REUTERS
"US finalizes awards to BAE Systems, Rocket Lab for semiconductor chips"
By David Shepardson
November 25, 2024
WASHINGTON, Nov 25 (Reuters) - The U.S. Commerce Department said on Monday it is finalizing nearly $60 million in government subsidies for BAE Systems to build chips used in jets and satellites, and for Rocket Lab to build compound semiconductors used in satellites and spacecraft.
The department is finalizing $35.5 million to BAE to quadruple production in New Hampshire for key semiconductor chips used in F-35 fighter jets and commercial satellites.
The investment will cut the company’s planned modernization timeline in half, Commerce said.
The Pentagon plans to spend $1.7 trillion on the F-35 program including buying 2,500 planes in the coming decades.
The chips are critical to F-15s and F-35s.
The Commerce Department is also finalizing $23.9 million for Rocket Lab unit SolAero Technologies Corp, which the government said would boost the company's production of solar cells by 50% over the next three years.
Rocket Lab, founded in 2006 by New Zealander Peter Beck, is one of two U.S. firms specializing in the production of highly efficient, radiation resistant compound semiconductors called space-grade solar cells.
The company's solar cells support U.S. space programs, including missile awareness systems, the James Webb Space Telescope, NASA's Artemis lunar explorations, Ingenuity Mars Helicopter, and Mars Insight Lander.
Commerce Secretary Gina Raimondo told Reuters this month the department is racing to complete as many agreements as possible under the Biden administration's $52.7 billion "Chips and Science" program before President-elect Donald Trump, who criticized the program, takes office on Jan. 20.
Commerce earlier this month finalized its first major award - a $6.6 billion subsidy for Taiwan Semiconductor Manufacturing Co's U.S. unit.
Last week, Commerce finalized a $1.5 billion subsidy for GlobalFoundries to expand semiconductor production in Malta, New York and Vermont.
Reporting by David Shepardson; Editing by Sonali Paul
https://www.reuters.com/business/aerosp ... 024-11-25/
CHIPS
Re: CHIPS
REUTERS
"HP forecasts Q1 profit below estimates on sluggish demand in PC market"
By Priyanka G
November 26, 2024
Nov 26 (Reuters) - HP forecast its first-quarter profit below Wall Street expectations on Tuesday, signaling persistent choppy demand in the personal computers market and sending the company's shares down 8.4% in extended trading.
PC makers have seen demand retreat from its peak during the pandemic, when customers stocked up on tech products.
Besides, demand for AI-powered PCs has remained muted in the mass market even as it increased in the corporate and educational sectors thanks to businesses and institutions looking to upgrade their devices.
AI PCs have not boosted the overall PC demand as "buyers have yet to see their clear benefits", Gartner analyst Mikako Kitagawa said.
Global shipments of traditional PCs dipped 2.4% over the year earlier to 68.8 million units in the third quarter, according to research firm IDC.
HP expects its adjusted profit per share to be between 70 cents and 76 cents for the first quarter, below analysts' estimate of 85 cents, according to data compiled by LSEG.
"We have stock-compensation expense that's higher in first quarter and it gets better in subsequent quarters," said Chief Financial Officer Karen Parkhill.
"We are taking pricing and cost actions to offset some of the margin headwinds in the personal systems and that's going to have a more significant impact in the back half."
The Palo Alto California-based company reported a 1.7% increase in revenue to $14.1 billion for the fourth quarter ended Oct. 31, compared with the estimates of $13.99 billion.
The PC maker's adjusted profit 93 cents per share met expectations.
For the fiscal 2025, the company forecast its adjusted profit to be between $3.45 and $3.75 per share, the midpoint of which is in line with analysts' estimate.
Reporting by Priyanka.G and Jaspreet Singh in Bengaluru; Editing by Shilpi Majumdar
https://www.reuters.com/technology/hp-f ... 024-11-26/
"HP forecasts Q1 profit below estimates on sluggish demand in PC market"
By Priyanka G
November 26, 2024
Nov 26 (Reuters) - HP forecast its first-quarter profit below Wall Street expectations on Tuesday, signaling persistent choppy demand in the personal computers market and sending the company's shares down 8.4% in extended trading.
PC makers have seen demand retreat from its peak during the pandemic, when customers stocked up on tech products.
Besides, demand for AI-powered PCs has remained muted in the mass market even as it increased in the corporate and educational sectors thanks to businesses and institutions looking to upgrade their devices.
AI PCs have not boosted the overall PC demand as "buyers have yet to see their clear benefits", Gartner analyst Mikako Kitagawa said.
Global shipments of traditional PCs dipped 2.4% over the year earlier to 68.8 million units in the third quarter, according to research firm IDC.
HP expects its adjusted profit per share to be between 70 cents and 76 cents for the first quarter, below analysts' estimate of 85 cents, according to data compiled by LSEG.
"We have stock-compensation expense that's higher in first quarter and it gets better in subsequent quarters," said Chief Financial Officer Karen Parkhill.
"We are taking pricing and cost actions to offset some of the margin headwinds in the personal systems and that's going to have a more significant impact in the back half."
The Palo Alto California-based company reported a 1.7% increase in revenue to $14.1 billion for the fourth quarter ended Oct. 31, compared with the estimates of $13.99 billion.
The PC maker's adjusted profit 93 cents per share met expectations.
For the fiscal 2025, the company forecast its adjusted profit to be between $3.45 and $3.75 per share, the midpoint of which is in line with analysts' estimate.
Reporting by Priyanka.G and Jaspreet Singh in Bengaluru; Editing by Shilpi Majumdar
https://www.reuters.com/technology/hp-f ... 024-11-26/
Re: CHIPS
REUTERS
"US finalizes $7.86 billion chips manufacturing award for Intel"
By David Shepardson
November 26, 2024
WASHINGTON, Nov 26 (Reuters) - The U.S. Commerce Department said Tuesday it was finalizing a $7.86 billion government subsidy for Intel, down from $8.5 billion announced in March after the California-based chips maker won a separate $3 billion award from the Pentagon.
The award will support nearly $90 billion in manufacturing projects in Arizona, New Mexico, Ohio, and Oregon.
"That means American-designed chips being manufactured and packaged by American workers in the United States by an American company for the first time in a very long time," Commerce Secretary Gina Raimondo said.
Intel has already met some initial project milestones and will receive at least $1 billion of the award before the end of December, a government official told reporters, adding that the grant reduction was not connected to Intel's broader struggles this year.
Margins have narrowed and the chipmaker has laid off thousands of employees, after years of heavy spending at the once-dominant chipmaker by Chief Executive Pat Gelsinger.
The $7.86 billion subsidy is the largest of any award under a 2022 law that seeks to boost domestic semiconductor output with $52.7 billion in funding, including $39 billion for semiconductor production and $11 billion for research.
Intel in September won a $3 billion contract with the Defense Department, after the initial $8.5 billion in grants had been announced.
Funding for the Pentagon contract ended up coming from the $39 billion that U.S. lawmakers allocated for chip manufacturing subsidies rather than the Pentagon's budget, which led to a reduction in Intel's direct grant award, the company and the government official said.
Gelsinger said Tuesday "strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country’s long-term economic growth and national security."
Intel opted not to finalize a separate $11 billion low-cost government loan that had been offered in March.
The company said Tuesday the loan terms "were less favorable than anticipated for Intel’s shareholders and did not align with Intel’s long-term growth and market interests."
It said it looks forward to engaging with the incoming administration about utilizing loan provisions in the future.
Intel said it also plans to claim the Treasury Investment Tax Credit, which is expected to be up to 25% of qualified investments of more than $100 billion.
Raimondo noted the Intel award was the sixth to be finalized and that more would be completed in the coming weeks.
She added that awards were being finalized "in a way that protects and safeguards taxpayer dollars."
