Daily: Vance on Chips; FT on CXMT; In-house OpenAI chip
8.5 min read.
Housekeeping: Apologies for missing the past few days. I was pretty sick, but am back to work now. Thanks to those who sent me well wishes. This newsletter will run long as there is a lot to catch up on.
Highlights
VP Vance on chips. Vice President JD Vance spoke at the AI Action Summit in Paris and he briefly discussed protecting American semiconductors, which suggests the Trump administration might continue to tighten semiconductor exports.
CXMT and memory industry. A great FT piece on CXMT, China’s leading DRAM company, and how it is small but rapidly growing. Recommend reading the article in full.
In 2016, at CXMT’s founding, China had no DRAM capacity. In 2020, CXMT had 0% market share. Last year it reached 5% market share and is projected to hit 10-15% in the next year or two. In the past few months, they developed the latest DRAM technologies, with HBM in the works. I’ve talked previously about how the West doesn’t report enough on Chinese memories.
Elsewhere in memory, Samsung and SK Hynix cut NAND production by 10% due to oversupply.
In-house OpenAI chips. OpenAI is developing its first in-house AI chips, partnering with Broadcom for design and TSMC (3nm) for manufacturing. They’ll use HBM for memory. The chips will be for both training and inference. Check out the full article for more details.
There are a lot of startups making AI chips and lots of companies (Google, Amazon, etc.) are trying to make their own in-house chips, but it seems there hasn’t been any real breakthroughs that can successfully beat, or even match, Nvidia chips. The AI chip design space is getting very crowded.
Thanks for reading.
1. Policy and Geopolitics
1.1
Fox (02/11): VP JD Vance on the future of artificial intelligence
Vance: “We will safeguard American AI and Chip technologies from theft and misuse, work with our allies and partners to strengthen and extend these protections and close pathways to adversaries attaining AI capabilities that threaten all of our people. And I would also remind our international friends here today that partnering with such regimes, it never pays off in the long term. From CCTV to 5G equipment, we're all familiar with cheap tech in the marketplace that's been heavily subsidized and exported by authoritarian regimes… Partnering with them means chaining your nation to an authoritarian master that seeks to infiltrate, dig in and seize your information infrastructure.
1.2
WSJ (02/11): EU Sets Out $200 Billion AI Spending Plan in Bid to Catch Up With U.S., China
The European Union pledged to mobilize 200 billion euros ($206.15 billion) to invest in artificial intelligence as the bloc seeks to catch up with the U.S. and China in the race to train the most complex models.
European Commission President Ursula von der Leyen said the bloc wants to supercharge its ability to compete with the U.S. and China in AI. The plan–dubbed InvestAI–includes a new 20 billion-euro fund for so-called AI gigafactories, facilities that rely on powerful chips to train the most complex AI models.
1.3
FT (02/10): Macron unveils plans for €109bn of AI investment in France
French President Emmanuel Macron has announced €109bn worth of investments in artificial intelligence in France over the coming years, as Europe seeks a greater foothold in the fast-growing industry dominated by the US and China.
The planned €109bn of AI projects in France are focused on building infrastructure, such as computing clusters and data centres with gigawatts of capacity with the aim of keeping up with the rival vast expansion in the US.
1.4
Reuters (02/11): AI chip startup Groq secures $1.5 billion commitment from Saudi Arabia
U.S. semiconductor startup Groq said on Monday it has secured a $1.5 billion commitment from Saudi Arabia to expand the delivery of its advanced AI chips to the country.
Groq told Reuters it will receive funds over the course of this year to expand its existing data center in Dammam. The company's chips, which specialize in fast responses from chatbots and other large language models, are subject to U.S. export controls, but Groq said it has obtained the licenses it needs to ship them to Dammam.
