Tag: Semiconductors

Warren Buffett gives reason for surprise sale of stake in Taiwan’s TSMC | CNN Business

Hong Kong
CNN
—

Warren Buffett says geopolitical tensions were “a consideration” in the decision to sell most of Berkshire Hathaway’s shares in global chip giant TSMC, which is based in Taiwan.

The 92-year-old “Oracle of Omaha” shed light on the investment call in a Tuesday interview with Japanese news agency Nikkei. He was quoted as sayiing that TSMC was a well-managed company but that Berkshire had “better places” to deploy its capital.

In February, Berkshire Hathaway

(BRKA) revealed that it had sold 86% of its shares in TSMC, which were purchased for $4.1 billion just months before.

The quick sale was considered unusual because the billionaire is known for making longer term bets. The size of the purchase suggested that the initial purchase was most likely made personally by Buffett himself, rather than one of his portfolio managers, Reuters reported.

TSMC is considered a national treasure in Taiwan and supplies semiconductors to tech giants including Apple

(AAPL) and Qualcomm

(QCOM). It mass produces the most advanced semiconductors in the world, components that are vital to the smooth running of everything from smartphones to washing machines.

The company is perceived as being so valuable to the global economy, as well as to China — which claims Taiwan as its own territory despite having never controlled it — that it is sometimes even referred to as forming part of a “silicon shield” against a potential military invasion by Beijing.

TSMC’s presence is seen as providing a strong incentive to the West to defend Taiwan against any attempt by China to take it by force.

This week, tensions soared across the Taiwan Strait after China simulated “joint precision strikes” on the island during a series of military exercises.

Beijing launched the drills on Saturday, a day after Taiwan’s President Tsai Ing-wen returned from a 10-day visit to Central America and the United States where she met US House Speaker Kevin McCarthy.

Chinese officials described the drills as “a serious warning against the Taiwan separatist forces’ collusion with external forces, and a necessary move to defend national sovereignty and territorial integrity.”

Beijing conducted similar large-scale military exercises around Taiwan last August, after then-US House Speaker Nancy Pelosi visited the island.

Taiwan and China have been governed separately since the end of a civil war more than seven decades ago, in which the defeated Nationalists fled to Taipei.

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April 12, 2021
TSMC confirms supplier data breach following ransom demand by Russian-speaking cybercriminal group | CNN Business

CNN
—

Taiwanese semiconductor giant TSMC confirmed Friday that one of its hardware suppliers was hacked and had data stolen from it, but said the incident had no impact on business operations.

Confirmation of the breach came after Russian-speaking cybercriminals claimed TSMC as a victim on Thursday and demanded an extraordinary $70 million ransom from the semiconductor firm.

There were no signs that TSMC or the hardware supplier, Taiwanese firm Kinmax, had any plans to pay the hackers (representatives from both companies didn’t respond to CNN’s questions about any ransom).

TSMC — one of the world’s largest chipmakers and a key supplier to Apple

(AAPL) — was quick to assure investors and the public that the hack had no impact on its operations and that it did not compromise its customers’ data.

“After the incident, TSMC has immediately terminated its data exchange with this concerned supplier in accordance with the Company’s security protocols and standard operating procedures,” TSMC said in a statement to CNN.

The hackers accessed Kinmax’s internal “testing environment” for the technology it prepares to deliver to customers, Kinmax said in a statement distributed by TSMC.

“The leaked content mainly consisted of system installation preparation that the Company provided to our customers as default configurations,” Kinmax said. The company apologized to customers whose names may show up in the leaked data.

Ransomware groups are known to exaggerate the value of the data they steal and make outlandish demands that are never met.

LockBit is the name of the group claiming responsibility for the hack of the TSMC supplier and the type of ransomware they use. LockBit ransomware was the most deployed ransomware around the world in 2022, according to US cybersecurity officials.

Jon DiMaggio, an executive at security firm Analyst1 who has studied LockBit extensively, said the hackers will likely publish the stolen data or sell it if TSMC refuses to negotiate a ransom.

For years, American officials and Taiwanese cybersecurity experts have looked to fortify the island’s infrastructure in the face of hacking threats.

