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Samsung, Micron Warn China’s Xian Lockdown Could Affect Memory Chip Manufacturing

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By Reuters | Updated: 30 December 2021

Samsung Electronics and Micron Technology, two of the world’s largest memory chip makers, warned that a COVID-19 lockdown in the Chinese city of Xian could affect their chip manufacturing bases in the area.

Micron said on Wednesday the lockdown could lead to delays in the supply of its DRAM memory chips, which are widely used in data centres.

It said the stringent restrictions, which went into effect earlier this month, may be increasingly difficult to mitigate and had resulted in thinner staffing levels at its manufacturing site.

Samsung Electronics also said on Wednesday that it will temporarily adjust operations at its Xian manufacturing facilities for NAND flash memory chips, used for data storage in data centres, smartphones and other tech gadgets.

Chinese officials have imposed tough curbs on travel within and leaving Xian from December 23, in line with Beijing’s drive to immediately contain outbreaks as they appear.

“We are tapping our global supply chain, including our subcontractor partners, to help service our customers for these DRAM products,” Micron said in a blog post.

“We project that these efforts will allow us to meet most of our customer demand, however there may be some near-term delays as we activate our network,” the company said.

Micron added that it was working to minimize the risk of virus transmission and had employed measures including physical distancing and on-site testing and was encouraging vaccination.

Samsung has two production lines in Xian making advanced NAND Flash products, which account for 42.5 percent of its total NAND flash memory production capacity and 15.3 percent of the overall global output capacity, according to analysis provider TrendForce.

Seoul-based analysts said chips made in Samsung’s Xian NAND plant would mainly go to the China market with limited shipments to overseas destinations, and some of the biggest demand for the kind of chips made in the plant would come from Chinese server companies.

Samsung said in a late October earnings call that it had entered the July-September quarter with low inventory of NAND chips, and intended to normalise inventory level during that quarter. It is expected to announce October-December earnings results in January.

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Chip Shortage Study Details Set to Be Released by US Amid Funding Push

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By Reuters | Updated: 25 January 2022

The US Commerce Department is expected to soon release details from a study of semiconductor chips it conducted last year amid a push to win funding to boost US manufacturing from Congress.

In September, the department asked semiconductor chip manufacturers and other companies in the supply chain to voluntarily submit data amid a shortage of chips that has curtailed auto production around the world.

The department has said it received cooperation but has not yet released details. Automakers and chips manufacturers have warned the supply shortages could last until least 2023.

On Monday, the Commerce Department sought input on planning potential programs to incentivise government investment in semiconductor manufacturing and research.

“The United States faces both an immediate supply shortage that’s driving up prices and a long-term threat to America’s economic and national security if we don’t increase domestic supply of chips,” said Commerce Secretary Gina Raimondo on Monday.

Chrysler-parent Stellantis said Friday it was halting production this week at its Windsor Assembly Plant in Ontario where it builds minivans because of the chips shortage.

House Democrats are expected as early as this week to introduce legislation aimed at increasing US competitiveness with China and spending $52 billion (roughly Rs. 3,88,925 crore) on semiconductor production and research, sources told Reuters, after the Senate approved funding in June.

US House Speaker Nancy Pelosi last week said the bill would come “soon” and a vote on the House floor is expected in February, the sources said.

US President Joe Biden has been pressing Congress to approve more funds to boost chip production in the United States as shortages of the key components used in autos and computers have exacerbated supply chain bottlenecks.

On Friday, Intel announced it plans to invest $20 billion (roughly Rs. 1,49,580 crore) and build two new chips plants in Ohio, while Samsung Electronics in November picked Taylor, Texas for a new $17 billion (roughly Rs. 1,27,140 crore) plant to make advanced chips.

© Thomson Reuters 2022

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Logitech Sees Ebb in Demand Post Pandemic, Reports 2 Percent Decline in Quarterly Sales

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By Reuters | Updated: 25 January 2022

Logitech International reported a 2 percent drop in third-quarter sales as the computer peripherals-maker lapped tough comparisons from a year earlier, when the pandemic boosted demand for its products.

However, the maker of keyboards, mice, and headsets raised its forecast for the current fiscal year to between 2 percent and 5 percent sales growth in constant currency, and between $850 million (roughly Rs. 6,340 crore) and $900 million (roughly Rs. 6,710 crore) in non-GAAP operating income.