The Commerce award includes restrictions on stock buy backs for five years and provisions for sharing of "meaningful" excess profits.
Reporting by David Shepardson; Editing by Kate Mayberry
https://www.reuters.com/technology/us-f ... 024-11-26/
"US finalizes $7.86 billion chips manufacturing award for Intel"
By David Shepardson
November 26, 2024
WASHINGTON, Nov 26 (Reuters) - The U.S. Commerce Department said Tuesday it was finalizing a $7.86 billion government subsidy for Intel, down from $8.5 billion announced in March after the California-based chips maker won a separate $3 billion award from the Pentagon.
The award will support nearly $90 billion in manufacturing projects in Arizona, New Mexico, Ohio, and Oregon.
"That means American-designed chips being manufactured and packaged by American workers in the United States by an American company for the first time in a very long time," Commerce Secretary Gina Raimondo said.
Intel has already met some initial project milestones and will receive at least $1 billion of the award before the end of December, a government official told reporters, adding that the grant reduction was not connected to Intel's broader struggles this year.
Margins have narrowed and the chipmaker has laid off thousands of employees, after years of heavy spending at the once-dominant chipmaker by Chief Executive Pat Gelsinger.
The $7.86 billion subsidy is the largest of any award under a 2022 law that seeks to boost domestic semiconductor output with $52.7 billion in funding, including $39 billion for semiconductor production and $11 billion for research.
Intel in September won a $3 billion contract with the Defense Department, after the initial $8.5 billion in grants had been announced.
Funding for the Pentagon contract ended up coming from the $39 billion that U.S. lawmakers allocated for chip manufacturing subsidies rather than the Pentagon's budget, which led to a reduction in Intel's direct grant award, the company and the government official said.
Gelsinger said Tuesday "strong bipartisan support for restoring American technology and manufacturing leadership is driving historic investments that are critical to the country’s long-term economic growth and national security."
Intel opted not to finalize a separate $11 billion low-cost government loan that had been offered in March.
The company said Tuesday the loan terms "were less favorable than anticipated for Intel’s shareholders and did not align with Intel’s long-term growth and market interests."
It said it looks forward to engaging with the incoming administration about utilizing loan provisions in the future.
Intel said it also plans to claim the Treasury Investment Tax Credit, which is expected to be up to 25% of qualified investments of more than $100 billion.
Raimondo noted the Intel award was the sixth to be finalized and that more would be completed in the coming weeks.
She added that awards were being finalized "in a way that protects and safeguards taxpayer dollars."
The Commerce award includes restrictions on stock buy backs for five years and provisions for sharing of "meaningful" excess profits.
Reporting by David Shepardson; Editing by Kate Mayberry
https://www.reuters.com/technology/us-f ... 024-11-26/
Re: CHIPS
The Daily Caller
"‘There Will Be Attrition’: Biden Admin To Slash Handout For Chip Maker In Blow To $39 Billion Manufacturing Push"
Story by Owen Klinsky
26 NOVEMBER 2024
The White House plans to curtail a multi-billion dollar subsidy for chipmaker Intel as the company dials back on construction projects following record-breaking losses.
The manufacturer was the largest beneficiary of the Biden-Harris administration’s 2022 CHIPS and Science Act (CHIPS Act), being awarded $8.5 billion in grants and up to $11 billion in subsidized loans as part of the legislation’s $39 billion domestic semiconductor production push.
Now, the White House has dialed back its funding to less than $8 billion following Intel’s decision to delay private investments in Ohio manufacturing facilities after posting a $16.6 billion quarterly loss in October, according to The New York Times.
The Biden-Harris administration’s decision also comes in response to fears that Intel will be unable to catch up technologically with Asian rival Taiwan Semiconductor Manufacturing Company (TSMC), the NYT reported.
It also follows Intel’s selection as the recipient of a $3 billion U.S. military contract.
Intel’s multi-billion dollar quarterly loss — the largest in its 56-year history — and its subsequent backpedaling of investment in domestic semiconductor production marks a blow to President Joe Biden’s goal of having the U.S. produce roughly 20% of the world’s leading-edge chips by 2030.
The White House expected reshoring the semiconductor industry would create 30,000 jobs and $240 billion of investment in the U.S. economy.
The Intel setback comes as a slew of Biden’s Inflation Reduction Act (IRA) and CHIPS Act-funded projects have run into challenges.
An August report from the Financial Times found that, of the nearly $228 billion of manufacturing projects worth more than $100 million funded by the two laws, roughly 40% are paused or delayed.
“There will be attrition,” John Hensley, vice-president of markets and policy analysis at American Clean Power, told the FT in August regarding the construction setbacks.
“Not every single one of these facilities is going to come online.”
The CHIPS Act and IRA earmarked roughly $53 billion and $1.2 trillion in incentives by 2032, respectively, with President-elect Donald’s Trump’s Treasury Secretary nominee Scott Bessent describing the IRA as “the doomsday machine for the deficit.”
While Biden has tried to use taxpayer-funded subsidies to promote domestic semiconductor manufacturing, Trump has proposed tariffs, arguing the taxes would force chip builders like TSMC to construct plants in the U.S.
Intel and the White House did not immediately respond to the Daily Caller News Foundation’s requests for comment.
https://www.msn.com/en-us/news/politics ... 28a0&ei=43
"‘There Will Be Attrition’: Biden Admin To Slash Handout For Chip Maker In Blow To $39 Billion Manufacturing Push"
Story by Owen Klinsky
26 NOVEMBER 2024
The White House plans to curtail a multi-billion dollar subsidy for chipmaker Intel as the company dials back on construction projects following record-breaking losses.
The manufacturer was the largest beneficiary of the Biden-Harris administration’s 2022 CHIPS and Science Act (CHIPS Act), being awarded $8.5 billion in grants and up to $11 billion in subsidized loans as part of the legislation’s $39 billion domestic semiconductor production push.
Now, the White House has dialed back its funding to less than $8 billion following Intel’s decision to delay private investments in Ohio manufacturing facilities after posting a $16.6 billion quarterly loss in October, according to The New York Times.
The Biden-Harris administration’s decision also comes in response to fears that Intel will be unable to catch up technologically with Asian rival Taiwan Semiconductor Manufacturing Company (TSMC), the NYT reported.
It also follows Intel’s selection as the recipient of a $3 billion U.S. military contract.
Intel’s multi-billion dollar quarterly loss — the largest in its 56-year history — and its subsequent backpedaling of investment in domestic semiconductor production marks a blow to President Joe Biden’s goal of having the U.S. produce roughly 20% of the world’s leading-edge chips by 2030.
The White House expected reshoring the semiconductor industry would create 30,000 jobs and $240 billion of investment in the U.S. economy.
The Intel setback comes as a slew of Biden’s Inflation Reduction Act (IRA) and CHIPS Act-funded projects have run into challenges.
An August report from the Financial Times found that, of the nearly $228 billion of manufacturing projects worth more than $100 million funded by the two laws, roughly 40% are paused or delayed.
“There will be attrition,” John Hensley, vice-president of markets and policy analysis at American Clean Power, told the FT in August regarding the construction setbacks.
“Not every single one of these facilities is going to come online.”
The CHIPS Act and IRA earmarked roughly $53 billion and $1.2 trillion in incentives by 2032, respectively, with President-elect Donald’s Trump’s Treasury Secretary nominee Scott Bessent describing the IRA as “the doomsday machine for the deficit.”
While Biden has tried to use taxpayer-funded subsidies to promote domestic semiconductor manufacturing, Trump has proposed tariffs, arguing the taxes would force chip builders like TSMC to construct plants in the U.S.