Taiwan’s chip industry is critical to the global hardware supply chain, making any potentially impactful cyberattacks on it a concern for government officials and business executives around the world.

While the TSMC-related hacking incident doesn’t appear to have been impactful, a separate ransomware attack in 2020 on Taiwan’s state-run energy company temporarily disrupted some customers’ ability to pay for gas with company cards, according to local media reports at the time.

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April 12, 2021
Samsung profits plunge 95% | CNN Business

Samsung Electronics flagged a gradual recovery for chips in the second half of the year after its semiconductor business reported a record loss on Thursday, driven by weak demand for tech devices.

A global downturn in semiconductor purchases amid an economic slowdown and weak customer spending sent chip prices plummeting in the first quarter, triggering production cuts across the sector.

Samsung

(SSNLF) said its chip business would focus on high-capacity server and mobile products “based on expectations of a gradual market recovery and a rebound in global demand” in the second half.

For the current quarter, Samsung said it expected limited recovery for memory chips as major data center firms invested more conservatively in servers.

The world’s biggest memory chipmaker said operating profit fell to 640 billion won ($478.6 million) for the January-March quarter, down 95% from 14.12 trillion won a year earlier and the lowest profit for any quarter in 14 years.

Revenue fell 18% to 63.7 trillion won.

The South Korean tech giant’s chip division — normally its most reliable cash cow — reported a 4.58 trillion won loss compared to an 8.45 trillion won profit a year earlier.

Shoppers around the world have cut back on purchases due to rising inflation. As a result, smartphone, personal computer and server companies have run down inventories, causing chip prices to plunge by about 70% over the previous nine months.

Samsung made a rare announcement of a chip production cut earlier this month, joining smaller rivals.

Although this could help chip prices recover slightly, analysts said Samsung’s profit in the current quarter may be similar to Q1 without a fundamental recovery in demand for devices that use chips.

By the second half of the year, customers will have run down inventory and gradually start buying chips again, Samsung said.

Despite the record loss in chips, Samsung said it spent 10.7 trillion won in capital expenditures during Q1, the highest for the first quarter of any year.

Out of that, 9.8 trillion won was spent on chips as Samsung sets up production in its Taylor, Texas and Pyeongtaek, South Korea factories.

“Samsung Electronics will continue to invest in memory semiconductors at a similar level to the previous year … to secure mid- to long-term competitiveness,” it said.

Samsung’s mobile business was a brighter spot, reporting 3.94 trillion won profit in Q1, up from 3.82 trillion won a year earlier.

“Samsung is focusing on profit rather than shipments” as it meets more resilient demand for premium smartphones rather than volume, said Jene Park, senior analyst at Counterpoint.

In the second half, Samsung forecast the smartphone market would increase in both shipments and revenue as the global economy recovers.

Shares in Samsung fell 0.5% in morning trade, in line with the wider market.

Samsung shares have risen about 16% year-to-date as investors anticipate a memory chip recovery in the second half of this year.

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April 12, 2021
China just played a trump card in the chip war. Are more export curbs coming? | CNN Business

Hong Kong
CNN
—

A trade war between China and the United States over the future of semiconductors is escalating.

Beijing hit back Monday by playing a trump card: It imposed export controls on two strategic raw materials, gallium and germanium, that are critical to the global chipmaking industry.

“We see this as China’s second, and much bigger, counter measure to the tech war, and likely a response to the potential US tightening of [its] AI chip ban,” said Jefferies analysts. Sanctioning one of America’s biggest memory chipmakers, Micron Technology

(MU), in May was the first, they said.

Here’s what you need to know about gallium and germanium, how they could play into the chip war and whether more countermeasures could be coming.

Last October, the Biden administration unveiled a set of export controls banning Chinese companies from buying advanced chips and chip-making equipment without a license.

Chips are vital for everything from smartphones and self-driving cars to advanced computing and weapons manufacturing. US officials have talked about the move as a measure to protect national security interests.

But it didn’t stop there. For the curbs to be effective, Washington needed other key suppliers, located in the Netherlands and Japan, to join. They did.

