Daily: AI Diffusion Rule scrapped; Huawei contained; Nvidia and AMD deals with Middle East
6.5 min read.
Highlights
AI Diffusion Rule scrapped. The AI Diffusion Rule, which split the world into three tiers with varying degrees of access to U.S.’ top AI chips, is officially scrapped. This is a big win for U.S. allies and AI chip companies, but also a win for competitors like China, for whom it may become easier to purchase, or at least smuggle, chips in. U.S. export controls were too loose, so the Biden admin tightened them, and now they’re loosening again.
Huawei contained. Or maybe not. At the same time, the Trump administration warned that any company, anywhere in the world, using Huawei’s AI chips (that is the Ascend series) could be violating U.S. export controls and may face criminal penalties.
Nvidia and AMD deals with Middle East. Meanwhile, in the Middle East, the door for U.S. AI chips is wide open, with Nvidia and AMD poised to ink major sales of their AI chips to the UAE and Saudi Arabia. UAE may get a million Nvidia chips, which would be a deal in the tens of billions of dollars. Saudi Arabia and AMD will do a $10 billion project, providing chips and software for data centres.
Thanks for reading.
1. Policy and Geopolitics
1.1
WSJ (05/14): U.S. Scraps ‘AI Diffusion’ Rule in Revamp of Biden-Era Chip Curbs
The U.S. has revamped Biden-era rules on artificial-intelligence chips, scrapping an unpopular measure in a move that could benefit major players like Nvidia.
The Department of Commerce said in a statement Tuesday that it is rescinding the “AI Diffusion Rule” on the grounds that it would have stifled American innovation, saddled companies with onerous regulations and undermined diplomatic relations with dozens of countries.
Tech companies including Microsoft and Oracle had spoken out against the rule, which imposed caps on how many chips countries such as India and Switzerland can buy, saying the move would limit U.S. firms’ opportunities abroad without doing much to hamper China, the main target of the tightened controls.
Focus will now be on how the Trump administration refashions the diffusion rule, which could take a couple of months, The Wall Street Journal reported this month. Policymakers are weighing how to block adversaries such as China from accessing advanced chips without hurting U.S. companies.
1.2
FT (05/14): US warns against using Huawei chips ‘anywhere in the world’
President Donald Trump’s administration has taken a tougher stance on Chinese technology advances, warning companies around the world that using artificial intelligence chips made by Huawei could trigger criminal penalties for violating US export controls.
The commerce department issued guidance to clarify that Huawei’s Ascend processors were subject to export controls because they almost certainly contained, or were made with, US technology.
Its Bureau of Industry and Security, which oversees export controls, said on Tuesday it was announcing strengthened rules for foreign AI chips, including “issuing guidance that using Huawei Ascend chips anywhere in the world violates US export controls”.
1.3
Bloomberg (05/14): Trump’s Mideast Visit Opens Floodgate of AI Deals Led by Nvidia
The Trump administration is clearing a path for two key Persian Gulf allies to pursue their artificial intelligence ambitions — and some of the biggest US tech companies are seizing on that opening with plans to spend billions of dollars in the region.
Under agreements with the US expected to be unveiled in coming days, Saudi Arabia and the United Arab Emirates are poised to win wider access to advanced AI chips from Nvidia Corp. and Advanced Micro Devices Inc. that are considered the gold standard for running AI models.
Nvidia, the world’s biggest semiconductor maker, will supply its most advanced artificial intelligence-related chips to Saudi Arabia’s Humain, a company created to push that country’s AI infrastructure efforts. Humain will get “several hundred thousand” of Nvidia’s most advanced processors over the next five years, starting with 18,000 of its cutting-edge GB300 Grace Blackwell products and its InfiniBand networking technology.
AMD, Nvidia’s nearest rival in AI accelerators, will provide chips and software for data centers “stretching from the Kingdom of Saudi Arabia to the United States” in a $10 billion project, Humain and AMD said.
1.4
Bloomberg (05/14): US Mulls Letting UAE Buy Over a Million Leading Nvidia Chips
The Trump administration is weighing a deal that would allow the United Arab Emirates to import more than a million advanced Nvidia Corp. chips, people familiar with the matter said, a quantity that far exceeds limits under Biden-era AI chip regulations — and one that’s raised concerns that American hardware risks ending up in China’s hands.
The deal, which is still being negotiated and could change, would let the UAE import 500,000 of the most advanced chips on the market each year from now to 2027, said the people, who asked not to be named discussing confidential conversations. One-fifth would be set aside for the Abu Dhabi AI firm G42, while the remainder would go to US companies building data centers in the Gulf nation, according to the people.