Intel and the White House did not immediately respond to the Daily Caller News Foundation’s requests for comment.
https://www.msn.com/en-us/news/politics ... 28a0&ei=43
Re: CHIPS
CCN
"China Threatens Retaliation Over US Plans to Expand Chip Export Restrictions"
Story by James Morales
29 NOVEMBER 2024
Key Takeaways
* The Biden Administration is reportedly considering expanding export restrictions aimed at Chinese chipmakers.
* Beijing has warned that escalating control measures could prompt it to take “necessary actions” to protect the interests of Chinese businesses.
* From batteries to raw materials, China has plenty of levers to apply pressure in return.
While the rest of the world is preoccupied with the prospect of a more extensive U.S.-China trade war when Donald Trump takes office, the global semiconductor industry has been dealing with escalating tensions between the two superpowers for years.
Now, after two years of mounting sanctions during the Biden Administration, there are signs that Beijing is preparing for a more forceful response.
Although U.S. export restrictions already prohibit firms from shipping powerful AI chips and semiconductor manufacturing equipment to China, recent reports suggest the White House could unveil yet more sanctions.
According to Reuters, the latest proposal could add up to 200 Chinese chip companies to a U.S. blacklist that prevents suppliers from shipping them goods.
The expanded restrictions may also incorporate High Bandwidth Memory (HBM) chips among the restricted goods for the first time.
Such a move would represent a major expansion of the U.S. sanctions regime with consequences that reach far beyond the semiconductor industry.
Any additional sanctions would apply to major chipmakers in Taiwan and South Korea, the latter of which produces most of the world’s HBM chips.
Asked about the anticipated new restrictions at a news conference on Thursday, Nov. 28, a commerce ministry spokesperson said China “strongly opposes” the measures, which he said could “destabilize global industrial security.”
“If the U.S. insists on escalating control measures, China will take necessary actions to resolutely protect the legitimate rights of Chinese enterprises,” he added.
How Could China Retaliate?
During the previous Trump-era trade war, China and the U.S. exchanged tit-for-tat blows in the form of tariffs, with China generally responding to each new levy in like.
But Biden’s more targeted strategy based on export restrictions didn’t initially prompt a reaction.
At the end of October, however, China made a move that could escalate into a full-blown supply chain war when it sanctioned the California-based drone manufacturer Skydio.
In a blog post at the time, Skydio CEO Adam Bry said that although the company had already moved to reduce its reliance on Chinese goods, “batteries are one of the few components we have not yet moved out of China.”
As a result of the sanctions, he said the company would have to ration batteries “for the next few months” while it onboarded alternative suppliers.
China’s Supply Chain Leverage
With the Biden administration ramping up semiconductor sanctions and Trump likely to escalate things even further with tariffs, batteries could be one of China’s most powerful levers to retaliate.
Not only are over 80% of the world’s lithium-ion batteries made in China, but the country is also a major supplier of the raw materials needed to produce them.
Aside from batteries and electronics, other areas where China could exert significant pressure on the U.S. include industrial chemicals and pharmaceutical ingredients, where specific, targeted sanctions like the one used against Skydio could significantly disrupt supply chains for American firms.
https://www.msn.com/en-us/news/world/ch ... 86e4&ei=37
"China Threatens Retaliation Over US Plans to Expand Chip Export Restrictions"
Story by James Morales
29 NOVEMBER 2024
Key Takeaways
* The Biden Administration is reportedly considering expanding export restrictions aimed at Chinese chipmakers.
* Beijing has warned that escalating control measures could prompt it to take “necessary actions” to protect the interests of Chinese businesses.
* From batteries to raw materials, China has plenty of levers to apply pressure in return.
While the rest of the world is preoccupied with the prospect of a more extensive U.S.-China trade war when Donald Trump takes office, the global semiconductor industry has been dealing with escalating tensions between the two superpowers for years.
Now, after two years of mounting sanctions during the Biden Administration, there are signs that Beijing is preparing for a more forceful response.
Although U.S. export restrictions already prohibit firms from shipping powerful AI chips and semiconductor manufacturing equipment to China, recent reports suggest the White House could unveil yet more sanctions.
According to Reuters, the latest proposal could add up to 200 Chinese chip companies to a U.S. blacklist that prevents suppliers from shipping them goods.
The expanded restrictions may also incorporate High Bandwidth Memory (HBM) chips among the restricted goods for the first time.
Such a move would represent a major expansion of the U.S. sanctions regime with consequences that reach far beyond the semiconductor industry.
Any additional sanctions would apply to major chipmakers in Taiwan and South Korea, the latter of which produces most of the world’s HBM chips.
Asked about the anticipated new restrictions at a news conference on Thursday, Nov. 28, a commerce ministry spokesperson said China “strongly opposes” the measures, which he said could “destabilize global industrial security.”
“If the U.S. insists on escalating control measures, China will take necessary actions to resolutely protect the legitimate rights of Chinese enterprises,” he added.
How Could China Retaliate?
During the previous Trump-era trade war, China and the U.S. exchanged tit-for-tat blows in the form of tariffs, with China generally responding to each new levy in like.
But Biden’s more targeted strategy based on export restrictions didn’t initially prompt a reaction.
At the end of October, however, China made a move that could escalate into a full-blown supply chain war when it sanctioned the California-based drone manufacturer Skydio.
In a blog post at the time, Skydio CEO Adam Bry said that although the company had already moved to reduce its reliance on Chinese goods, “batteries are one of the few components we have not yet moved out of China.”
As a result of the sanctions, he said the company would have to ration batteries “for the next few months” while it onboarded alternative suppliers.
China’s Supply Chain Leverage
With the Biden administration ramping up semiconductor sanctions and Trump likely to escalate things even further with tariffs, batteries could be one of China’s most powerful levers to retaliate.
Not only are over 80% of the world’s lithium-ion batteries made in China, but the country is also a major supplier of the raw materials needed to produce them.
Aside from batteries and electronics, other areas where China could exert significant pressure on the U.S. include industrial chemicals and pharmaceutical ingredients, where specific, targeted sanctions like the one used against Skydio could significantly disrupt supply chains for American firms.
https://www.msn.com/en-us/news/world/ch ... 86e4&ei=37
Re: CHIPS
REUTERS
"Intel's $7.86 billion subsidy deal restricts sale of its manufacturing unit"
By Stephen Nellis
November 27, 2024
Nov 27 (Reuters) - Intel said on Wednesday its deal for $7.86 billion in U.S. government subsidies restricts the company's ability to sell stakes in its chipmaking unit if it becomes an independent entity.
The U.S. Commerce Department announced the subsidy to Intel on Tuesday, part of $39 billion for the sector including Taiwan Semiconductor Manufacturing Co and others in an effort to revitalize chip manufacturing in the United States.
Intel Chief Executive Pat Gelsinger in September said that the company planned to spin its chip manufacturing operations into a subsidiary and was open to taking on outside investors in the unit, called Intel Foundry.
In a securities filing, Intel said on Wednesday the subsidies require it to own at least 50.1% of Intel Foundry if the unit is separated into a new privately held legal entity.
If Intel Foundry becomes a public company and Intel itself is not the largest shareholder, the company could sell only 35% of Intel Foundry to any single shareholder before running into change-in-control provisions.
Intel did not immediately respond to a request for comment on the disclosures.
A Commerce Department spokesman said the government is negotiating change-in-control provisions with all direct grant recipients.
Intel would need to comply with the restrictions to continue the company's $90 billion worth of projects in Arizona, New Mexico, Ohio, and Oregon and keep manufacturing cutting-edge chips in the U.S., according to the filing.
Any changes in control could require Intel to seek permission from the U.S. Department of Commerce, the filing said.