China eventually retaliated. In April, it launched a cybersecurity probe into Micron before banning the company from selling to Chinese companies working on key infrastructure projects. On Monday, Beijing announced the restrictions on gallium and germanium.

Gallium is a soft, silvery metal and is easy to cut with a knife. It’s commonly used to produce compounds that are key materials in semiconductors and light-emitting diodes.

Germanium is a hard, grayish-white and brittle metalloid that is used in the production of optical fibers that can transmit light and electronic data.

The export controls have drawn comparisons with China’s reported attempts in early 2021 to restrict exports of rare earths, a group of 17 elements for which China controls more than half of the global supply.

Gallium and germanium do not belong to this group of minerals. Like rare earths, they can be expensive to mine or produce.

This is because they are usually formed as a byproduct of mining more common metals, primarily aluminum, zinc and copper, and processed in countries that produce them.

China is the world’s leading producer of both gallium and germanium, according to the US Geological Survey. The country accounted for 98% of the global production of gallium, and 68% of the refinery production of germanium.

“The economies of scale in China’s extensive and increasingly integrated mining and processing operations, along with state subsidies, have allowed it to export processed minerals at a cost that operators elsewhere can’t match, perpetuating the country’s market dominance for many critical commodities,” analysts from Eurasia Group said on Tuesday.

Shares of Chinese producers of the two raw materials surged by 10% on Tuesday.

Beyond China, Australian rare earths producers also advanced, as investors expected Beijing might extend export curbs to that group of strategically important minerals. Lynas Rare Earths

(LYSCF) rose 1.5%.

The United States is dependent on China for these the two critical elements. It imported more than 50% of the gallium and germanium it used in 2021 from the country, the US Geological Survey showed.

Eurasia Group analysts described China’s export controls as a “warning shot.”

“It is a shot across the bow intended to remind countries including the United States, Japan, and the Netherlands that China has retaliatory options and to thereby deter them from imposing further restrictions on Chinese access to high-end chips and tools,” Eurasia Group said in a research note.

Chinese authorities may also intend to use its control over these niche metals as a possible bargaining chip in discussions with US Treasury Secretary Janet Yellen, who is scheduled to visit Beijing later this week.

Jefferies analysts said the timing of the announcement was unlikely to be a casual decision.

“It gives the US at least two days to digest and come up with a well-considered response,” they said.

However, the move is not considered “a death blow” to the United States and its allies.

China may be the industry leader, but there are alternative producers, as well as available substitutes for both minerals, the Eurasia Group analysts pointed out.

The United States also imports a fifth of its gallium from the United Kingdom and Germany and buys more than 30% of its germanium from Belgium and Germany.

That’s definitely possible, a former senior Chinese official has warned.

The curbs announced this week are “just the start,” Wei Jianguo, a former deputy commerce minister, told the official China Daily on Wednesday, adding China has more tools in its arsenal with which to retaliate.

“If the high-tech restrictions on China become tougher in the future, China’s countermeasures will also escalate,” he was quoted as saying.

Analysts believe this too. Rare earths, which are not difficult to find but are complicated to process, are also critical in making semiconductors, and could be the next target.

“If this action doesn’t change the US-China dynamics, more rare earth export controls should be expected,” Jefferies analysts said.

However, analysts from Eurasia Group warned that restricting exports is a “double-edged sword.”

Past attempts by China to leverage its dominance in rare earths have reduced availability and raised prices. Higher prices have spurred greater competition by making mining and processing ventures outside of China more cost-competitive, they said.

China cut its rare earths export quota in 2010 amid tensions with the United States.

That resulted in greater efforts by companies outside of the country to produce the metals. US data showed that China’s global market share dropped from 97% in 2010 to about 60% in 2019.

“Imposing export restrictions risks reducing market dominance,” the Eurasia Group analysts said.

CNN’s Hanna Ziady and Xiaofei Xu contributed to reporting.

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April 12, 2021
Biden kicks off reelection bid with union rally in Philadelphia | CNN Politics

CNN
—

President Joe Biden kicked off his reelection campaign Saturday at a union rally in his frequent haunt of Pennsylvania, the state that remains an intersection of his personal and political identities that he hopes can propel him to a second term.

