The Source – Top 5 News 1st September 2023

The Source is our latest offering to support our clients and visitors. You can read our Top 5 news for week commencing 28th August 2023 below.

1. Mercedes-Benz Leads the Way in 5G for Connected Cars

Mercedes-Benz has made history by becoming the first automaker to partner with Avanci, a U.S. patent platform, for licensing 5G technology for their connected vehicles. Avanci, known for licensing cellular patents, had previously sealed 4G deals with several automakers, reflecting the surging interest in connected vehicles. This bold move cements Mercedes-Benz’s position at the forefront of automotive innovation.

2. Surging Demand for Used Chipmaking Equipment Persists

The CEO of Moov Technologies, an online platform specializing in secondhand chip gear transactions, reports an ongoing and robust increase in demand for used chipmaking equipment. Despite pandemic disruptions, this trend remains steadfast. Steven Zhou, the CEO and founder of Moov based in the U.S., has observed chip manufacturers resorting to pre-owned equipment due to the exceptional chip shortage. Unable to acquire sufficient new machinery for their expansion endeavors, chipmakers are relying on the secondary market to fuel their growth.

3. US Extends Chip Equipment Import Waiver for China-Based Firms

The United States government has granted an extension of a waiver to enable mainland China-based Taiwanese and South Korean companies to import chip-making equipment for another year, starting in October. This decision, reported by Nikkei, aligns with US Commerce Secretary Gina Raimondo’s forthcoming trip to China and the recent removal of 27 Chinese firms from the US Commerce Department’s unverified list, receiving positive feedback from Beijing.

In July, Chinese officials successfully negotiated with US Treasury Secretary Janet Yellen to reduce investment restrictions on China’s high-tech sectors. During Raimondo’s visit, Beijing intends to request the cancellation of additional tariffs imposed on Chinese steel and aluminum products, as part of efforts to promote mutually beneficial Sino-US economic relations.

4. Intel Expanding Chip Packaging Capacity in Malaysia to Regain Industry Lead

Intel has ambitious plans to boost its top-tier chip packaging services’ capacity fourfold by 2025, driven by the establishment of a new facility in Malaysia, as reported by Nikkei Asia. This strategic move reflects Intel’s determination to reclaim its position as a global leader in semiconductor manufacturing. The new factory in Penang, Malaysia, will focus on advanced 3D chip packaging, known as Foveros technology, which combines various chip types into one package to enhance computing power. Additionally, Intel is investing in another chip assembly and testing factory in Kulim as part of a $7 billion expansion in Southeast Asia, positioning Malaysia to become its primary production hub for 3D chip packaging. While the start date for mass production in Penang remains unconfirmed, Intel has secured commitments from major players such as Amazon, Cisco, and the US government to adopt its advanced packaging technology.

5. Struggles and Controversies Surround TSMC’s Phoenix Microchip Plant

TSMC’s ambitious microchip plant project in Phoenix, a cornerstone of the $52.7 billion US hi-tech manufacturing initiative led by President Biden, faces delays and criticisms. The Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker and owner of the plant, has postponed manufacturing until 2025, attributing the setback to a shortage of skilled labor. Labor unions challenge TSMC’s claims, suggesting the labor scarcity is a pretext for hiring cheaper foreign workers, while concerns about safety have also surfaced.

The spotlight on the Phoenix plant’s success intensifies as President Biden approaches the 2024 election cycle and tensions between the US, China, and Taiwan escalate. The project, funded through the Chips and Science Act, is a vital part of Biden’s endeavor to boost US semiconductor production. However, the endeavor has been plagued by accidents, organizational issues, and disagreements, as insiders reveal, posing challenges to achieving its intended goals.

6. Indo-Pacific Semiconductor Race and Geopolitical Dynamics

The Indo-Pacific region is a key player in the rapidly growing semiconductor industry, with countries like Taiwan, South Korea, Singapore, China, and the US investing heavily to maintain their leadership. Global giants like Samsung, Intel, and TSMC are based across the region. As economic and security concerns drive the race for semiconductor dominance, countries such as India and Australia are also entering the arena. This sector underpins modern technology, including AI and military applications, making it a focal point for geopolitical rivalries.

Analysis by Counterpoint Research reveals TSMC’s 59% global semiconductor manufacturing foundry share, with South Korea’s Samsung at 13% and China’s SMIC at 6%. However, complex supply chains make it challenging to attribute dominance to a single nation. China’s “Made in China 2025” initiative has aimed at challenging the US’s tech supremacy.

Across the Indo-Pacific the US aims to curb China’s assertiveness, resulting in export restrictions and sanctions. China’s counteractions include filing a WTO complaint and a $143 billion support package for semiconductor R&D. The outcome will shape the region’s technological landscape, with alliances and rivalries vying for dominance.

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