Reporting by Stephen Nellis in San Francisco; Editing by Cynthia Osterman
https://www.reuters.com/technology/inte ... 024-11-28/
"Intel's $7.86 billion subsidy deal restricts sale of its manufacturing unit"
By Stephen Nellis
November 27, 2024
Nov 27 (Reuters) - Intel said on Wednesday its deal for $7.86 billion in U.S. government subsidies restricts the company's ability to sell stakes in its chipmaking unit if it becomes an independent entity.
The U.S. Commerce Department announced the subsidy to Intel on Tuesday, part of $39 billion for the sector including Taiwan Semiconductor Manufacturing Co and others in an effort to revitalize chip manufacturing in the United States.
Intel Chief Executive Pat Gelsinger in September said that the company planned to spin its chip manufacturing operations into a subsidiary and was open to taking on outside investors in the unit, called Intel Foundry.
In a securities filing, Intel said on Wednesday the subsidies require it to own at least 50.1% of Intel Foundry if the unit is separated into a new privately held legal entity.
If Intel Foundry becomes a public company and Intel itself is not the largest shareholder, the company could sell only 35% of Intel Foundry to any single shareholder before running into change-in-control provisions.
Intel did not immediately respond to a request for comment on the disclosures.
A Commerce Department spokesman said the government is negotiating change-in-control provisions with all direct grant recipients.
Intel would need to comply with the restrictions to continue the company's $90 billion worth of projects in Arizona, New Mexico, Ohio, and Oregon and keep manufacturing cutting-edge chips in the U.S., according to the filing.
Any changes in control could require Intel to seek permission from the U.S. Department of Commerce, the filing said.
Reporting by Stephen Nellis in San Francisco; Editing by Cynthia Osterman
https://www.reuters.com/technology/inte ... 024-11-28/
Re: CHIPS
CNBC
"Intel CEO Pat Gelsinger ousted by board after disastrous performance"
Rohan Goswami @in/rohangoswamicnbc/ @rogoswami Hayden Field @haydenfield
Published Mon, Dec 2 2024
Key Points
* Intel announced Monday that CEO Pat Gelsinger had retired from the company effective Dec. 1.
* Intel CFO David Zinsner and Intel products CEO MJ Holthaus were named interim co-CEOs. Frank Yeary will serve as interim executive chair.
* The company has been mired in an extended slump due to market share losses in its core businesses and an inability to crack the artificial intelligence market. Intel’s stock has fallen 52% year to date.
Intel ousted CEO Pat Gelsinger over the weekend, capping a tumultuous nearly four-year tenure at what was America’s leading semiconductor company before its stock price and market share collapsed.
The company announced Gelsinger’s resignation Monday morning, which a person familiar with the matter said came after a contentious board meeting last week over Gelsinger’s perceived failure to respond to Nvidia’s competitive edge and a lack of confidence in Gelsinger’s turnaround plans.
Intel CFO David Zinsner and Intel products CEO MJ Holthaus were named interim co-CEOs.
Longtime board member Frank Yeary will serve as interim executive chair.
Shares of Intel were down 2% Monday afternoon.
“We are working to create a leaner, simpler, more agile Intel,” Yeary said.
Yeary was a key driver in Gelsinger’s ouster, said the person, who requested anonymity to discuss confidential board proceedings freely.
Intel did not immediately return a request for comment on the board meeting.
Yeary, Intel’s longest-serving board member, will now have to preside over yet another CEO search process.
Gelsinger, 63, had an illustrious career at Intel, rising to become the company’s first chief technical officer at the turn of the century, before he took a senior role at EMC.
Gelsinger returned to the company from VMware, where he was chief executive, to stabilize Intel in 2021, succeeding then-CEO Bob Swan.
“It has been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics,” Gelsinger said in a press release.
The board meeting that led to Gelsinger’s ouster was first reported by Bloomberg.
Gelsinger set out an audacious plan when he arrived in 2021 to transform the languishing company into a chipmaking juggernaut.
He sought to achieve parity with the two leading chipmakers, Samsung and Taiwan Semiconductor Manufacturing Co.
He pursued big buildouts in the U.S. and around the world, a costly endeavor that weighed heavily on Intel’s free cash flow and increased the company’s debt load.
He also wooed government investment, positioning Intel as the single-largest beneficiary of the U.S. CHIPS and Science Act.
Government money has begun to flow to Intel in recent weeks and will aid the company’s chip fabs in Arizona and Ohio.
Gelsinger’s retirement comes a week after Intel and the CHIPS and Science Act office finalized a $7.86 billion grant.
Gelsinger also moved to position the company as vital to U.S. national security.
He won a multibillion-dollar contract with the Department of Defense to build secure chips, and in meetings with analysts and prospective customers stressed that Intel was a trusted partner of the U.S. government.
But all that was not enough to assuage investors, who increasingly began to see Intel’s aggressive spending as a folly.
Troubled tenure
Investors became increasingly leery of Intel’s prospects, especially as the artificial intelligence wave buoyed rival Nvidia and left Intel in the dust.
The company’s market cap is less than half of what it was in 2021, and briefly crossed beneath $100 billion earlier this year.
The company’s stock has fallen 52% year to date.
In August, Intel reported disappointing quarterly results, sparking the sharpest sell-off in 50 years, and said it would lay off more than 15% of its workforce as part of a $10 billion cost reduction plan.
CNBC reported that Intel had engaged advisors to defend itself against activist investors.
There is no indication yet that an activist has taken a sizable position in the company’s stock, nor any sign that overtures have been made to Intel’s board.
It isn’t clear what agenda an activist would pursue at the company.
Intel revealed plans in September to turn the company’s foundry business into an independent subsidiary, a move that would enable outside funding options.
That same month, Qualcomm made overtures about a possible takeover.
Gelsinger’s successor, whenever found, will assume command of a company that is smaller and more challenged than ever before.
Many of the problems Gelsinger faced were inherited: to not pursue a chipmaking mandate for Apple’s mobile devices and passing on an acquisition of Nvidia were just two of the reportedly conscious decisions that Intel’s prior leadership made that left the company at a competitive disadvantage.
Those decisions were made by Intel’s board and past CEOs.
But Gelsinger’s weekend ouster raises fresh questions about the company’s governance.
Lip-Bu Tan stepped off Intel’s board earlier this year, leaving the company without any directors who had semiconductor expertise.
Numerous reports have emerged in the weeks since detailing a dysfunctional corporate acquisition strategy and boardroom rancor.
— CNBC’s Jordan Novet contributed reporting.
https://www.cnbc.com/2024/12/02/intel-c ... s-out.html
"Intel CEO Pat Gelsinger ousted by board after disastrous performance"
Rohan Goswami @in/rohangoswamicnbc/ @rogoswami Hayden Field @haydenfield
Published Mon, Dec 2 2024
Key Points
* Intel announced Monday that CEO Pat Gelsinger had retired from the company effective Dec. 1.
* Intel CFO David Zinsner and Intel products CEO MJ Holthaus were named interim co-CEOs. Frank Yeary will serve as interim executive chair.
* The company has been mired in an extended slump due to market share losses in its core businesses and an inability to crack the artificial intelligence market. Intel’s stock has fallen 52% year to date.
Intel ousted CEO Pat Gelsinger over the weekend, capping a tumultuous nearly four-year tenure at what was America’s leading semiconductor company before its stock price and market share collapsed.
The company announced Gelsinger’s resignation Monday morning, which a person familiar with the matter said came after a contentious board meeting last week over Gelsinger’s perceived failure to respond to Nvidia’s competitive edge and a lack of confidence in Gelsinger’s turnaround plans.
Intel CFO David Zinsner and Intel products CEO MJ Holthaus were named interim co-CEOs.
Longtime board member Frank Yeary will serve as interim executive chair.
Shares of Intel were down 2% Monday afternoon.
“We are working to create a leaner, simpler, more agile Intel,” Yeary said.
