Review of Semiconductor Week (November 24 – 30):
Chinese chipmakers are challenging Korean memory dominance as TSMC and Samsung tighten restrictions on Chinese customers’ access to 7nm technology. As Commerce Secretary Raimondo races to finalize funding for the CHIPS Act, Korean giants are committing $44 billion to the production of memory for AI. Qualcomm and MediaTek are pursuing divergent paths beyond mobile markets, targeting edge computing and cloud services, respectively.
Chinese chipmakers challenge Korean dominance with aggressive pricing
China’s semiconductor industry is experiencing unprecedented growth, with SMIC leading the way with quarterly revenue above $2 billion, while Chinese memory makers compete aggressively on price. The transformation from a negligible presence a decade ago into a formidable force is evident as companies like SMIC, YMTC and CXMT make significant technological advancements, backed by government support and a massive domestic market.
While lagging behind global leaders, SMIC notably achieved 7nm processing capacity, reminiscent of TSMC’s 2018-2019 technology, thanks to strategic talent acquisition despite US export controls. In the memory sector, CXMT and YMTC are rapidly closing the technology gap with Korean giants Samsung and SK Hynix, with Morgan Stanley forecasting CXMT’s DRAM market share to exceed 10% in 2024.
Industry ambitions extend to cutting-edge technologies, with Chinese companies actively developing high-bandwidth memories for AI applications, suggesting a global initiative to challenge the established semiconductor hierarchy dominated by Taiwan, South Korea and the United States.
Chip restrictions tighten grip on China’s AI ambitions
As part of a strategic move to curb China’s artificial intelligence progress, TSMC and Samsung have launched a rigorous verification process for their Chinese customers seeking 7nm chip manufacturing capabilities. The new restrictions, implemented on November 11, specifically target high-performance AI chips by limiting specifications such as chip sizes larger than 300 mm², HBM implementation, or transistor counts exceeding 30 billion.
While “whitelisted” Chinese customers maintain their existing partnerships, the policy particularly affects emerging AI chip makers, forcing them to downgrade their specifications or seek alternative solutions. The moves reflect a growing U.S. strategy to maintain control over advanced semiconductor technology, with industry experts predicting possible additional restrictions after January 2025, particularly in areas such as packaging, equipment and the design.
China’s chip sector faces new hurdles as TSMC withdraws AI technology
Dealing a blow to China’s semiconductor ambitions, TSMC has suspended production of advanced AI chips at 7nm and below for Chinese customers, as domestic players scramble to adapt amid escalation of tensions between the United States and China. The move, coinciding with the discovery of TSMC-made chips in Huawei devices and potential tougher sanctions under the new Trump administration, has sparked both concern and resolve within China’s chip sector.
At IC China 2024 in Beijing, industry leaders including Shenzhen Basic Semiconductor and Moore Threads presented strategies to address challenges, from localizing supply chains to exploring manufacturing techniques alternatives. Although China remains the world’s largest consumer of chips and Beijing’s latest economic stimulus measures provide some relief, the country’s difficulty in accessing cutting-edge technologies underscores a growing technology gap with the West, particularly in the crucial sector of AI.
Qualcomm and MediaTek chart divergent paths in non-mobile expansion
As chipmakers increasingly look beyond smartphones, Qualcomm and MediaTek are pursuing distinct strategies in their diversification efforts. Qualcomm CEO Cristiano Amon forecasts a $900 billion edge computing market by 2030, with a target of $8 billion in non-mobile revenue by 2029, with a particular focus on automotive and IoT sectors.
Although both companies are expanding beyond mobile, their approaches differ significantly: Qualcomm emphasizes branded platforms in automotive, PC, and spatial computing, while MediaTek focuses on cloud ASICs and network services, with more emphasis on mobile.
Industry experts note that despite MediaTek’s success in the mobile market, Qualcomm maintains a significant lead in emerging sectors like automotive and edge computing, with its Copilot+ PC initiative demonstrating its technological advantage. This strategic divergence highlights the changing competitive landscape in the semiconductor sector, as companies seek new growth avenues beyond traditional mobile markets.
Foundry self-policing portends tougher technology restrictions in China
In an unprecedented move that signals potentially tighter restrictions on China’s access to semiconductors, major foundries like TSMC and GlobalFoundries have begun self-regulating their Chinese customers’ access to 14nm chip technology , even without a formal mandate from the US government.
This proactive industry response, coupled with new Secretary of State Marco Rubio’s criticism of previous enforcement shortcomings and the CHIPS Act’s classification of 14nm as an “advanced process,” suggests that the incoming Trump administration could use this voluntary compliance as a model for stricter controls.
These developments are particularly important for China’s semiconductor ambitions, as domestic manufacturers like SMIC already struggle with limited advanced manufacturing capacity and fierce competition, leaving Chinese chip designers increasingly vulnerable to future restrictions on access to international smelters.
Trade chief rushes to make chip deals ahead of Trump transition
US Commerce Secretary Gina Raimondo launched a last-minute push to shore up billions of dollars in semiconductor subsidies before a potential Trump administration takes office, ordering staff to work overtime and personally advocating with technology executives to expedite deals under the $50 billion CHIPS Act.
While TSMC and GlobalFoundries have already reached binding agreements, the Commerce Department is working to finalize terms with industry heavyweights like Intel, Samsung and a host of other manufacturers in the coming months. The stakes are particularly high for Intel, which has been offered $19.5 billion in combined financing and loans but faces delays in meeting program milestones, despite its strategic importance to the independence of the United States in semiconductors.
With the transition of power looming as a tough deadline, Raimondo aims to secure these transformative investments before Howard Lutnick, Trump’s pick for Commerce secretary, takes the helm, even as she says she’s confident the program will survive under new leadership.
Korean chipmakers are betting big on AI memory in the face of Chinese competition
In a strategic pivot that reflects the evolving semiconductor landscape, South Korean memory giants SK Hynix and Samsung Electronics are channeling their 2025 investments toward upgrading existing facilities and expanding high-bandwidth memory capabilities, rather than adding new production lines. The companies are collectively spending about $44 billion on HBM’s advanced manufacturing processes and expansion, betting heavily on artificial intelligence-driven demand while meeting the challenge of emerging Chinese competition.
While Korean manufacturers’ “natural attrition” strategy of moving to more complex processes could help maintain market balance, the rapid expansion of China’s CXMT – expected to become the world’s third largest DRAM supplier here 2026 – threatens to disrupt their carefully calculated approach.
At the same time, growing AI-related demand has prompted analysts to revise HBM’s 2025 projections upwards, from 15 to 25 exabytes, suggesting the bet on advanced memory could pay off despite pressures competitive.