customers.

Gelsinger has been quoted saying Intel wants the EU to commit state aid to Intel’s proposed European investment drive.

Intel views automakers as a key strategic priority. Gelsinger said Tuesday that the company believes chips will make up 20 percent of the cost of vehicles by 2030, a five-fold increase from 4 percent of the cost in 2019.

© Thomson Reuters 2021

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Computers

Tesla CEO Elon Musk Signals Competition Concerns Over Nvidia-Arm Deal: Report

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By Agencies | Updated: 30 August 2021

Tesla Chief Executive Elon Musk has signaled competition concerns over Nvidia’s planned purchase of British chip designer Arm, the Telegraph reported on Saturday, citing multiple sources.

E-commerce giant Amazon and smartphone maker Samsung have also lodged opposition to the deal with US authorities, the newspaper reported.

Earlier this year, the US Federal Trade Commission opened an in-depth probe into the takeover. The probe findings are expected in the coming weeks, according to the newspaper.

Tesla, Amazon, Samsung, and Nvidia did not immediately respond to a Reuters request for comment.

Nvidia is likely to seek European Union antitrust approval for the $54 billion (roughly Rs. 3,96,910 crores) purchase of Arm early next month, with regulators expected to launch a full-scale investigation after a preliminary review, people familiar with the matter have said.

Last week, Musk said that Tesla was working on improving the much-awaited update to its self-driving software “as fast as possible.”

Musk tweeted that the Full Self-Driving Beta version 9.2 is “actually not great imo [in my opinion], but Autopilot/AI team is rallying to improve as fast as possible.”

“We’re trying to have a single stack for both highway & city streets, but it requires massive NN (neural network) retraining.”

Tesla had recently come under the scrutiny of US safety regulators, who opened an investigation into its driver assistant system because of 11 accidents where its cars crashed into stationary police cars and fire trucks.

The incidents dating back to 2018 included one fatal crash and seven that resulted in injuries to 17 people, according to the National Highway Traffic Safety Administration.

The agency “is committed to ensuring the highest standards of safety on the nation’s roadways,” a spokesperson said, and in order to “better understand the causes of certain Tesla crashes, NHTSA is opening a preliminary evaluation into Tesla Autopilot systems.”

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Dell Rides Strong Demand for Laptops, Desktops, Cloud Services Due to Remote Work to Beat Q2 Revenue Estimates

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By Reuters | Updated: 27 August 2021

Dell beat market estimates for second-quarter revenue on Thursday as the shift to hybrid work kept demand strong for its laptops, desktops and cloud services.

People globally continue to spend on computer devices even after a year of working from home. Figures from International Data showed shipments of PCs rose 13 percent from April to June, but the pace of growth was much slower than last year’s frenzy.

While the industry has faced pressure from components shortage and supply chain woes, revenue at Dell’s client solutions unit – home to its hardware devices – surged 27 percent to a record $14.3 billion (roughly Rs. 1,05,990 crores).

Its cloud-computing unit, VMware, grew 8 percent, thanks to orders from companies looking to cut costs and expand their digital presence.

Total revenue jumped 15 percent to $26.12 billion (roughly Rs. 1,93,600 crores), beating the analysts’ average estimate of $25.53 billion (roughly Rs. 1,89,230 crores), according to Refinitiv data.

The reopening of the economy has redirected some consumer spending away from computers to other sectors. But a recent rise in COVID-19 cases has prompted renewed curbs and could potentially boost the demand for remote-working equipment.

Dell’s net income fell to $880 million (roughly Rs. 6,520 crores), or $1.05 (roughly Rs. 80) per share, in the quarter ended July 30, from $1.01 billion (roughly Rs. 7,490 crores), or $1.37 (roughly Rs. 100) per share, a year earlier.

© Thomson Reuters 2021

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