Daily: Lutnick suggests using CHIPS funding to take more stakes
7 min read.
Highlights
CHIPS funding for more equity? Reuters’ sources say that Commerce Secretary Howard Lutnick is looking into converting CHIPS Act funding into equity stakes of the US government, following the Intel blueprint that was floated this week. The companies could include Micron, TSMC, and Samsung; the last two are foreign companies. The Intel deal is not unprecedented but unorthodox and would challenge what the American capitalist free market means.
This is especially the case as Treasury Secretary Scott Bessent said that the US government does not intend to help out with Intel’s business by helping the chipmaker find customers, as has previously been suggested / hoped for.
The CHIPS funding has mostly been committed, though mostly not yet disbursed.
SoftBank considered buying Intel foundry. In months of meetings between SoftBank’s Masa Son and Intel’s Lip-bu Tan, Son reportedly suggested buying Intel’s foundry business. It would fit nicely in Son’s ambition’s to buy more of the value chain (he already owns chip architecture and AI chip design), but goes against Tan’s public commitment to keep the foundry business inside Intel.
Nvidia designing more powerful H20. Nvidia is reportedly building another chip designed for the China market, based on the latest Blackwell architecture and more powerful than the current H20 chip. It would have HBMs and Nvidia’s NVLink networking technology, giving China more bandwidth - China’s primary bottleneck. It is unclear if the chip, tentatively named B30A, will be compliant with regulations and/or given an export licence.
Thanks for reading.
1. Policy and Geopolitics
1.1
Reuters (08/20): Trump eyes US government stakes in other chip makers that received CHIPS Act funds, sources say
U.S. Commerce Secretary Howard Lutnick is looking into the federal government taking equity stakes in computer chip manufacturers that receive CHIPS Act funding to build factories in the country, two sources said.
Expanding on a plan to receive an equity stake in Intel in exchange for cash grants, a White House official and a person familiar with the situation said Lutnick is exploring how the U.S. can receive equity stakes in exchange for CHIPS Act funding for companies such as Micron, Taiwan Semiconductor Manufacturing Co and Samsung. Much of the funding has not yet been dispersed.
Aside from Intel, memory chipmaker Micron is the biggest U.S. recipient of CHIPS Act cash. TSMC declined comment. Micron, Samsung and the White House did not respond to requests for comment.
1.2
Axios (08/19): Trump admin pours cold water on its hot Intel deal
The U.S. government would soon acquire around a 10% equity stake in Intel, whose products division has been supporting its foundry.
The White House then would put pressure on major U.S. tech companies to buy Intel chips or use its foundry, either by making a compelling national security case or (more likely) via an array of financial carrots and sticks.
[But Bessent] poured cold water on finding new customers for Intel.
"The last thing we're going to do is take the stake and then try to drum up business," Bessent said. "There's no talk of trying to force companies to try and buy from Intel."
1.3
TrendForce (08/20): India’s First Compound Semiconductor Wafer Fab Gets Approval
Recently, the Indian government announced the approval of four new semiconductor projects under the India Semiconductor Mission (ISM), raising the total number of ISM projects from six to ten. These four projects involve a total investment of about INR 46 billion. Notably, one of them refers to India’s first commercial compound semiconductor wafer fab.
2. Economy, Finance, and Business
2.1
FT (08/19): SoftBank held talks with Intel on buying contract chipmaking business
SoftBank’s billionaire founder Masayoshi Son held talks with Intel’s chief executive about buying its faltering contract chipmaking business in the weeks before Monday’s announcement that the Japanese company would invest $2bn in the US group’s shares.
Son has met Intel’s Lip-Bu Tan since the latter’s appointment in March to discuss a potential deal, according to multiple people with knowledge of the talks, as the US company tries to find a solution for its advanced chip manufacturing business, which is struggling to compete with Taiwan’s TSMC.
The talks were wide-ranging and could have led to multiple outcomes, including joint ventures with third parties or a minority investment similar to that announced on Monday. However, two of the people said the announcement did not preclude a bigger deal over Intel’s so-called foundry business in the future.
2.2
WSJ (08/19): Intel, SoftBank Discussed a Sale. Now, a Cash Infusion Will Accelerate American AI.
SoftBank’s $2 billion investment in Intel offers the challenged chip maker a lifeline—and makes the Japanese conglomerate a private-sector champion in the Trump administration’s effort to revive a onetime American chip giant.