The first official rally of his final political campaign was a moment for Biden to underscore recent economic wins that undergird his argument for another four years in the White House.

“Just think back. Remember what it was like when I came to office, we came into office. Remember the mess we inherited,” Biden told the audience in Philadelphia. “Now look at where we are today.”

To a roaring crowd, who repeatedly cheered “four more years,” the president touted several accomplishments, including the bipartisan infrastructure law, a coronavirus relief package, a bipartisan semiconductor chip manufacturing law and the recently negotiated debt ceiling deal that helped avert a US default.

Biden also criticized recent Republican tax proposals while describing what he called his middle-class vision for the American economy, referring to it several times as “Biden-omics.”

Biden made only brief mention of Donald Trump, the current front-runner for the 2024 GOP presidential nomination, steering clear of the former president’s recent federal indictment and arraignment but hitting him on infrastructure.

“Under my predecessor, infrastructure week became a punchline,” Biden said. “On my watch, we’re making infrastructure a decade headline.”

First lady Jill Biden, who spoke shortly before her husband, highlighted the president’s optimism. Wearing a corsage to mark their 46th wedding anniversary Saturday, the first lady recalled how she met Biden following the death of his first wife and baby daughter in a tragic car accident that also injured his two sons.

“What I love about Joe is that even though he has faced unimaginable tragedies, his optimism is undaunted,” Jill Biden said. “His strength is unshakeable.”

She added that the president was “not done.”

“He’s ready to finish the job,” she said. “He’s ready to win, and with your help, he will.”

Though his economic wins were the centerpiece of Biden’s opening campaign event, polls show many voters give him poor marks for his handling of the economy, particularly as prices have soared post-pandemic. Recent figures have shown inflation easing, however, and fears of an imminent recession have faded.

Biden has said more Americans will come to reward him for his economic stewardship once the benefits of some of his signature legislative achievements, including a new infrastructure law, begin taking hold.

Labor groups that threw their backing behind Biden ahead of his speech include the AFL-CIO, which said it was the earliest point in a presidential election cycle it had ever endorsed a candidate.

“There’s absolutely no question that Joe Biden is the most pro-union president in our lifetimes,” said AFL-CIO President Liz Shuler. “From bringing manufacturing jobs home to America to protecting our pensions and making historic investments in infrastructure, clean energy and education, we’ve never seen a president work so tirelessly to rebuild our economy from the bottom up and middle out.”

Biden, who made his first stop after announcing his reelection bid a legislative conference for North America’s Building Trades Unions in Washington, has long relied on union support for his political ambitions.

“I’m more honored by your endorsement than you can imagine – coming this early, it’s going to make a gigantic difference in this campaign,” Biden said during Saturday’s event in Philadelphia, where he called himself “the most pro-union president in American history.”

Not all unions have thrown their support behind Biden’s reelection bid. The powerful United Auto Workers said last month it was holding off on endorsing Biden, citing concerns over his policies that would encourage a transition to electric vehicles, according to a memo from the union.

The UAW has more than 400,000 members, and Biden has touted its support in the past. Last year he called American autoworkers “the most skilled autoworkers in the world.” The group’s membership is mostly concentrated in Michigan, a presidential election battleground.

Biden also rankled union members last year when he signed legislation that averted a nationwide rail strike – a step he said was necessary to prevent a stoppage of important freight movement.

Biden’s campaign has leaned into his economic record, including releasing a 60-second ad titled “Backbone” last month. The spot struck a populist tone, mixing audio of the president speaking about “investing in places and people that have been forgotten” and a narrator ticking through the administration’s work to boost infrastructure and manufacturing in the country.

“Joe Biden’s building an economy that leaves no city, no town, no American behind,” the narrator says.

This story has been updated with additional information.

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April 12, 2021
Foxconn pulls out of $19 billion chipmaking project in India | CNN Business

Hong Kong
CNN
—

Foxconn says it is exiting an ambitious project to help build one of India’s first chip factories.

