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Samsung Expects Chip Demand to Recover in 2023 as Q3 Profits Fall, Names Lee Jae-Yong Executive Chairman

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By Agence France-Presse | Updated: 27 October 2022

Samsung Electronics on Thursday said its third-quarter operating profits were down 31.39 percent year-on-year after a global economic downturn hit demand for consumer electronics. Earnings in the South Korean tech giant’s crucial memory chips division dropped, the company said in a statement, adding that “demand for consumer products remained weak”. Operating profit for July to September 2022 fell to KRW 10 trillion (roughly Rs. 58,100 crore), down from KRW 15.8 trillion (roughly Rs. 91,800 crore) for the same period last year, the company said.

The results are the first year-on-year decline in profit in nearly three years for Samsung Electronics, the world’s biggest smartphone maker.

But the company said it had seen an increase in sales, which were up by 3.79 percent from the same period last year to KRW 76 trillion (roughly Rs. 4,41,500 crore).

The world’s biggest memory-chip maker is the flagship subsidiary of the giant Samsung group, by far the largest of the family-controlled empires known as chaebols that dominate business in South Korea, Asia’s fourth-largest economy.

The conglomerate is crucial to the country’s economic health — its overall turnover is equivalent to a fifth of the national gross domestic product.

Until the second quarter of this year, Samsung, along with other tech companies, significantly benefited from strong demand for electronic devices — as well as chips that power them — during the pandemic.

But the global economy is now facing multiple challenges, including soaring inflation, rising interest rates and the growing threat of a broad debt crisis.

The situation has been exacerbated by Russia’s invasion of Ukraine — which has spurred a surge in energy prices and pushed global food prices up — along with China’s adherence to a strict zero-Covid policy.

“In 2023, demand is expected to recover to some extent, but macroeconomic uncertainties are likely to persist,” Samsung Electronics said.

“In the Memory Business, after a dampened first half, demand is expected to rebound centering on servers as data center installations resume,” it added.

Analyst Park Sung-soon of Cape Investment & Securities told AFP he did not expect consumer demand for tech products to recover until the second half of 2023.

“So the focus for Samsung will be adjusting its supply rather than relying on demand recovering anytime soon,” he said.

Samsung also said it had benefited from the strength of the US dollar against the Korean won, “resulting in an approximately KRW 1.0 trillion (roughly Rs. 5,800 crore) company-wide gain in operating profit compared to the previous quarter”.

Parent company Samsung Group announced Thursday that heir and de facto leader Lee Jae-yong — who received a presidential pardon in August over a fraud conviction — would be promoted to executive chairman.

Geopolitics
The vast majority of the world’s most advanced microchips are made by just two companies — Samsung and Taiwan’s TSMC — both of which are running at full capacity to alleviate a global shortage.

The supply of memory chips has become an issue of global geopolitical significance recently, with leading governments scrambling to secure supplies.

That was demonstrated in May when US President Joe Biden kicked off a South Korea tour by visiting Samsung’s sprawling Pyeongtaek chip plant.

Russia’s invasion of Ukraine has “further spotlighted the need to secure our critical supply chains”, Biden said at the plant, underscoring the importance of bolstering technology partnerships among “close partners who do share our values”.

Samsung employs about 20,000 people in the US and work is under way to build a new semiconductor plant in Texas, scheduled to open in 2024.

The US also recently introduced new measures to limit China’s access to high-end semiconductors with military uses, a move that has wiped billions from chip companies’ valuations worldwide.

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US Senators Lobbying for Ban on Government Deals With Chinese Chipmakers: Report

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By Reuters | Updated: 18 November 2022

US Senate Majority Leader Chuck Schumer and Republican Senator John Cornyn are lobbying hard for a ban on government business with Chinese chipmakers, Politico reported on Thursday, citing three people familiar with the matter. The senators want to get their amendment which blocks federal access to semiconductor products and services made by Chinese firms into the final version of this year’s National Defense Authorization Act (NDAA), the report said.

The measure would broaden provisions in Section 889 that already prohibit government agencies from doing business with Chinese telecommunications companies or contractors who use their technologies, according to a report by Politico.

Schumer and Cornyn got their proposal added to the Senate NDAA last month in the October managers package and are now working to convince their colleagues, the report added.

The fiscal 2023 NDAA must pass the Senate and House of Representatives later this year before it can be sent to the White House for US President Joe Biden to sign into law.

Last month, the Biden administration published a sweeping set of export controls, including a measure to cut off China from certain semiconductor chips made anywhere in the world with US tools.

On August 9, Biden signed a landmark bill to provide $52.7 billion (roughly Rs. 430 crore) in subsidies for US semiconductor production and research and to boost efforts to make the US more competitive with China’s science and technology efforts.

At the time, Biden had touted investments that chip companies are making even though it remains unclear when the US Commerce Department will write rules for reviewing grant awards and how long it will take to underwrite projects.