The deal could help secure future chip and AI hardware supply for large-scale projects such as SoftBank’s Stargate data-center venture and a potential artificial-intelligence and robotics hub in Arizona, according to people familiar with the matter. It could also reduce SoftBank’s reliance on Asia for chip supply, while building capacity in the U.S. Earlier this year, SoftBank held talks about buying the chip-manufacturing side of Intel’s business, which didn’t result in a deal, according to people familiar with the matter.
2.3
TrendForce (08/20): Chip Equipment Makers Ride AI Boom but Face 5% Q2 Revenue Decline on China Slowdown
According to Nikkei, earnings among leading chipmaking equipment makers are beginning to diverge, shaped by weakening sales in China and rising demand for AI chips.
The report highlights that the combined net profit of the top ten chipmaking equipment makers remained robust, rising about 40% to $9.4 billion—marking a fifth straight quarter of growth fueled by AI demand. Still, half of them recorded either year-on-year declines in second-quarter profit or slower growth than a year earlier.
Notably, the report adds that in the second quarter, nine companies disclosing China sales posted a combined 5% drop to $9.3 billion, equal to 30% of total sales—down from around 40% in late 2023 to early 2024.
2.4
Nikkei (08/20): Japan's fragmented power chip industry struggles to meet China's challenge
As Japan invests billions of dollars into manufacturing chips used for artificial intelligence, the country's less-recognized dominance in legacy power semiconductors is being challenged by emerging Chinese companies. And despite the tough times, local producers have been slow to form a united front.
2.5
Reuters (08/20): Shanghai Bright Power plans to buy Chinese charging chip maker for $457 mln
Shanghai Bright Power has agreed to buy a 100% stake in a Chinese wireless charging chip maker for 3.28 billion yuan ($457 million), to further expand its products portfolio and enhance competitiveness, it said in a Shanghai stock exchange filing, opens new tab late on Tuesday.
3. Technology
3.1
Reuters (08/20): Nvidia working on new AI chip for China that outperforms the H20, sources say
Nvidia is developing a new artificial intelligence chip for China based on its latest Blackwell architecture that will be more powerful than the H20 model it is currently allowed to sell there, two people briefed on the matter said.
U.S. President Donald Trump last week opened the door to the possibility of more advanced Nvidia chips being sold in China. But the sources noted U.S. regulatory approval is far from guaranteed amid deep-seated fears in Washington about giving China too much access to U.S. AI technology.
The new chip, tentatively known as the B30A, will use a single-die design likely to deliver half the raw computing power of the more sophisticated dual-die configuration in Nvidia's flagship B300 accelerator card, the sources said.
The new chip would have high-bandwidth memory and Nvidia's NVLink technology for fast data transmission between processors, features that are also in the H20, a chip based on the company's older Hopper architecture.
3.2
TrendForce (08/19): NVIDIA’s Rubin Ultra Seen Driving Immersion Cooling Boom by 2027-28
As AI chips grow more powerful, they generate massive heat that threatens system stability and performance, making advanced cooling the critical bottleneck for cloud giants’ data centers and NVIDIA alike. While liquid cooling dominates today, NVIDIA is expected to embrace immersion cooling post-Rubin Ultra, with the market set to take off between 2027-2028, ZDNet reports.
3.3
SCMP (08/19): Huawei reveals Kirin chip inside 5G smartphones as firm overcomes US sanctions
Huawei Technologies has revealed that the new Pura 80 handsets are powered by its Kirin 9020 system-on-a-chip, marking the first time in about five years that the US-sanctioned company has lifted the veil of secrecy behind its advanced smartphone processors.
The name of Huawei’s chipset, which was designed by semiconductor design subsidiary HiSilicon, was found prominently displayed in screenshots shared online by Pura 80 users after a system update of the handset.
3.4
SCMP (08/19): Chinese EDA leader Empyrean announces breakthroughs in chip design software
China’s top semiconductor design software developer Empyrean Technology said it has made breakthroughs in design tools for memory chips and panel displays, as part of its long-term goal to “fully replace foreign products” amid the ongoing US-China tech war.
For memory chip design, Empyrean added a “clone group” function to the layout editor, which helps “quickly and accurately complete the layout design of identical units” as memory devices contain arrays of storage modules, according to a filing to the Shenzhen Stock Exchange over the weekend.
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