The world’s largest contract electronics maker will “no longer move forward” with its $19.4 billion joint venture with Vedanta

(VEDL), an Indian metals and energy conglomerate, in Asia’s third largest economy, it said Monday.

The news was seen as a blow to the Indian government’s plans to turn the country into a tech manufacturing powerhouse, even as officials have sought to counter that view.

In a statement to CNN, Foxconn, a Taiwanese tech giant best known for being one of Apple

(AAPL)’s top suppliers, said the decision was based on “mutual agreement” and allowed the company “to explore more diverse development opportunities.”

The joint venture will now be wholly owned by Vedanta.

In a followup statement Tuesday, Foxconn reaffirmed its commitment to invest in Indian chipmaking, saying it will apply for a government program that subsidizes the cost of setting up semiconductor or electronic display production facilities in the country.

“Building fabs from scratch in a new geography is a challenge, but Foxconn is committed to invest in India,” the company said, referring to fabrication plants, the technical term for semiconductor factories.

“There was recognition from both sides that the project was not moving fast enough, there were challenging gaps we were not able to smoothly overcome, as well as external issues unrelated to the project,” it said.

Since announcing the deal in February 2022, Foxconn said it had worked with Vedanta on plans to set up a semiconductor plant in the country that would support a wider ecosystem for manufacturers.

It did not provide an investment figure for the facility, but Indian Prime Minister Narendra Modi tweeted in September that the total investment would amount to 1.54 trillion rupees, which was then equivalent to $19.4 billion.

Foxconn said last year it was actively scouting for locations for the plant and held discussions with “a few state governments.”

Foxconn CEO Young Liu has in recent months courted Indian partners, having traveled there in February to seek new collaborators.

The company, which already has factories in the Indian states of Andhra Pradesh and Tamil Nadu, is one of many global tech firms looking for opportunities in the country, particularly as multinationals seek to diversify their supply chains beyond China.

On Monday, India’s electronics and information technology minister Ashwini Vaishnaw told Indian news outlet and CNN affiliate News18 that both Vedanta and Foxconn are “completely committed to India’s semiconductor mission.”

Rajeev Chandrasekhar, the country’s minister of state for electronics and IT, also tweeted that the news “changes nothing about” India’s semiconductor manufacturing goals, adding that the decision would still allow “both companies to independently pursue their strategies” in India.

The project had been hailed as a milestone in India’s campaign to attract more investment in manufacturing, a sector sorely needed to help ease unemployment.

Prime Minister Modi had framed the project as a significant boost for the economy and jobs.

Foxconn shares rose 1.3% in Taipei on Tuesday following its announcement, while Vedanta’s shares fell 1.4% in Mumbai. The latter has not responded to a request for comment.

Other prominent tech companies have moved to expand production in India recently.

Last month, US chipmaker Micron

(MICR) announced a new factory in the western state of Gujarat, calling it the country’s first semiconductor assembly and test manufacturing facility.

The venture will see Micron invest up to $825 million, and create “up to 5,000 new direct Micron jobs and 15,000 community jobs over the next several years,” according to the company.

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April 12, 2021
Italy ties China’s hands at Pirelli over fears about chip technology | CNN Business

London
CNN
—

Italy has imposed several curbs on Pirelli’s biggest shareholder, Sinochem, in a move aimed at blocking the Chinese government’s access to sensitive chip technology.

The Italian government decided last week to make use of its so-called “Golden Power” regulations, designed to protect assets of strategic importance to the country, Pirelli said in a statement Sunday.

The government order risks inflaming tensions between Europe and Beijing, and follows similar intervention by Germany and the United Kingdom to protect their semiconductor technology.

Earlier this year, Europe joined a US-led effort to restrict China’s access to the most advanced chipmaking technology when the Netherlands — home to ASML Holding, a key supplier to the global semiconductor industry — said it would introduce export controls.

Italy’s move comes as US Secretary of State Antony Blinken wraps up a high-stakes visit to China aimed at repairing strained relations between the world’s two biggest economies.

Sinochem, owned by the Chinese government, is Pirelli’s biggest single shareholder, with a 37% stake, and has 60% of seats on the board of the Italian tire maker. CNN has contacted Sinochem for comment.