Yeary was a key driver in Gelsinger’s ouster, said the person, who requested anonymity to discuss confidential board proceedings freely.
Intel did not immediately return a request for comment on the board meeting.
Yeary, Intel’s longest-serving board member, will now have to preside over yet another CEO search process.
Gelsinger, 63, had an illustrious career at Intel, rising to become the company’s first chief technical officer at the turn of the century, before he took a senior role at EMC.
Gelsinger returned to the company from VMware, where he was chief executive, to stabilize Intel in 2021, succeeding then-CEO Bob Swan.
“It has been a challenging year for all of us as we have made tough but necessary decisions to position Intel for the current market dynamics,” Gelsinger said in a press release.
The board meeting that led to Gelsinger’s ouster was first reported by Bloomberg.
Gelsinger set out an audacious plan when he arrived in 2021 to transform the languishing company into a chipmaking juggernaut.
He sought to achieve parity with the two leading chipmakers, Samsung and Taiwan Semiconductor Manufacturing Co.
He pursued big buildouts in the U.S. and around the world, a costly endeavor that weighed heavily on Intel’s free cash flow and increased the company’s debt load.
He also wooed government investment, positioning Intel as the single-largest beneficiary of the U.S. CHIPS and Science Act.
Government money has begun to flow to Intel in recent weeks and will aid the company’s chip fabs in Arizona and Ohio.
Gelsinger’s retirement comes a week after Intel and the CHIPS and Science Act office finalized a $7.86 billion grant.
Gelsinger also moved to position the company as vital to U.S. national security.
He won a multibillion-dollar contract with the Department of Defense to build secure chips, and in meetings with analysts and prospective customers stressed that Intel was a trusted partner of the U.S. government.
But all that was not enough to assuage investors, who increasingly began to see Intel’s aggressive spending as a folly.
Troubled tenure
Investors became increasingly leery of Intel’s prospects, especially as the artificial intelligence wave buoyed rival Nvidia and left Intel in the dust.
The company’s market cap is less than half of what it was in 2021, and briefly crossed beneath $100 billion earlier this year.
The company’s stock has fallen 52% year to date.
In August, Intel reported disappointing quarterly results, sparking the sharpest sell-off in 50 years, and said it would lay off more than 15% of its workforce as part of a $10 billion cost reduction plan.
CNBC reported that Intel had engaged advisors to defend itself against activist investors.
There is no indication yet that an activist has taken a sizable position in the company’s stock, nor any sign that overtures have been made to Intel’s board.
It isn’t clear what agenda an activist would pursue at the company.
Intel revealed plans in September to turn the company’s foundry business into an independent subsidiary, a move that would enable outside funding options.
That same month, Qualcomm made overtures about a possible takeover.
Gelsinger’s successor, whenever found, will assume command of a company that is smaller and more challenged than ever before.
Many of the problems Gelsinger faced were inherited: to not pursue a chipmaking mandate for Apple’s mobile devices and passing on an acquisition of Nvidia were just two of the reportedly conscious decisions that Intel’s prior leadership made that left the company at a competitive disadvantage.
Those decisions were made by Intel’s board and past CEOs.
But Gelsinger’s weekend ouster raises fresh questions about the company’s governance.
Lip-Bu Tan stepped off Intel’s board earlier this year, leaving the company without any directors who had semiconductor expertise.
Numerous reports have emerged in the weeks since detailing a dysfunctional corporate acquisition strategy and boardroom rancor.
— CNBC’s Jordan Novet contributed reporting.
https://www.cnbc.com/2024/12/02/intel-c ... s-out.html
Re: CHIPS
REUTERS
"Intel CEO Gelsinger forced out after board lost confidence in turnaround plan"
By Max A. Cherney and Stephen Nellis
December 2, 2024
Summary
* Gelsinger leaves before completing Intel's turnaround plan
* Intel's stock rises 4.1%; it's down by half this year
* Communications chief plans to leave the company, sources say
* Zinsner and Holthaus named interim co-CEOs during CEO search
* CEO had started a turnaround plan of layoffs, asset sales
SAN FRANCISCO, Dec 2 (Reuters) - Intel Chief Executive Pat Gelsinger has been forced out less than four years after taking the helm of the company, handing control to two lieutenants as the faltering American chipmaking icon searches for a permanent replacement.
Gelsinger, who resigned on Dec. 1, left after a board meeting last week during which directors felt Gelsinger's costly and ambitious plan to turn Intel around was not working and the progress of change was not fast enough, according to a person familiar with the matter.
The board told Gelsinger he could retire or be removed, and he chose to step down, according to the source.
His departure comes well before the completion of his four-year roadmap to restore the company's lead in making the fastest and smallest computer chips, a crown it lost to Taiwan Semiconductor Manufacturing Co, which makes chips for Intel rivals such as Nvidia.
Under Gelsinger's watch, Intel, which was founded in 1968 and for decades formed the bedrock of Silicon Valley's global dominance in chips, has withered to a market value more than 30 times smaller than Nvidia, the leader in artificial intelligence chips.
Bloomberg earlier reported on the circumstances surrounding Gelsinger's retirement.
Gelsinger, 63, has assured both investors and U.S. officials, who are subsidizing Intel's turnaround, that his manufacturing plans remain on track.
But the full results will not be known until next year, when the company aims to bring a flagship laptop chip back into its own factories.
Shares of the company rose 4.1%.
The stock has lost more than half of its value this year, and it was replaced last month by Nvidia on the blue-chip Dow Jones Industrial Average index.
The company named Chief Financial Officer David Zinsner and senior executive Michelle Johnston Holthaus as interim co-chief executive officers while its board conducted a search for a new CEO.
The moves come less than a week after U.S. officials gave $7.86 billion in subsidies to Intel.
The board has formed a search committee for Gelsinger's successor.
"While we have made significant progress in regaining manufacturing competitiveness and building the capabilities to be a world-class foundry, we know that we have much more work to do at the company and are committed to restoring investor confidence," Frank Yeary, independent chair of the board, said in a release.
Intel's communications chief, Karen Kahn, is also planning to leave the company, according to two people with knowledge of the situation.
SPENDING SPREE
Gelsinger announced his turnaround plan in July 2021, when the company was already troubled by years of missteps in its manufacturing operations, and then embarked on a spending spree.
It started construction on a $20 billion suite of new factories in Ohio and hiring a larger workforce - at 132,000 - than Intel had ever maintained even during its days as the biggest player in the chip business.
But the spending coincided with a post-pandemic collapse in the market for laptops and PCs, which in turn sank Intel's gross margins well below historical norms and depressed its stock price, sparking takeover interest in the company.
The spending eventually forced Gelsinger to come up with a menu of layoffs and potential sales and spinouts of assets.
“The stock lost more than 60% under his tenure, so this shouldn’t have come as a very big surprise," said Ryan Detrick, chief market strategist for investment advisory firm Carson Group.
"New leadership is needed to turn things around and it is safe to say that any of his major strategic decisions are on the chopping board, including the move to focus on being a contract manufacturer."
Gelsinger also failed to field an effective AI chip challenger to Nvidia, which began its march toward becoming a $3 trillion company by powering services such as ChatGPT.
"At the end of the day, you need leading-edge products, innovation, and execution, none of which we saw during Pat Gelsinger's reign," said Hans Mosesmann, an analyst at Rosenblatt Securities.
Gelsinger's turnaround plan centered on Intel becoming a major player in contract manufacturing for others, a business model called a "foundry" in the chip industry.
Intel has announced a handful of foundry customers such as Microsoft and Amazon.com, but neither would bring to Intel's factories the huge volumes of chips needed to ensure the factories' profitability.