1.5
Reuters (02/12): US chip toolmaker Lam Research to invest over $1 billion in India
U.S.-based chip toolmaker company Lam Research said it will invest over 100 billion rupees ($1.2 billion) in the next few years in India's southern Karnataka state, the latest boost to the nation's plans to bolster its semiconductor ecosystem.
Prime Minister Narendra Modi's government has been trying to grow India's nascent chipmaking industry with initiatives including a $10 billion incentive package. India expects its semiconductor market to be worth $63 billion by 2026.
2. Economy, Finance, and Business
2.1
FT (02/10): Chinese chip champion’s ‘snowballing’ growth threatens Korean dominance
CXMT, China’s leading producer of memory chips, is rapidly gaining global market share at the expense of South Korean competitors, joining OpenAI rival DeepSeek in strengthening Beijing’s drive to reduce its dependence on foreign technology in advanced fields such as artificial intelligence.
Based in Hefei in the eastern province of Anhui, CXMT — ChangXin Memory Technologies — increased its share of the $90bn global Dram memory market from close to zero in 2020 to 5 per cent last year, according to Shenzhen-based consultancy Qianzhan, with analysts predicting growth could quickly “snowball”.
The company is also spearheading China’s efforts to break into the growing market for so-called high-bandwidth memory (HBM), a crucial component in running AI systems such as Open AI’s ChatGPT, which is facing new competition from its cheaper Chinese rival DeepSeek.
2.2
TrendForce (02/12): Samsung and SK hynix Reportedly to Cut NAND Production by 10% in Q1 Amid Tech Migration
The memory market, particularly in the NAND Flash sector, appears to be entering a downturn. Samsung and SK hynix have started reducing their NAND flash production due to oversupply.
Industry sources mentioned in the report indicate that both companies’ NAND production in the first quarter of 2025 will drop by over 10% compared to the second half of 2024.
According to the analysis by TrendForce, NAND Flash prices have been in decline since 3Q24, and suppliers remain pessimistic about demand in the first half of 2025. The prolonged price weakness risks further eroding profit margins, thereby compelling manufacturers to reduce output.
2.3
Reuters (02/12): SMIC flags chip oversupply risk; quarterly revenue meets estimates
China's largest chipmaker SMIC said the market for its staple mature-node chips could be in a state of oversupply in the second half of 2025, tempering optimism about recovery from a post-pandemic slump.
Advanced chips such as those found in Huawei Technology's smartphones represent only a marginal portion of revenue. SMIC has never confirmed it produces Huawei chips.
2.4
SCMP (02/11): Chipmaker SMIC posts 45% profit slump in 2024 amid US-China trade tensions
China’s top chipmaker, Semiconductor Manufacturing International Corp (SMIC), on Tuesday said its 2024 profit had plunged significantly from the previous year, against a backdrop of surging trade tensions between Beijing and Washington.
“Unaudited profit attributable to owners of the company was US$492.7 million in 2024,” SMIC reported in a filing to the Hong Kong stock exchange.
That figure represented a 45.4 per cent decrease from US$902.5 million in 2023, according to the Shanghai-based firm, which added that the fall was “mainly due to the decrease of investment income and financial income”.
2.5
Bloomberg (02/10): TSMC Tempers Outlook on Quake Loss as AI Concerns Persist
Taiwan Semiconductor Manufacturing Co. said first-quarter sales are set to be at the lower end of its forecast range after several quakes affected production in January.
Losses from the quakes were about about NT$5.3 billion ($161 million) net of insurance claims, TSMC said in a statement on Monday, adding it is “making every effort to recover the lost production.”
The company maintained its first-quarter gross profit margin will reach 57% to 59%, and upheld its full-year outlook. The first-quarter revenue guidance provided a few days before the earthquakes hit was $25 billion to $25.8 billion.
2.6
Reuters (02/12): GlobalFoundries forecasts dour first quarter amid tariff concerns, smartphone weakness
GlobalFoundries on Tuesday forecast first-quarter revenue and profit below Wall Street estimates as the contract chipmaker braces for the potential impact of U.S. President Donald Trump's tariffs on automakers and a challenging smartphone market in 2025.