In a statement Friday, the Italian government said Pirelli’s Cyber Tyre, which uses chip technology to collect vehicle data, is “configured as a critical technology of national strategic importance.”

“Improper use of this technology can pose significant risks not only to the confidentiality of user data, but also to the possible transfer of information relevant to security,” the statement added.

The order sets a host of limitations on Sinochem’s involvement in Pirelli, including a bar on it devising the company’s strategy and financial plans, or appointing a CEO.

The government said these curbs would protect the “autonomy” of Pirelli and its management, as well as “information of strategic importance.”

Europe is heavily reliant on China for trade and investment, but relations have come under strain from ideological differences, including over Russia’s war in Ukraine, and recent moves by European Union regulators and governments to limit China’s access to sensitive technology.

The order takes a page out of this playbook. It requires that Pirelli refuse any requests from Sinochem’s owner — China’s State-owned Assets Supervision and Administration Commission of the State Council — for information sharing, including any information connected to the “know-how” of proprietary technologies.

The government said “some” strategic decisions would require approval from at least 80% of board directors, a further limitation on Sinochem’s influence.

Separately, Rome is also assessing whether to renew its partnership with Beijing on the Belt and Road Initiative — China’s global infrastructure and investment megaproject. Italy is the only Group of Seven nation to have joined the initiative.

In a further sign of the steps multinational companies are beginning to consider to protect their operations from growing geopolitical friction, drugmaker AstraZeneca

(AZN) has drawn up plans to spin off its China business and list it separately in Hong Kong, according to the Financial Times. AstraZeneca

(AZN) declined to comment.

Earlier this month, Sequoia Capital, the Silicon Valley venture capital group, said it would separate its China investments into an independent unit.

On Tuesday, the European Commission will unveil measures — possibly including screening of outbound investments and export controls — to keep prized EU technology from countries such as China, Reuters reported.

— Laura He in Hong Kong contributed to this article.

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April 12, 2021
Chipmakers look to Japan as worries about China grow | CNN Business

Japanese Prime Minister Fumio Kishida said he welcomed and expected more investment from global chipmakers, after meeting top executives on Thursday before a Group of Seven summit.

China is set to be high on the agenda of the annual G7 leaders meeting that begins on Friday, with the United States increasingly urging its allies to counter the Asian giant’s chip and advanced technology development.

Growing Taiwan and US tensions with China have brought serious challenges to the semiconductor industry. Taiwan is a major producer of chips used in everything from cars and smartphones to fighter jets.

Ensuring diversified, resilient supply chains is a key component of the economic security theme being emphasized by Japan at the talks, White House national security adviser Jake Sullivan told reporters on Air Force One.

Kishida told the executives, including those from Micron Technology Inc

(MU), Intel Corp

(INTC) and Taiwan Semiconductor Manufacturing Co

(TSM) (TSMC), that stabilizing supply chains would be a topic of discussion at the G7 talks in the western city of Hiroshima.

“I am very pleased with your positive attitude towards investment in Japan, and would like the government as a whole to work on further expanding direct investment in Japan and support the semiconductor industry,” Kishida said.

An industry ministry official later said Kishida wanted to foster cooperation to strengthen semiconductor supply chains, while Industry Minister Yasutoshi Nishimura said Japan would use 1.3 trillion yen ($9.63 billion) of the supplementary budget from the last fiscal year to support its chip business.

In particular, Kumamoto prefecture in southwestern Japan is quickly becoming a hotbed for tech investment from companies including TSMC and Fujifilm Holdings Corp

(FUJIF).

Micron said in a statement that it would bring extreme ultraviolet (EUV) technology to Japan, becoming the first semiconductor company to do so, and expected to invest up to 500 billion yen ($3.6 billion) with support from the Japanese government.

Bloomberg News reported the financial incentives would total about 200 billion yen.

An industry ministry official said no decision had been made on whether Japan would give a subsidy to Micron, but that one would be made as soon as possible.