The spending spree, coupled with the lack of tangible progress in the company's foundry, created tension on the board of directors, causing Lip-Bu Tan, a board member who himself had turned around a faltering firm in the chip industry, to leave over disagreements with Gelsinger's strategy.
Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis and Max Cherney in San Francisco; Editing by Sriraj Kalluvila and Nick Zieminski
https://www.reuters.com/business/intel- ... 024-12-02/
"Intel CEO Gelsinger forced out after board lost confidence in turnaround plan"
By Max A. Cherney and Stephen Nellis
December 2, 2024
Summary
* Gelsinger leaves before completing Intel's turnaround plan
* Intel's stock rises 4.1%; it's down by half this year
* Communications chief plans to leave the company, sources say
* Zinsner and Holthaus named interim co-CEOs during CEO search
* CEO had started a turnaround plan of layoffs, asset sales
SAN FRANCISCO, Dec 2 (Reuters) - Intel Chief Executive Pat Gelsinger has been forced out less than four years after taking the helm of the company, handing control to two lieutenants as the faltering American chipmaking icon searches for a permanent replacement.
Gelsinger, who resigned on Dec. 1, left after a board meeting last week during which directors felt Gelsinger's costly and ambitious plan to turn Intel around was not working and the progress of change was not fast enough, according to a person familiar with the matter.
The board told Gelsinger he could retire or be removed, and he chose to step down, according to the source.
His departure comes well before the completion of his four-year roadmap to restore the company's lead in making the fastest and smallest computer chips, a crown it lost to Taiwan Semiconductor Manufacturing Co, which makes chips for Intel rivals such as Nvidia.
Under Gelsinger's watch, Intel, which was founded in 1968 and for decades formed the bedrock of Silicon Valley's global dominance in chips, has withered to a market value more than 30 times smaller than Nvidia, the leader in artificial intelligence chips.
Bloomberg earlier reported on the circumstances surrounding Gelsinger's retirement.
Gelsinger, 63, has assured both investors and U.S. officials, who are subsidizing Intel's turnaround, that his manufacturing plans remain on track.
But the full results will not be known until next year, when the company aims to bring a flagship laptop chip back into its own factories.
Shares of the company rose 4.1%.
The stock has lost more than half of its value this year, and it was replaced last month by Nvidia on the blue-chip Dow Jones Industrial Average index.
The company named Chief Financial Officer David Zinsner and senior executive Michelle Johnston Holthaus as interim co-chief executive officers while its board conducted a search for a new CEO.
The moves come less than a week after U.S. officials gave $7.86 billion in subsidies to Intel.
The board has formed a search committee for Gelsinger's successor.
"While we have made significant progress in regaining manufacturing competitiveness and building the capabilities to be a world-class foundry, we know that we have much more work to do at the company and are committed to restoring investor confidence," Frank Yeary, independent chair of the board, said in a release.
Intel's communications chief, Karen Kahn, is also planning to leave the company, according to two people with knowledge of the situation.
SPENDING SPREE
Gelsinger announced his turnaround plan in July 2021, when the company was already troubled by years of missteps in its manufacturing operations, and then embarked on a spending spree.
It started construction on a $20 billion suite of new factories in Ohio and hiring a larger workforce - at 132,000 - than Intel had ever maintained even during its days as the biggest player in the chip business.
But the spending coincided with a post-pandemic collapse in the market for laptops and PCs, which in turn sank Intel's gross margins well below historical norms and depressed its stock price, sparking takeover interest in the company.
The spending eventually forced Gelsinger to come up with a menu of layoffs and potential sales and spinouts of assets.
“The stock lost more than 60% under his tenure, so this shouldn’t have come as a very big surprise," said Ryan Detrick, chief market strategist for investment advisory firm Carson Group.
"New leadership is needed to turn things around and it is safe to say that any of his major strategic decisions are on the chopping board, including the move to focus on being a contract manufacturer."
Gelsinger also failed to field an effective AI chip challenger to Nvidia, which began its march toward becoming a $3 trillion company by powering services such as ChatGPT.
"At the end of the day, you need leading-edge products, innovation, and execution, none of which we saw during Pat Gelsinger's reign," said Hans Mosesmann, an analyst at Rosenblatt Securities.
Gelsinger's turnaround plan centered on Intel becoming a major player in contract manufacturing for others, a business model called a "foundry" in the chip industry.
Intel has announced a handful of foundry customers such as Microsoft and Amazon.com, but neither would bring to Intel's factories the huge volumes of chips needed to ensure the factories' profitability.
The spending spree, coupled with the lack of tangible progress in the company's foundry, created tension on the board of directors, causing Lip-Bu Tan, a board member who himself had turned around a faltering firm in the chip industry, to leave over disagreements with Gelsinger's strategy.
Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis and Max Cherney in San Francisco; Editing by Sriraj Kalluvila and Nick Zieminski
https://www.reuters.com/business/intel- ... 024-12-02/
Re: CHIPS
REUTERS
"Latest US clampdown on China's chips hits semiconductor toolmakers"
By Karen Freifeld and David Shepardson
December 2, 2024
Summary
* Swaysure, Si’En Qingdao and Shenzhen Pensun fabs added to entity list
* Netherlands, Japan exempted from expanded foreign direct product rule
* US will restrict high bandwidth memory shipped to China
Dec 2 (Reuters) - The United States on Monday launched its third crackdown in three years on China's semiconductor industry, curbing exports to 140 companies, including chip equipment maker Naura Technology Group, among other moves.
The effort to hobble Beijing's chipmaking ambitions also hits Chinese chip toolmakers Piotech, ACM Research and SiCarrier Technology with new export restrictions as part of the package, which also takes aim at shipments of advanced memory chips and more chipmaking tools to China.
The move is one of the Biden administration's last large-scale efforts to stymie China's ability to access and produce chips that can help advance artificial intelligence for military applications, or otherwise threaten U.S. national security.
It comes just weeks before the swearing-in of Republican President-elect Donald Trump, who is expected to retain many of Biden's tough-on-China measures.
The package includes curbs on China-bound shipments of high bandwidth memory chips, critical for high-end applications like AI training; new curbs on 24 additional chipmaking tools and three software tools; and new export curbs on chipmaking equipment made in countries such as Singapore and Malaysia.
Commerce Secretary Gina Raimondo said the action aims to prevent "China from advancing its domestic semiconductor manufacturing system, which it will use to support its military modernization."
Reuters first reported many companies involved and key details of the plan.
The tool controls will likely hurt Lam Research, KLA and Applied Materials, as well as non-U.S. companies like Dutch equipment maker ASM International.
Chinese companies facing new restrictions include nearly two dozen semiconductor companies, two investment companies and over 100 chipmaking tool makers.
The companies include Swaysure Technology Co, Si'En Qingdao, and Shenzhen Pensun Technology Co, which work with China's Huawei Technologies.
The telecommunications equipment leader has been hobbled by U.S. sanctions and is now at the center of China's advanced chip production and development.
They will be added to the entity list, which bars U.S. suppliers from shipping to them without first receiving a special license.
Asked about the U.S. curbs, Chinese foreign ministry spokesman Lin Jian said such behaviour undermined the international economic trade order and disrupted global supply chains.
China will take measures to safeguard the rights and interests of its firms, he added at a regular press briefing on Monday.
China's commerce ministry described the U.S. restrictions as a clear example of "economic coercion" and "non-market practices," according to a statement published on its official website after the new curbs were announced.
China has stepped up its drive to become self-sufficient in the semiconductor sector in recent years, as the U.S. and other countries have restricted exports of the advanced chips and the tools to make them.
However, it remains years behind chip industry leaders like Nvidia in AI chips and chip equipment maker ASML in the Netherlands.
The U.S. also is poised to place additional restrictions on Semiconductor Manufacturing International Co., China's largest contract chip manufacturer, which was placed on the Entity List in 2020 but with a policy that allowed billions of dollars worth of licenses to ship goods to it to be granted.