Shares of the Malta, New York State-based company, however, reversed course from its premarket losses to rise nearly 4% in morning trade.
2.7
WSJ (02/10): Intel’s AI Chief to Leave Chip Maker in Wake of CEO Exit
Intel’s head of data-center and artificial-intelligence operations is leaving the group to take the helm of European telecommunications-gear maker Nokia, the latest high-profile executive shuffle at the chip maker as it struggles to revamp its business.
Justin Hotard, who joined Intel in February last year, will be succeeding Pekka Lundmark as Nokia’s chief executive as of April 1. The executive, who previously served as executive vice president and general manager of high-performance computing, AI and labs at Hewlett Packard Enterprise, had been leading efforts at Intel to cash in on AI.
3. Technology
3.1
Reuters (02/10): OpenAI set to finalize first custom chip design this year
OpenAI is pushing ahead on its plan to reduce its reliance on Nvidia for its chip supply by developing its first generation of in-house artificial-intelligence silicon.
The chip is being designed by OpenAI’s in-house team led by Richard Ho, which had doubled in the past months to 40 people, in collaboration with Broadcom. Ho joined OpenAI more than a year ago from Alphabet's Google where he helped lead the search giant's custom AI chip program. Reuters first reported OpenAI’s plans with Broadcom last year.
OpenAI's in-house AI chip, while capable of both training and running AI models, will initially be deployed on a limited scale, and primarily for running AI models, the sources said. The chip will have a limited role within the company's infrastructure.
TSMC is manufacturing OpenAI's AI chip using its advanced 3-nanometer process technology. The chip features a commonly used systolic array architecture with high-bandwidth memory (HBM) - also used by Nvidia for its chips - and extensive networking capabilities, sources said.
3.2
SCMP (02/12): Chinese GPUs outdo Nvidia chips nearly tenfold in supercomputer simulation: study
Computer researchers in China using domestically made graphics processors have achieved a near-tenfold boost in performance over powerful US supercomputers that rely on Nvidia’s cutting-edge hardware, according to a peer-reviewed study.
The researchers said that innovative software optimisation techniques enabled them to improve efficiency gains in computers powered by Chinese-designed graphics processing units (GPUs) to outperform US supercomputers in certain scientific computations.
3.3
Reuters (02/12): AI chip startup Positron raises $23.5 million seed round to take on Nvidia
Positron, a startup chip maker that aims to compete with Nvidia, said Tuesday it raised $23.5 million to scale production of its U.S.-made artificial intelligence chips.
Reno-based Positron says its chips, which are manufactured in Arizona, use less than a third of the power of Nvidia’s top-of-the-line H100 graphical processing units, while maintaining the same performance.
3.4
Nikkei (02/08): Taiwan's MediaTek eyes new growth with AI chips
Major Taiwanese chip designer MediaTek looks to apply its low-power design know-how to products geared toward artificial intelligence as its primary smartphone business plateaus in the Chinese market.
Sales rose 22.4% on the year to 530.5 billion New Taiwan dollars ($16.2 billion) in 2024 results announced Friday, with net profit up 38.2% at NT$106.3 billion.
3.5
TrendForce (02/11): Samsung Reportedly Targets 1c DRAM Yield Improvement by Mid-2025 with Redesign Plans
While earlier reports suggested Samsung was gearing up for 1c DRAM mass production, ZDNet now suggests the company has been redesigning it since the second half of 2024, opting for larger chip sizes to boost yield over productivity and performance.
Notably, 1c (6th-gen 10nm) DRAM would be a critical component that determines the company’s competitiveness in HBM4. According to the ZDNet report, Samsung plans to apply 1c DRAM to HBM4 production, as it aims to gain a competitive edge over archrivals like SK hynix and Micron.
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