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April 12, 2021
Taiwan’s TSMC to invest $2.9 billion in new plant as demand for AI chips soars | CNN Business

Hong Kong
CNN
—

TSMC, the world’s largest chipmaker, says it plans to invest nearly 90 billion New Taiwan dollars ($2.9 billion) to build an advanced chip plant in Taiwan, as it expands production to meet booming demand for artificial intelligence (AI) products.

Last week, CEO C.C. Wei told analysts the company plans to roughly double its capacity for advanced packaging in 2024 compared to 2023, in order to meet “strong demand” for AI chips from its customers, which include Nvidia

(NVDA) and AMD.

Advanced packaging in the semiconductor industry involves using high-tech methods to aggregate components from various wafers in order to create a more powerful computer chip.

TSMC

(TSM) said the new plant is expected to create 1,500 jobs.

“To meet market needs, TSMC is planning to establish an advanced packaging fab in the Tongluo Science Park,” the company told CNN in a statement, referring to fabrication plants — the technical term for semiconductor factories.

The science park is located in Miaoli County, south of the firm’s main facilities in Hsinchu, near Taipei.

TSMC on Thursday reported a 23% fall in net profit for the second quarter, compared to the same period last year, as a global economic downturn took a toll on overall demand — even as customers clamored for more of its AI chips.

Chips manufactured by TSMC for customers like Nvidia are the muscle behind generative AI, a type of artificial intelligence that can create new content, such as text and images, in response to user prompts.

That’s the kind of AI underlying ChatGPT, Google

(GOOGL)’s Bard, Dall-E and many of the other new AI technologies.

TSMC is considered a national treasure in Taiwan, supplying semiconductors to global tech giants including Apple

(AAPL) and Qualcomm

(QCOM).

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April 12, 2021
Japan joins the US and Europe in chipmaking curbs on China | CNN Business

Hong Kong/Tokyo
CNN
—

Japan will restrict the overseas sale of chip manufacturing equipment, joining the United States and the Netherlands in curbing the export of key technology to China.

The country announced Friday it would tighten exports of 23 types of advanced semiconductor manufacturing equipment.

The rules will take effect in July, according to Japan’s minister of economy, trade and industry, Yasutoshi Nishimura.

The ministry said it would require stricter procedures to export to about 160 destinations such as China, while 42 territories — including the United States, South Korea and Taiwan — are recognized by Japan as having adequate export controls in place.

All exports to countries not formally recognized will now require approval from the Japanese trade ministry, it added.

At a press conference, Nishimura said the new measures were aimed at preventing the equipment from being diverted for military use.

“We will fulfill our responsibilities in the international community as a technology-owning country and contribute to maintaining international peace and security,” he told reporters.

The restrictions are not aimed at a specific country, the trade ministry told CNN on Friday.

But they follow a series of curbs enacted in recent months to clamp down on sales of chipmaking equipment to China as part of a coordinated international effort led by Washington.

In October, the United States banned Chinese companies from buying advanced chips and chipmaking equipment without a license. It also restricted the ability of American citizens to provide support for the development or production of chips at certain facilities in China.

Earlier this month, the Netherlands also unveiled new restrictions on overseas sales of semiconductor technology, citing the need to protect national security.

Japan has been involved in three-way discussions with both countries, a source familiar with the talks previously told CNN.

China has strongly criticized restrictions on tech exports, saying earlier this month that it “firmly opposes” such measures.

Mao Ning, a Chinese foreign ministry spokesperson, also hit back at the latest move from Japan.

“Weaponizing economic, trade and technology issues to deliberately destabilize the global industry chain will only harm others and harm oneself,” she said at a Friday news briefing.

Japan is home to several chipmaking equipment producers, including Nikon

(NINOY) and Tokyo Electron. The companies’ shares in Tokyo were little changed on Friday.

Nikon and Tokyo Electron declined to comment.

In recent reports to clients, Jefferies analysts had assessed the potential consequences of Japanese export controls to China, noting that Nikon did “not anticipate a major impact.”

For Tokyo Electron, the tightening is also “unlikely to have much additional impact as long as they do not go further than the US sanctions,” they added.

— Mengchen Zhang contributed to this report.

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April 12, 2021