TSMC on Tuesday said it will open a second manufacturing plant in Japan with backing from technology giant Sony and automaker Toyota.
Japan Advanced Semiconductor Manufacturing, Inc. (JASM), the manufacturing operation majority-owned by TSMC, will begin building the new factory this year and aims to bring it into operation by the end of 2027.
TSMC said the overall investment in JASM, factoring in a first facility that is set to begin operation this year, will exceed $20 billion. The figure includes the contributions of other venture partners.
The expansion of TSMC’s operations in Japan highlights the Japanese government’s push to onshore manufacturing of semiconductors, which go into everything from cars and smartphones to military weapons and are seen as critical components in technology, such as artificial intelligence.
Japan is looking to regain some leadership in the semiconductor arena.
TSMC’s two factories in Japan will not manufacture the most cutting-edge chips, but they will focus on applications in areas like semiconductors for the automotive industry, industrial uses, consumer and so-called high-performance computing.
The world’s largest contract chip manufacturer, TSMC makes chips for companies like Apple and Nvidia and has been courted by many countries to set up operations locally. One of TSMC’s biggest overseas projects is a $40 billion investment in Arizona to build two chip manufacturing plants as part of a broader U.S. push to reshore manufacturing.
A Samsung Electronics Co. 12-layer HBM3E, top, and other DDR modules arranged in Seoul, South Korea, on Thursday, April 4, 2024. Samsung’s profit rebounded sharply in the first quarter of 2024, reflecting a turnaround in the company’s pivotal semiconductor division and robust sales of Galaxy S24 smartphones. Photographer: SeongJoon Cho/Bloomberg via Getty Images
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High-performance memory chips are likely to remain in tight supply this year, as explosive AI demand drives a shortage for these chips, according to analysts.
SK Hynix and Micron – two of the world’s largest memory chip suppliers – are out of high-bandwidth memory chips for 2024, while the stock for 2025 is also nearly sold out, according to the firms.
“We expect the general memory supply to remain tight throughout 2024,” Kazunori Ito, director of equity research at Morningstar said in a report last week.
The demand for AI chipsets has boosted the high-end memory chip market, hugely benefiting firms such Samsung Electronics and SK Hynix, the top two memory chipmakers in the world. While SK Hynix already supplies chips to Nvidia, the company is reportedly considering Samsung as a potential supplier too.
High-performance memory chips play a crucial role in the training of large language models (LLMs) such as OpenAI’s ChatGPT, which led AI adoption to skyrocket. LLMs need these chips to remember details from past conversations with users and their preferences to generate human-like responses to queries.
“The manufacturing of these chips are more complex and ramping up production has been difficult. This likely sets up shortages through the rest of 2024 and through much of 2025,” said William Bailey, director at Nasdaq IR Intelligence.
HBM’s production cycle is longer by 1.5 to 2 months compared with DDR5 memory chip commonly found in personal computers and servers, market intelligence firm TrendForce said in March.
Samsung during its first-quarter earnings call in April said its HBM bit supply in 2024 “expanded by more than threefold versus last year.” Chip capacity refers to the number of bits of data a memory chip can store.
“And we have already completed discussions with our customers with that committed supply. In 2025, we will continue to expand supply by at least two times or more year on year, and we’re already in smooth talks with our customers on that supply,” Samsung said.
Micron didn’t respond to CNBC’s request for comment.
“The big buyers of AI chips – firms like Meta and Microsoft – have signaled they plan to keep pouring resources into building AI infrastructure. This means they will be buying large volumes of AI chips, including HBM, at least through 2024,” said Chris Miller, author of “Chip War,” a book on the semiconductor industry.
Chipmakers are in a fierce race to manufacture the most advanced memory chips in the market to capture the AI boom.
SK Hynix in a press conference earlier this month said that it would begin mass production of its latest generation of HBM chips, the 12-layer HBM3E, in the third quarter, while Samsung Electronics plans to do so within the second quarter, having been the first in the industry to ship samples of the latest chip.
“Currently Samsung is ahead in 12-layer HBM3E sampling process. If they can get qualification earlier than its peers, I assume it can get majority shares in end-2024 and 2025,” said SK Kim, executive director and analyst at Daiwa Securities.
From left to right, Accel general partners Harry Nelis, Sonali de Rycker, Andrei Brasoveanu, Luca Bocchio, and Philippe Botteri.
Accel
Venture capital firm Accel said Tuesday it’s raised $650 million for its eighth fund targeted at investing in European and Israeli early-stage startups, in a sign the venture capital market may be showing signs of a recovery.
The firm, which made prolific early bets on the likes of social media app Facebook and music streaming service Spotify, said in a press release it raised the fund to “support ambitious founders building global category-defining companies” in Europe and Israel.
Harry Nelis, general partner at Accel, said the European tech ecosystem in particular has evolved drastically in the nearly 25 years since it opened up its London office as a separate fund in 2001.
“The environment has dramatically changed since then,” Nelis told CNBC. “People would ask us, can Europe generate $1 billion outcomes?”
“Now, there are more than 360 venture-backed unicorns across Europe and Israel, and the whole ecosystem has evolved from one that raised about $1 billion in capital to now $66 billion in 2023.”
Talent ‘flywheel’
Nelis said Europe is producing a more promising talent pool now thanks to a “flywheel” of experienced employees from other companies that have hit unicorn status becoming founders of new companies themselves.
A report released by the firm last year citing Dealroom data showed that employees of 248 venture-funded unicorns in the region have fueled 1,451 new tech startups across Europe and Israel.