The legislation authorises $200 billion (roughly Rs. 16,34,700 crore) over 10 years to boost US scientific research to better compete with China. Congress would still need to pass separate appropriations legislation to fund those investments.

© Thomson Reuters 2022

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Nvidia Working With Microsoft to Build ‘Massive’ Cloud AI Computer Using Several Thousand GPUs

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By Reuters | Updated: 17 November 2022

US chip designer and computing firm Nvidia on Wednesday said it is teaming up with Microsoft to build a “massive” computer to handle intense artificial intelligence computing work in the cloud.

The AI computer will operate on Microsoft’s Azure cloud, using tens of thousands of graphics processing units (GPUs), Nvidia’s most powerful H100 and its A100 chips. Nvidia declined to say how much the deal is worth, but industry sources said each A100 chip is priced at about $10,000 (roughly Rs. 8,15,400) to $12,000 (roughly Rs. 9,78,500), and the H100 is far more expensive than that.

“We’re at that inflection point where AI is coming to the enterprise and getting those services out there that customers can use to deploy AI for business use cases is becoming real,” Ian Buck, Nvidia’s general manager for Hyperscale and HPC told Reuters. “We’re seeing a broad groundswell of AI adoption … and the need for applying AI for enterprise use cases.”

In addition to selling Microsoft the chips, Nvidia said it will partner with the software and cloud giant to develop AI models. Buck said Nvidia would also be a customer of Microsoft’s AI cloud computer and develop AI applications on it to offer services to customers.

The rapid growth of AI models such as those used for natural language processing have sharply boosted demand for faster, more powerful computing infrastructure.

Nvidia said Azure would be the first public cloud to use its Quantum-2 InfiniBand networking technology which has a speed of 400 gigabits per second. That networking technology links servers at high speed. This is important as heavy AI computing work requires thousands of chips to work together across several servers.

© Thomson Reuters 2022

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Micron Begins Mass Production of Advanced DRAM Memory Chip in Japan

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By Reuters | Updated: 16 November 2022

Memory chip maker Micron on Wednesday kicked off mass production of its new high-capacity low-power 1-beta dynamic random access memory (DRAM) chips at its plant in Hiroshima, Japan. Both the US Ambassador to Japan, Rahm Emanuel, and Japanese officials attended a ceremony in Hiroshima to mark the start of the large-scale output, highlighting the growing political importance of semiconductors for the two allies.

Earlier this month, Micron said it started shipping samples of its most advanced DRAM chip based on the LPDDR5X, low-power double data rate 5X, standard to smartphone makers to test out.

At the time, the company said it was able to get to the 1-beta manufacturing technology without using the expensive extreme ultraviolet, or EUV, lithography tools, which are used in the latest processor chips in top-end smartphones.

The production of Micron’s most advanced chip, which can store a third more data than older chips, comes as Japan tries to revive and modernise its once-mighty chip industry.

Emanuel said on Twitter that Wednesday’s launch was an example of how the two countries “are committed to strengthening semiconductor supply chains” and national security together.

The former Chicago mayor who has focused on bolstering commercial ties between both countries to safeguard supply chains and cut reliance on China.

Tokyo worries that growing trade friction between the United States and China could cause shortages of semiconductors needed by automakers and other manufacturers.

The Japanese government in September offered Micron a JPY 46.5 billion (roughly Rs. 2,709 crore) to boost production capacity at its plant.

In July it gave a JPY 93 billion (roughly Rs. 5,417 crore) subsidy to rival memory chip makers Kioxia and Western Digital to help it expand output at their joint factory in Japan.

DRAM chips are widely used in data centres, personal computers and other devices.

© Thomson Reuters 2022

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Mahindra Q4 Profit Up 46 Percent as Vehicle Sales Soar 75 Percent YoY to Over 1.7 Lakh Units

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By Reuters | Updated: 11 November 2022

Mahindra reported a better-than-expected second-quarter profit on Friday, driven by strong demand for its passenger vehicles and farm equipment. The Indian automaker posted a sharp 46 percent jump in profit as total vehicles sold soared 75 percent from a year ago to 174,098 units, while it had open bookings for more than 260,000 sports utility vehicles. Mahindra reported a profit after tax of 20.9 billion Indian rupees for the three months ended September 30, up from 14.33 billion a year earlier.

Analysts were expecting a profit of Rs, 1,988 crore, according to Refinitiv IBES data.

The company’s farm equipment sector saw the highest second-quarter volume while the auto segment achieved the highest-ever quarterly volume, Mahindra said in a statement, adding that exports for both vehicles and tractors remained strong.