For the first time, the U.S. will add three companies that make investments in chips to the entity list.
Chinese private equity firm Wise Road Capital, tech firm Wingtech Technology Co and JAC Capital were added, the department said, because of their role "in aiding China’s government’s efforts to acquire entities with sensitive semiconductor manufacturing capability critical to the defense industrial bases of the United States and its allies with the objective of relocating these entities to China."
Companies seeking licenses to ship to firms on the Entity List generally get denied.
DUTCH AND JAPANESE EXEMPTED
An aspect of the new package that addresses the foreign direct product rule could hurt some U.S. allies by limiting what their companies can ship to China.
The new rule will expand U.S. powers to curb exports of chipmaking equipment by U.S., Japanese, and Dutch manufacturers made in other parts of the world to certain chip plants in China.
Equipment made in Israel, Malaysia, Singapore, South Korea and Taiwan is subject to the rule while Japan and the Netherlands will be exempt.
The expanded foreign direct product rule will apply to 16 companies on the entity list that are seen as the most important to China's most advanced chipmaking ambitions.
The rule will also lower to zero the amount of U.S. content that determines when certain foreign items are subject to U.S. control.
That will allow the U.S. to regulate any item shipped to China from overseas if it contains any U.S. chips.
The new rules are being released after lengthy discussions with Japan and the Netherlands, which, along with the United States, dominate the production of advanced chipmaking equipment.
The Dutch government said it will study the new restrictions, adding that "every country has its own considerations" on national security and export controls.
ASML said on its website that it did not see a material impact on its business, adding that if the Dutch government makes a "similar security assessment," it could affect exports of some of its chip making tools.
The United States plans to exempt countries that adopt similar controls, sources told Reuters.
Another rule in the package restricts memory used in AI chips that correspond with what is known as "HBM 2" and higher, technology made by South Korea's Samsung and SK Hynix and U.S.-based Micron.
Industry sources expect only Samsung Electronics to be affected.
Analysts estimate Samsung generates about 30% of its HBM chip sales from China.
The latest rules are the third major package of chip-related export curbs on China adopted under the Biden administration.
In October 2022, the United States published a sweeping set of controls on sale and manufacture of certain high-end chips that was considered to be the biggest shift in its tech policy toward China since the 1990s.
Reporting by Karen Freifeld and David Shepardson; Additional reporting by Brenda Goh and Antoni Slodkowski; Editing by Sonali Paul, Clarence Fernandez, Nick Zieminski, Chizu Nomiyama and Jonathan Oatis
https://www.reuters.com/technology/late ... 024-12-02/
"Latest US clampdown on China's chips hits semiconductor toolmakers"
By Karen Freifeld and David Shepardson
December 2, 2024
Summary
* Swaysure, Si’En Qingdao and Shenzhen Pensun fabs added to entity list
* Netherlands, Japan exempted from expanded foreign direct product rule
* US will restrict high bandwidth memory shipped to China
Dec 2 (Reuters) - The United States on Monday launched its third crackdown in three years on China's semiconductor industry, curbing exports to 140 companies, including chip equipment maker Naura Technology Group, among other moves.
The effort to hobble Beijing's chipmaking ambitions also hits Chinese chip toolmakers Piotech, ACM Research and SiCarrier Technology with new export restrictions as part of the package, which also takes aim at shipments of advanced memory chips and more chipmaking tools to China.
The move is one of the Biden administration's last large-scale efforts to stymie China's ability to access and produce chips that can help advance artificial intelligence for military applications, or otherwise threaten U.S. national security.
It comes just weeks before the swearing-in of Republican President-elect Donald Trump, who is expected to retain many of Biden's tough-on-China measures.
The package includes curbs on China-bound shipments of high bandwidth memory chips, critical for high-end applications like AI training; new curbs on 24 additional chipmaking tools and three software tools; and new export curbs on chipmaking equipment made in countries such as Singapore and Malaysia.
Commerce Secretary Gina Raimondo said the action aims to prevent "China from advancing its domestic semiconductor manufacturing system, which it will use to support its military modernization."
Reuters first reported many companies involved and key details of the plan.
The tool controls will likely hurt Lam Research, KLA and Applied Materials, as well as non-U.S. companies like Dutch equipment maker ASM International.
Chinese companies facing new restrictions include nearly two dozen semiconductor companies, two investment companies and over 100 chipmaking tool makers.
The companies include Swaysure Technology Co, Si'En Qingdao, and Shenzhen Pensun Technology Co, which work with China's Huawei Technologies.
The telecommunications equipment leader has been hobbled by U.S. sanctions and is now at the center of China's advanced chip production and development.
They will be added to the entity list, which bars U.S. suppliers from shipping to them without first receiving a special license.
Asked about the U.S. curbs, Chinese foreign ministry spokesman Lin Jian said such behaviour undermined the international economic trade order and disrupted global supply chains.
China will take measures to safeguard the rights and interests of its firms, he added at a regular press briefing on Monday.
China's commerce ministry described the U.S. restrictions as a clear example of "economic coercion" and "non-market practices," according to a statement published on its official website after the new curbs were announced.
China has stepped up its drive to become self-sufficient in the semiconductor sector in recent years, as the U.S. and other countries have restricted exports of the advanced chips and the tools to make them.
However, it remains years behind chip industry leaders like Nvidia in AI chips and chip equipment maker ASML in the Netherlands.
The U.S. also is poised to place additional restrictions on Semiconductor Manufacturing International Co., China's largest contract chip manufacturer, which was placed on the Entity List in 2020 but with a policy that allowed billions of dollars worth of licenses to ship goods to it to be granted.
For the first time, the U.S. will add three companies that make investments in chips to the entity list.
Chinese private equity firm Wise Road Capital, tech firm Wingtech Technology Co and JAC Capital were added, the department said, because of their role "in aiding China’s government’s efforts to acquire entities with sensitive semiconductor manufacturing capability critical to the defense industrial bases of the United States and its allies with the objective of relocating these entities to China."
Companies seeking licenses to ship to firms on the Entity List generally get denied.
DUTCH AND JAPANESE EXEMPTED
An aspect of the new package that addresses the foreign direct product rule could hurt some U.S. allies by limiting what their companies can ship to China.
The new rule will expand U.S. powers to curb exports of chipmaking equipment by U.S., Japanese, and Dutch manufacturers made in other parts of the world to certain chip plants in China.
Equipment made in Israel, Malaysia, Singapore, South Korea and Taiwan is subject to the rule while Japan and the Netherlands will be exempt.
The expanded foreign direct product rule will apply to 16 companies on the entity list that are seen as the most important to China's most advanced chipmaking ambitions.
The rule will also lower to zero the amount of U.S. content that determines when certain foreign items are subject to U.S. control.
That will allow the U.S. to regulate any item shipped to China from overseas if it contains any U.S. chips.
The new rules are being released after lengthy discussions with Japan and the Netherlands, which, along with the United States, dominate the production of advanced chipmaking equipment.
The Dutch government said it will study the new restrictions, adding that "every country has its own considerations" on national security and export controls.
ASML said on its website that it did not see a material impact on its business, adding that if the Dutch government makes a "similar security assessment," it could affect exports of some of its chip making tools.
The United States plans to exempt countries that adopt similar controls, sources told Reuters.
Another rule in the package restricts memory used in AI chips that correspond with what is known as "HBM 2" and higher, technology made by South Korea's Samsung and SK Hynix and U.S.-based Micron.
Industry sources expect only Samsung Electronics to be affected.
Analysts estimate Samsung generates about 30% of its HBM chip sales from China.
The latest rules are the third major package of chip-related export curbs on China adopted under the Biden administration.
