Daily: Semiconductor tariffs expected in two weeks
5.5 min read.
Highlights
Semiconductor tariffs expected in 2 weeks. Commerce Secretary Howard Lutnick said that the investigation into semiconductors is expected to be complete in about two weeks. The conclusion of the probe is expected to lead to a sector-specific tariff on semiconductors. Trump has floated 25% as a potential tariff rate. The markets have been fairly resilient to tariff announcements, which former Atlantic writer Derek Thompson recently explained on his Substack, but perhaps the chip tariffs will move markets, given their fundamental importance to modern economy and society.
Samsung’s $16.5 billion deal. Bloomberg reports that Samsung inked a US$16.5 billion deal to produce semiconductors for Tesla. The deal is expected to last until the end of 2033, giving the struggling chipmaker a lifeline. Samsung stock jumped ~3% today following the news.
Huawei unveils CloudMatrix 384. At the World AI Conference (WAIC) in Shanghai, China, Huawei unveiled their CloudMatrix 384 system, which rivals Nvidia’s latest product. Although China doesn’t have cutting edge chipmaking abilities yet, they have roughly made up for it through innovation and creativity.
Elsewhere at the WAIC, Chinese premier Li Qiang called for global AI cooperation, including the creation of a new body to facilitate AI cooperation.
Thanks for reading.
1. Policy and Geopolitics
1.1
FT (07/26): China proposes global body to govern artificial intelligence
China has unveiled a sweeping plan to expand its role in artificial intelligence governance including the creation of a global co-operation organisation as Beijing vies with Washington for technological leadership.
Speaking at the opening of the World Artificial Intelligence Conference (WAIC) in Shanghai on Saturday, Chinese premier Li Qiang said AI innovation was hindered by “bottlenecks” such as the supply of computer chips.
“We should strengthen co-ordination to form a global AI governance framework that has broad consensus as soon as possible,” he said, adding that China would help create “a world AI co-operation organisation”.
1.2
Reuters (07/28): US to release result of probe into chip imports in two weeks
The Trump administration will announce the results of a national security probe into imports of semiconductors in two weeks, Commerce Secretary Howard Lutnick said on Sunday, as President Donald Trump suggested higher tariffs were on the horizon.
Trump said many companies would be investing in semiconductor manufacturing in the United States, including some from Taiwan and other places, to avoid getting hit by new tariffs.
1.3
Reuters (07/26): Japan says $550 billion package in trade deal could finance Taiwanese chipmaker in US
Japan's $550 billion investment package agreed in this week's U.S. tariff deal could help finance a Taiwanese firm building semiconductor plants in the U.S., Japan's top trade negotiator Ryosei Akazawa said on Saturday.
Japan agreed to the sweeping U.S.-bound investment initiative, which includes equity, loans and guarantees, in exchange for lower tariffs on its exports to the U.S.
However, the structure of the scheme remains unclear.
2. Economy, Finance, and Business
2.1
Bloomberg (07/28): Samsung to Produce Tesla Chips in $16.5 Billion Multiyear Deal
Samsung Electronics Co. will produce semiconductors for Tesla Inc. in a new $16.5 billion pact that gives a boost for its underperforming foundry division.
South Korea’s largest company announced on Monday that it has secured a 22.8 trillion won chipmaking agreement with a global corporation that will run through the end of 2033. Tesla, which already does business with Samsung’s contract chipmaking division, is that customer, according to a person familiar with the matter who asked not to be named as the information isn’t public.
Samsung’s Seoul-traded shares rose as much as 3.5%, their biggest intraday gain in almost four weeks. A company spokesperson declined to comment regarding Tesla, and representatives for the US company did not immediately respond to requests for comment.
2.2
Reuters (07/26): Intel slumps as potential foundry exit deepens investor gloom
Intel shares sank 8% on Friday after the company warned of exiting chip manufacturing if it fails to secure a major customer, a potentially drastic move by the new CEO to cut spending and revive the struggling American icon.
The plan for such extreme measures follows a surprise second-quarter adjusted loss and a forecast for a bigger-than-expected loss in the third quarter.
As part of its new strategy, Intel may reserve the advanced 18A manufacturing process for its products and proceed with its next-generation 14A only if it lands a major external customer commits, Tan told analysts on the post-earnings call.
2.3
TrendForce (07/28): Intel Spins off Network and Edge Unit to Sharpen Focus on Core Strategy After $2.9B Q2 Loss
Intel is spinning off its Network and Edge Group (NEX) into an independent business unit. In a memo to customers, the company revealed its plan to seek external investment for the NEX unit. As CRN notes, an Intel spokesperson has confirmed the details outlined in the memo.
Tom’s Hardware highlights that the NEX spin-off reflects Intel’s broader strategy to divest non-core operations and sharpen its focus on x86 and AI. By separating the NEX division, Intel aims to double down on these strategic growth areas and move away from segments that compress profit margins, the report notes.
3. Technology
3.1
WSJ (07/25): The New Chips Designed to Solve AI’s Energy Problem
“I can’t wrap my head around it,” says Andrew Wee, who has been a Silicon Valley data-center and hardware guy for 30 years.
The “it” that has him so befuddled—irate, even—is the projected power demands of future AI supercomputers, the ones that are supposed to power humanity’s great leap forward. Wee held senior roles at Apple and Meta, and is now head of hardware for cloud provider Cloudflare. He believes the current growth in energy required for AI—which the World Economic Forum estimates will be 50% a year through 2030—is unsustainable.
To that end, Wee’s team at Cloudflare is testing a radical new kind of microchip, from a startup founded in 2023, called Positron, which has just announced a fresh round of $51.6 million in investment. These chips have the potential to be much more energy efficient than ones from industry leader Nvidia at the all-important task of inference, which is the process by which AI responses are generated from user prompts.
There are at least a dozen chip startups all battling to sell cloud-computing providers the custom-built inference chips of the future. Then there are the well-funded, multiyear efforts by Google, Amazon and Microsoft to build inference-focused chips to power their own internal AI tools, and to sell to others through their cloud services.
3.2
Reuters (07/26): Huawei shows off AI computing system to rival Nvidia's top product
China's Huawei Technologies showed off an AI computing system on Saturday that one industry expert has said rivals Nvidia's most advanced offering, as the Chinese technology giant seeks to capture market share in the country's growing artificial intelligence sector.
The CloudMatrix 384 system made its first public debut at the World Artificial Intelligence Conference (WAIC), a three-day event in Shanghai where companies showcase their latest AI innovations, drawing a large crowd to the company's booth.
The system has drawn close attention from the global AI community since Huawei first announced it in April. Industry analysts view it as a direct competitor to Nvidia's GB200 NVL72, the U.S. chipmaker's most advanced system-level product currently available in the market.
3.3
Nikkei (07/26): South Korea's LG, Hanmi enter advanced chip tools game
LG Electronics and Hanmi Semiconductor are preparing to manufacture advanced chipmaking equipment as part of a wider effort to create a homegrown semiconductor supply chain in South Korea.
LG said this month that it will start development of a hybrid bonder, a device that attaches multiple chips together in the same package. Hybrid bonders are considered an improvement from regular bonders, which adhere chips to substrates.
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