Daily: TSMC and Samsung 2nm; Consolidating Chinese chip industry; AI investments in the Middle East?
4.5 min read.
Highlights
TSMC and Samsung 2nm. TSMC will begin mass production of 2nm chips in the second half of this year. Samsung is also expected to launch 2nm in H2 2025, but is expected to be a little behind TSMC and with a lower yield rate.
Consolidating Chinese chip industry. Chinese semiconductor industry is consolidating. The industry is following the pattern that many previous innovative industries have gone before in China, such as the EV industry. Start with many, then compete domestically, consolidate the industry through M&As, and then cultivate the remaining few as national champions.
With this in mind, Chinese router producer TP-Link is cutting its chip unit, while Chinese chip designer SemiDrive will design chips for a European carmaker.
AI investments in the Middle East? A WSJ article casting doubt on the AI investments in the Middle East. Among other things, it points to Neom, the proposed futuristic city in Saudi Arabia, as an example of overpromising and underdelivering.
Thanks for reading.
1. Policy and Geopolitics
1.1
WSJ (06/16): AI Companies Should Be Wary of Gulf Spending Spree
A handful of Middle Eastern countries have emerged as some of the world’s biggest spenders on artificial intelligence. The companies benefiting from the windfall should be wary—as should their investors.
Their aim is to seed domestic AI industries rather than ceding the technology entirely to foreign tech companies. Many see it as a point of national pride to develop Arabic-language AI models locally. AI investments also fit into longstanding economic diversification efforts.
Many big investments in the region that generated a flurry of initial excitement have been scaled back or scrapped over the years, falling victim to poor management or political squabbles. Among the largest is Neom, a futuristic desert city in Saudi Arabia launched in 2017 but plagued by cost overruns and delays. A board presentation last year found it would cost $370 billion to build the city’s first phase in the next 10 years.
Even if Middle Eastern countries do move forward with the projects they have announced, it is unclear where the end demand for their AI services will come from. That differentiates them from commercial buyers and makes it less certain that they will keep plowing money into larger and more advanced AI facilities down the road.
2. Economy, Finance, and Business
2.1
TrendForce (06/16): China’s A-Share Chip M&A Boom: 73+ Applications Reportedly in 18 Months, $55B Deal Value in 2024
As the U.S. clamps down on chip exports, China is fast-tracking the consolidation of its semiconductor industry. According to Economic Daily News and Chinese media like Sina, China’s A-share chip sector has announced at least 23 M&A deals since 2025.
Notably, as the reports highlight, in 2024 alone, over 50 mergers were reported, with total deal values topping RMB 400 billion (around $55.7 billion).
This aligns with an April report from South Korea’s Etnews, which noted that since many chipmaking tool firms depend on government subsidies, Beijing plans to consolidate over 200 chip equipment companies into just 10 key players.
2.2
SCMP (06/17): SemiDrive to supply EV cockpit chips to European carmaker as Chinese firms go global
Chinese automotive chip firm SemiDrive will start supplying its cockpit system-on-a-chip (SoC) to an undisclosed European carmaker late next year, marking its first collaboration on the continent to push for global sales, a senior executive said.
The chips would be used in several of the carmaker’s models including sedans and SUVs produced and sold in the Europe, Middle East and Africa region, general manager Eugene Wang said. The vehicles were expected to feature its X9 SoC, which integrates high-performance CPUs, GPUs, AI accelerators and video processors designed for advanced cockpit applications, he added.
2.3
SCMP (06/16): Chinese router maker TP-Link cuts staff at Shanghai chip unit, retains Shenzhen facility
TP-Link, China’s leading Wi-fi router manufacturer, has laid off most employees at a chip development unit in Shanghai amid setbacks, according to people familiar with the matter and local media reports.
Lianzhou International, known globally as TP-Link Systems and the overseas arm of the router maker, cut the majority of workers at its Shanghai-based chip unit last week, according to two people with knowledge of the situation, who declined to be named because they are not authorised to speak to news media.
3. Technology
3.1
TrendForce (06/17): SK hynix Reportedly Slows 1c DRAM Investment, Shifts Focus to 1b DRAM for HBM3E/HBM4
As AI chip giants like NVIDIA and AMD race ahead with next-gen HBM adoption, SK hynix is reportedly taking a more cautious stance on the investment in 1c DRAM (6th-gen 10nm-class), according to South Korean media outlet the bell. The move reflects the company’s strategy to double down on the more lucrative and in-demand HBM market, the report suggests.
According to the bell, SK hynix is likely to ramp up 1c DRAM production only once it begins mass-producing HBM4E, which will use 1c as its core die. The upcoming HBM4, set to enter mass production in the second half of this year, will continue using the more mature 1b DRAM process, the report adds.
According to the bell, HBM is 3 to 5 times more profitable than standard DRAM. HBM3 8-Hi (24GB) chips are reportedly priced just over $200, while HBM3E 8-Hi (36GB) fetch nearly $400. The upcoming HBM4 12-Hi could top $600, the report notes.
3.2
Chosun Ilbo (06/16): Samsung, TSMC race to launch 2nm chip production in H2
Taiwan’s TSMC, the world’s largest semiconductor foundry, plans to begin mass production of its next-generation 2-nanometer process using gate-all-around (GAA) technology in the second half of this year. Samsung Electronics, which pioneered GAA at the 3nm node, is also preparing to launch its own 2nm process later this year.
According to industry sources on June 15, TSMC will start 2nm production simultaneously at its Baoshan and Kaohsiung facilities within Taiwan’s Hsinchu Science Park. The 3nm process remains the most advanced currently in the foundry market.
TSMC’s 2nm yield is reportedly stable at around 60 to 70%. Major clients such as Apple, Nvidia, and AMD are considering outsourcing chip production to TSMC’s new 2nm process.
Samsung also targets mass production of 2nm chips in the second half of the year.
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