In October 2022, the United States published a sweeping set of controls on sale and manufacture of certain high-end chips that was considered to be the biggest shift in its tech policy toward China since the 1990s.
Reporting by Karen Freifeld and David Shepardson; Additional reporting by Brenda Goh and Antoni Slodkowski; Editing by Sonali Paul, Clarence Fernandez, Nick Zieminski, Chizu Nomiyama and Jonathan Oatis
https://www.reuters.com/technology/late ... 024-12-02/
Re: CHIPS
REUTERS
"US chips are 'no longer safe,' Chinese industry bodies say in latest trade salvo"
By Eduardo Baptista and Brenda Goh
December 3, 2024
Summary
* Chinese industry groups issue coordinated statement on US chips
* Chipmakers affected could include Intel, Nvidia, AMD
* China also bans exports of rare minerals to the US
BEIJING, Dec 3 (Reuters) - Chinese companies should be wary of buying U.S. chips as they are "no longer safe" and buy locally instead, four of the country's top industry associations said on Tuesday in a rare coordinated response to Washington's curbs on Chinese chipmakers.
The two nations have targeted each other's economies in the last few days, escalating tensions even before U.S. President-elect Donald Trump returns to the White House in January.
Trump has promised to impose heavy tariffs on imported Chinese goods, reviving a trade war from his first four-year term as president.
The industry association warnings came after the United States on Monday launched its third crackdown in three years on China's semiconductor industry, curbing exports to 140 companies, including chip equipment maker Naura Technology Group.
Their advice could affect U.S. chipmaking giants like Nvidia, AMD, and Intel, which, despite export controls, have managed to keep selling products in the Chinese market.
The three companies did not immediately respond to a Reuters request for comment.
The Semiconductor Industry Association, a U.S. trade association representing major chipmakers, said, "Coordinated calls in China to limit procurement of U.S. chips are unhelpful, and any claims that American chips are ‘no longer safe or reliable’ are simply inaccurate."
The group reiterated its belief that "export controls should be narrow and targeted to meet specific national security objectives."
"... We encourage both governments to avoid further escalation."
“China had been moving quite slowly or carefully in terms of retaliating against moves by the United States, but it seems pretty clear that now the gloves are off,” said Tom Nunlist, associate director at research firm Trivium China.
The associations cover some of China's largest industries, including telecommunications, the digital economy, autos, and semiconductors and combined count 6,400 companies as members.
The statements, released shortly after each other, did not detail why U.S. chips were unsafe or unreliable.
Beijing on Tuesday also banned exports of rare minerals used in military applications, solar cells, fibre optic cables and other manufacturing processes.
A White House National Security Council spokesperson said the U.S. would take necessary steps to try to deter other "coercive actions" from China and continue efforts to diversify supply chains away from that nation.
The Internet Society of China urged domestic companies to think carefully before procuring U.S. chips and seek to expand cooperation with chip firms from countries and regions other than the United States, according to its official WeChat account.
It also encouraged domestic firms to "proactively" use chips produced by both domestic and foreign-owned enterprises in China.
U.S. chip export controls have caused "substantial harm" to the health and development of China's internet industry, it added.
Companies targeted by the United States said they would be able to continue production due to their efforts to localize output.
The China Association of Communication Enterprises said it no longer saw U.S. chip products as reliable or safe and the Chinese government should investigate how secure the supply chain of the country's critical information infrastructure was.
The warnings echo China's treatment of U.S. memory chipmaker Micron, which became the subject of a cybersecurity review last year shortly after the U.S. imposed export controls on chipmaking technology to China.
China later barred Micron from selling its chips to key domestic industries, impacting a low-double-digit percentage of its total revenue.
Intel has also faced scrutiny.
In October, another influential industry group, the Cybersecurity Association of China, called for a security review of Intel products, saying the U.S. chipmaker had "constantly harmed" the country's national security and interests.
Reporting by Eduardo Baptista, Ella Cao, Qiaoyi Li, Liam Mo and Ryan Woo; additional reporting by David Shepardson and Trevor Hunnicutt in Washington; Editing by Christina Fincher and Jonathan Oatis
https://www.reuters.com/technology/chin ... 024-12-03/
"US chips are 'no longer safe,' Chinese industry bodies say in latest trade salvo"
By Eduardo Baptista and Brenda Goh
December 3, 2024
Summary
* Chinese industry groups issue coordinated statement on US chips
* Chipmakers affected could include Intel, Nvidia, AMD
* China also bans exports of rare minerals to the US
BEIJING, Dec 3 (Reuters) - Chinese companies should be wary of buying U.S. chips as they are "no longer safe" and buy locally instead, four of the country's top industry associations said on Tuesday in a rare coordinated response to Washington's curbs on Chinese chipmakers.
The two nations have targeted each other's economies in the last few days, escalating tensions even before U.S. President-elect Donald Trump returns to the White House in January.
Trump has promised to impose heavy tariffs on imported Chinese goods, reviving a trade war from his first four-year term as president.
The industry association warnings came after the United States on Monday launched its third crackdown in three years on China's semiconductor industry, curbing exports to 140 companies, including chip equipment maker Naura Technology Group.
Their advice could affect U.S. chipmaking giants like Nvidia, AMD, and Intel, which, despite export controls, have managed to keep selling products in the Chinese market.
The three companies did not immediately respond to a Reuters request for comment.
The Semiconductor Industry Association, a U.S. trade association representing major chipmakers, said, "Coordinated calls in China to limit procurement of U.S. chips are unhelpful, and any claims that American chips are ‘no longer safe or reliable’ are simply inaccurate."
The group reiterated its belief that "export controls should be narrow and targeted to meet specific national security objectives."
"... We encourage both governments to avoid further escalation."
“China had been moving quite slowly or carefully in terms of retaliating against moves by the United States, but it seems pretty clear that now the gloves are off,” said Tom Nunlist, associate director at research firm Trivium China.
The associations cover some of China's largest industries, including telecommunications, the digital economy, autos, and semiconductors and combined count 6,400 companies as members.
The statements, released shortly after each other, did not detail why U.S. chips were unsafe or unreliable.
Beijing on Tuesday also banned exports of rare minerals used in military applications, solar cells, fibre optic cables and other manufacturing processes.
A White House National Security Council spokesperson said the U.S. would take necessary steps to try to deter other "coercive actions" from China and continue efforts to diversify supply chains away from that nation.
The Internet Society of China urged domestic companies to think carefully before procuring U.S. chips and seek to expand cooperation with chip firms from countries and regions other than the United States, according to its official WeChat account.
It also encouraged domestic firms to "proactively" use chips produced by both domestic and foreign-owned enterprises in China.
U.S. chip export controls have caused "substantial harm" to the health and development of China's internet industry, it added.
Companies targeted by the United States said they would be able to continue production due to their efforts to localize output.
The China Association of Communication Enterprises said it no longer saw U.S. chip products as reliable or safe and the Chinese government should investigate how secure the supply chain of the country's critical information infrastructure was.
The warnings echo China's treatment of U.S. memory chipmaker Micron, which became the subject of a cybersecurity review last year shortly after the U.S. imposed export controls on chipmaking technology to China.
China later barred Micron from selling its chips to key domestic industries, impacting a low-double-digit percentage of its total revenue.
Intel has also faced scrutiny.
In October, another influential industry group, the Cybersecurity Association of China, called for a security review of Intel products, saying the U.S. chipmaker had "constantly harmed" the country's national security and interests.
Reporting by Eduardo Baptista, Ella Cao, Qiaoyi Li, Liam Mo and Ryan Woo; additional reporting by David Shepardson and Trevor Hunnicutt in Washington; Editing by Christina Fincher and Jonathan Oatis
https://www.reuters.com/technology/chin ... 024-12-03/