One of those companies could be OpenAI, which may announce new data center capacity in the UAE as soon as this week, people familiar with the matter said. The people emphasized that discussions around that deal remain fluid.
2. Economy, Finance, and Business
2.1
Bloomberg (05/13): Intel’s New CEO to Focus on Executing Its Existing Strategy
New Intel Corp. Chief Executive Officer Lip-Bu Tan is focused on improving the execution of the chipmaker’s existing strategy rather than making sweeping changes, according to his head of finance.
Zinsner’s comments indicate that Tan won’t pursue a formal split of the company’s manufacturing and product divisions — an idea seized on by investors and analysts in recent months. Intel is unique among top processor companies in having design and production under one roof. Most other major chipmakers outsource the manufacturing portion.
Separately, Intel is still trying to entice more customers to its outsourced manufacturing effort — what’s known as a chip foundry. So far, it hasn’t won orders for large volumes of chips, Zinsner said.
2.2
Bloomberg (05/14): Samsung to Buy FläktGroup for €1.5 Billion in Data Center Play
Samsung Electronics Co. has agreed to buy FläktGroup Holding GmbH for €1.5 billion ($1.7 billion), acquiring the European heating and cooling specialist in its biggest overseas takeover in eight years.
The Korean company inked a pact to acquire all shares of the century-old German company from Triton Investments Advisers LLP. That deal should get done in 2025, it said in a statement. Samsung’s shares rose as much as 1.6% Wednesday morning in Seoul.
FläktGroup would help bolster Samsung’s position against rivals such as LG Electronics Inc. in the heating, ventilation and air-conditioning market, which is expanding rapidly alongside the need to cool data centers during the AI development boom.
2.3
Reuters (05/14): Exclusive: SiCarrier - Huawei partner in chips - seeks $2.8 billion in funds, sources say
SiCarrier, a Chinese chip equipment maker with close links to Huawei, is seeking $2.8 billion in its maiden fundraising round, two people familiar with the plans said, as the startup chases more clients and clout.
SiCarrier was until recently little known, but it has become the most talked-about company in Chinese semiconductor circles this year as the breadth of its planned product range and ambitions emerges.
Founded in 2021 and owned by the Shenzhen city government, SiCarrier is largely seen as a Huawei supplier. But it wants to become the leading domestic provider of chipmaking equipment in China, surpassing Naura and Advanced Micro-Fabrication Equipment China (AMEC).
2.4
FT (05/13): Creditors offer US chipmaker $600mn refinancing to avert bankruptcy
Junior creditors of Wolfspeed Inc., a strategically sensitive US chipmaker, have offered rescue financing to the struggling company to pre-empt a potential bankruptcy filing.
A group of hedge funds and other investors sent a proposal on Sunday that would provide Wolfspeed roughly $600mn to refinance a large convertible bond coming due in 2026, as well as fund fresh working capital.
The offer comes after Wolfspeed, which manufactures silicon carbide wafers for electric vehicles and other energy applications, announced last Thursday it was considering a bankruptcy filing after negotiations to restructure the bond reached an impasse.
3. Technology
3.1
Bloomberg (05/13): Intel Certifies Shell Lubricant for Cooling AI Data Centers
Intel Corp. has certified Shell Plc’s lubricant-based method for cooling servers more efficiently within data centers used for artificial intelligence.
The announcement on Tuesday, which follows the chipmaker’s two-year trial of the technology, offers a way to use less energy at artificial intelligence facilities, which are booming and are expected to double their electricity demand globally by 2030, consuming as much power then as all of Japan today, according to the International Energy Agency.
3.2
TrendForce (05/14): TSMC Offloads Gear to Vanguard JV in Singapore, Reportedly Eases Off Mature Node Production
According to a report from Commercial Times, TSMC’s board on May 13 approved the sale of equipment to VisionPower Semiconductor Manufacturing Company (VSMC), a Singapore joint venture between its subsidiary Vanguard and NXP. As TSMC shifts toward more advanced nodes, it is scaling back mature node operations and reallocating resources, supply chain sources indicate.
The transaction is estimated to be valued between USD 71 million and USD 73 million, with expected disposal gains ranging from USD 21.9 million to USD 23.9 million, according to the report.
With personnel being reassigned from older fabs to support advanced packaging facilities, TSMC is scaling back certain mature node operations—particularly at the 0.13μm, 90nm, 65nm, and 40nm levels, the report states.
The report also notes that within the TSMC Group’s foundry strategy, the two companies are pursuing different paths—TSMC is focused on advanced to angstrom-class nodes, while Vanguard is targeting the 40nm and above segment.