Mahindra reported a better-than-expected second-quarter profit on Friday, driven by strong demand for its passenger vehicles and farm equipment. The Indian automaker posted a sharp 46 percent jump in profit as total vehicles sold soared 75 percent from a year ago to 174,098 units, while it had open bookings for more than 260,000 sports utility vehicles. Mahindra reported a profit after tax of 20.9 billion Indian rupees for the three months ended September 30, up from 14.33 billion a year earlier.

Analysts were expecting a profit of Rs, 1,988 crore, according to Refinitiv IBES data.

The company’s farm equipment sector saw the highest second-quarter volume while the auto segment achieved the highest-ever quarterly volume, Mahindra said in a statement, adding that exports for both vehicles and tractors remained strong.

Earlier, rival Maruti Suzuki India reported a four-fold jump in quarterly profit, while Tata Motors saw its loss narrowing from a year ago on strong demand.

Meanwhile, German-based Mutares has offered to acquire a controlling stake of 80 percent in Mahindra-owned Peugeot Motocycles, the companies said on Thursday.

Earlier this week, Mahindra announced that it has tied up with three electric vehicle infrastructure partners – Jio-bp, Statiq, and Charge+Zone – to offer charging solutions for its upcoming range of passenger electric vehicles. With these partnerships, Mahindra EV users will get seamless access to a robust fast charging infrastructure and e-mobility solutions spanning across discovery, availability, navigation and transactions, the Mumbai-based automaker said.

© Thomson Reuters 2022

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Rapidus Project Gains Japanese Government Backing Ahead of Goal to Mass Produce Advanced Chips by 2027

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By Agence France-Presse | Updated: 11 November 2022

The Japanese government will pour half a billion dollars into a new project to develop and make next-generation microchips, chief cabinet secretary Hirokazu Matsuno said Friday.

Eight major companies including Sony, SoftBank, Toyota, and telecoms giant NTT have joined forces for the venture, Japanese media reports said.

The new firm, named Rapidus, will develop and mass produce next-generation semiconductors by 2027, according to major media outlets including national broadcaster NHK and the Mainichi Shimbun.

The pandemic has fuelled a global shortage of memory chips, with governments scrambling to secure supplies as carmakers and tech companies have been forced to make production cuts.

Each company has invested around JPY one billion (roughly Rs. 57 crore), with MUFG Bank investing JPY 300 million (roughly Rs. 17 crore), according to the industry ministry.

The investor companies are expected to officially announce the project later on Friday.

The ministry will grant JPY 70 billion (roughly Rs. 4,000 crore) to Rapidus to lead a research and development project for next-generation semiconductors, Matsuno said without elaborating.

“Semiconductors are a key technology that supports digitalisation and decarbonisation,” Matsuno said at a regular briefing.

“We hope these steps will help improve the competitiveness of our country’s semiconductor industry.”

The chip shortage has prompted calls for the government and businesses to secure semiconductor supplies for Japan’s economic security, as geopolitics become increasingly volatile – especially concerning Taiwan, which has a huge chip-producing capacity.

The United States recently introduced new measures to limit China’s access to high-end semiconductors with military uses, a move that has wiped billions from chip companies’ valuations worldwide.

The German economy ministry also has recommended that the sale of a chip factory to a Chinese-owned firm should be blocked as it poses a security threat, government sources said Tuesday.

Last year, Taiwanese chip giant TSMC and Sony said they would tie up on a new $7 billion (roughly Rs. 400 crore) plant in Japan.

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IBM Osprey Quantum Computer With 433 Qubits Launched: All You Need to Know

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By Reuters | Updated: 10 November 2022

International Business Machines (IBM) on Wednesday said it launched its most powerful quantum computer to date called the Osprey, a 433-qubit machine that has three times the number of qubits than its Eagle machine announced last year.

The number of qubits, or quantum bits, are an indication of the power of the quantum computer which uses quantum mechanics, although different quantum computer companies make different claims about the power of their qubits which can be created in many different ways.

Quantum computers are one day expected to speed up certain calculations millions of times faster than the fastest supercomputers today.

Dario Gil, IBM’s director of research, said IBM is still on track to launch a computer with over 1,000 qubits but for further scaling was working on a new approach.

“As we push the limits of the size of the Osprey chip that we’re announcing, if you look at it, it’s really big already. Next year, 1,000 is going to be very big,” he said. “So after that, we have been designing and engineering the whole architecture for quantum computing based on modularity.”

IBM is calling the modular system Quantum System Two.

“Quantum System Two is the first truly modular quantum computing system so that you can continue to scale to larger and larger systems over time,” Gil told Reuters ahead of the IBM Quantum Summit this week. “Modularity means the chips themselves are going to have to be interconnected to one another.”

IBM said it is targeting this system to be online by end of next year and it would be the building blocks for “quantum-centric supercomputing” by connecting multiple Quantum System Twos. IBM said it could build a system with up to 16,632 qubits by linking three of these systems.

IBM has over 20 quantum computers around the world, and customers can access them through the cloud.

© Thomson Reuters 2022

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