Nelis noted that there are emerging geographies in Europe that investors aren’t paying as much attention to, but that are showing huge potential in technology innovation.
He called out Lithuania and Romania as examples of countries where major technology successes are emerging. In Lithuania, for example, secondhand marketplace Vinted is now a $4.5 billion “unicorn” company, while in Romania, UiPath has attracted a $10.9 billion valuation in the public markets.
Accel expects to invest in between 25 and 30 companies from its latest early-stage fund.
The launch of Accel’s eighth European fund comes as funding for high-growth tech startups has plunged sharply in the past two years.
That’s as macroeconomic uncertainty caused by Russia’s full-scale invasion of Ukraine, coupled with higher interest rates from central banks, has caused something of a reset in technology valuations.
Against this backdrop, Accel’s ability to raise such a large fund for European and Israeli ventures suggests the grim environment for technology may be showing signs of easing.
The firm managed to close its eighth fund for the region in just a couple of months, according to a source familiar with the matter speaking on condition of anonymity, since the details aren’t public.
Magnus Grimeland, CEO of seed investor Antler, told CNBC earlier this year that early-stage venture activity and private company valuations have been inching up since the start of this year — and he expects Europe to follow the trend.
“It’s on its way back,” Grimeland said in an interview at Antler’s London office in March. “We see a lot more activity in the portfolio. In New York, we made eight investments in January, and seven of them already have follow-on investments. The U.S. tends to always act quicker.”
Europe’s AI opportunity
Even as startup funding has waned, though, excitement about artificial intelligence has led to a rush of capital flowing into startups focusing on AI.
For example, the likes of OpenAI, Anthropic and Cohere have raised billions of dollars.
Nelis suggested that Accel doesn’t want to get distracted and focus solely on a hyped area like AI with its latest fund.
Instead, he said, the firm will focus on using its “prepared mind” philosophy — which encourages deep focus and a disciplined and informed approach to investing — to approach its next startup bets.
“We’re lucky that with DeepMind here in London and with Fair [Facebook AI Research] in Paris, there’s at least two big centers that have great AI expertise,” Nelis told CNBC.
“Together with smaller centers across Europe, we think that Europe is extremely well-positioned to create some important AI companies, the same way we created important enterprise businesses.”
Nelis said that the way Accel thinks about AI can be broken up into three layers: the “foundation model” layer, referring to algorithms underpinning advanced AI systems, the “tooling layer,” which helps applications that sit on top of these algorithms run, and the “application layer.”
He added that he thinks Europe will excel when it comes to AI application companies, as opposed to foundation models where U.S. technology giants have a big advantage.
“My expectation is Europe is going to generate some really interesting AI application companies,” Nelis told CNBC. “The foundation layer is a layer where at least for now the U.S. incumbents currently have a real advantage — they have the advantage of compute power, large datasets, and lots of capital.”
The firm has previously invested in Synthesia, a $1 billion generative AI startup backed by U.S. chipmaker Nvidia that helps companies make presentations with AI-generated avatars.
Victor Riparbelli, CEO and co-founder of Synthesia, told CNBC his company partnered with Accel last year as the firm’s team knows “how to strike the right balance between visionary and useful technology.”
“Over the last year, there have been a lot of cool demos and perhaps too much frothiness in the AI industry,” Riparbelli told CNBC via email. “It was really important to us to partner with a fund that is as focussed as we are on delivering real, tangible business value.”
Anthropic, the artificial intelligence startup backed by Amazon, said Monday it’s launching its generative AI assistant Claude in Europe on Tuesday. It will be available to individuals and businesses through the web and via an iPhone app.
A paid subscription-based version of Anthropic’s Claude assistant, called Claude Pro, will be available to users who want access to all its models, including Claude 3 Opus, Anthropic’s most advanced offering.
Anthropic is also launching its business-focused Claude Team subscription-based plans, which cost 28 euros ($30) a month before value-added tax (VAT).
“We’ve designed Claude with a strong commitment to accuracy, security and privacy,” Dario Amodei, CEO and co-founder at Anthropic, said in a statement Tuesday.
AI has been advancing rapidly and officials are concerned about the impact on jobs and privacy.
The European Union Parliament earlier this year passed the world’s first major set of regulatory ground rules to govern the new technology. The AI Act seeks to, among other things, identify and apply rules in accordance with the levels of risk AI poses, dividing categories of risk into low, medium, high and unacceptable.
Anthropic said its Claude assistant is highly fluent in French, German, Italian, Spanish, and other European languages.
While Claude.ai is already available for free on both web and mobile in the U.K., Anthropic says this is the first time the product is launching for users in the EU and non-EU countries like Norway, Switzerland, and Iceland.
Anthropic has quickly become one of the buzziest and most-hyped generative AI companies in the market, with investors valuing the firm at a whopping $18.4 billion as recently as March. That month, Amazon announced a $2.75 billion investment in the startup, taking its total invested in the firm to date to $4 billion.
Amazon’s investment into Anthropic has attracted concerns from some regulators, who worry it could lessen the company’s independence.
In the United Kingdom, regulators are assessing whether Amazon’s investment and partnership with Anthropic, and deals struck by Microsoft with generative AI firms, may constitute effective mergers that could lessen competition.
Amazon says its partnership with Anthropic constitutes a limited corporate investment, not a merger. Microsoft denies its deals with AI startups OpenAI and Mistral and hiring from Inflection are equivalent to merging.