It had previously forecast flat sales growth, plus or minus 5 percent, and non-GAAP operating income of $800 million (roughly Rs. 5,970 crore) to $850 million (roughly Rs. 6,340 crore).

For the third quarter, sales fell to $1.63 billion (roughly Rs. 12,160 crore) in the three months ending December 2021. The company had posted quarterly sales of $1.67 billion (roughly Rs. 12,460 crore) a year earlier, boosted by stay-at-home workers buying more keyboards, mice and webcams.

The Swiss-American company, the first to manufacture and sell computer mice in the 1980s, said its non-GAAP operating income fell by 37 percent to $302 million (roughly Rs. 2,250 crore) during the reported quarter.

Late last year, the company said it was facing unprecedented problems getting parts to make its products, which also include headsets, video conferencing device, and wireless speakers.

© Thomson Reuters 2022

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Facebook-Parent Meta Creates AI Research SuperCluster Supercomputer, Touted to Be World’s Fastest

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By Associated Press | Updated: 25 January 2022

Facebook’s parent company Meta on Monday said it has created what it believes is among the fastest artificial intelligence supercomputers running today.

The social media giant said it hopes the machine will help lay the groundwork for its building of the metaverse, a virtual reality construct intended to supplant the Internet as we know it today.

Facebook said it believes the computer will be the fastest in the world once it is fully built around the middle of the year.

Supercomputers are extremely fast and powerful machines built to do complex calculations not possible with a regular home computer. Meta did not disclose where the computer is located or how much it is costing to build.

The computer, which is already up and running but is still being built, is called AI Research SuperCluster. Meta says it will help its AI researchers build “new and better” artificial intelligence models that can learn from “trillions” of examples and work across hundreds of different languages simultaneously and analyse text, images and video together.

The way Meta is defining the power of its computer is different from how conventional and more technically powerful supercomputers are measured because it relies on the performance of graphics-processing chips, which are useful for running “deep learning” algorithms that can understand what’s in an image, analyse text, and translate between languages, said Tuomas Sandholm, a computer science professor and co-director of the AI center at Carnegie Mellon University.

“We hope RSC will help us build entirely new AI systems that can, for example, power real-time voice translations to large groups of people, each speaking a different language, so they can seamlessly collaborate on a research project or play an AR game together,” Meta said in a blog post.

The company said its supercomputer will incorporate “real-world examples” from its own systems into training its AI. It says its previous efforts used only open-source and other publicly available data sets.

“They are going to, for the first time, put their customer data on their AI research computer,” Sandholm said. “That would be a really big change to give AI researchers and algorithms access to all that data.”

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Toshiba Halts Operations at Japan Chip Plant After Quake

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By Reuters | Updated: 24 January 2022

Toshiba said on Monday that it had suspended operations at a plant in Oita, southern Japan that makes semiconductors used in cars and industrial machinery, after a strong earthquake hit the area at the weekend.

Some equipment had been damaged and the company was still analysing the impact on production, Toshiba said in a statement.

The plant makes system LSI chips, around 60 percent of which are sold to carmakers and industrial machinery makers, a spokesperson for Toshiba Electronic Devices & Storage said.

Toshiba does not yet know when it can restart production and will likely provide an update on Tuesday, he added.

The company also makes system LSI chips at a factory in northern Japan, with other domestic producers, such as Renesas Electronics, also building the devices.

© Thomson Reuters 2022

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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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AMD’s $35-Billion Deal for Xilinx Now Expected to Close in 2022

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By Reuters | Updated: 31 December 2021

Chip company Advanced Micro Devices’s $35 billion (roughly Rs. 2,60,025 crore) all-stock deal for peer Xilinx is now expected to close in the first quarter of 2022, delayed from a previous target of end-2021, the companies said on Thursday.

“While we had previously expected that we would secure all approvals by the end of 2021, we have not yet completed the process,” the companies said in a statement.

Shares of AMD were marginally up in trading after the bell, while those of Xilinx fell 3.6 percent.

AMD announced the deal in October, intensifying its battle with chief rival Intel in the data center chip market.

Amid the US-China tensions, chip deals face approval challenges from Chinese regulators, who are known for their lengthy and sometimes opaque antitrust reviews.

“Our conversations with regulators continue to progress productively, and we expect to secure all required approvals,” the companies said.

Chip designing peer Nvidia has been struggling with getting regulatory approval for its deal for UK-based chip firm ARM, with the US Federal Trade Commission earlier this month suing to block the deal over competition concerns.

© Thomson Reuters 2021

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