India’s iPhone hopes and South Korea’s EV considerations

Hello everybody! That is Cheng Ting-Fang saying hey from Taipei.

In early August, I had the distinctive alternative to go to Infineon’s silicon carbide energy semiconductor plant in Kulim, Malaysia. Wearing full clean-room apparel, together with a swimsuit, boots, head masking, masks and gloves, I toured the power and discovered about a number of key chipmaking processes.

Probably the most hanging features of the tour was the high-temperature furnaces, which function at as much as 2,000C. One of many chip consultants described them as like “rice cookers cooking rice”. I additionally noticed moist stations, the place chemical substances are utilized to wafers.

The hourlong tour was extraordinarily academic, however I started to really feel dizzy close to the tip as a result of the head-to-toe outfit was exhausting to breathe in. The expertise jogged my memory of how demanding semiconductor manufacturing is, the place strict protocols have to be adopted to stop even the smallest particles from contaminating the manufacturing surroundings. It was exhausting to think about engineers and technicians working right here as much as eight hours a day, taking day and night time shifts to maintain the plant up and operating 24/7.

Final week, a pal shared images of the baroque Frauenkirche church, the Royal Palace and lovely gardens taken throughout his go to to Dresden for TSMC’s groundbreaking ceremony for its first European chip plant. The picturesque riverside metropolis alongside the Elbe, with its clear blue skies and enjoyable ambiance, made him surprise why anybody would select to work in a chip manufacturing unit there. “I’d somewhat be having a picnic than be caught in a cleanroom. This serene surroundings might be a menace to competitiveness,” he joked.

Whoever I communicate with within the tech provide chain lists the identical components for achievement on this, or any, trade: tradition, expertise and infrastructure. For instance, I heard that at TSMC’s Arizona plant, high-priority conferences are sometimes carried out in Mandarin, with solely Taiwanese employees current to facilitate communication. This demonstrates the challenges of integrating into a brand new tradition and changing into extra worldwide.

A dialog with executives from ASE Expertise Holding, the world’s largest chip packaging and testing firm, highlighted the significance of infrastructure. The corporate has been investing within the US and lately acquired land in Kitakyushu for its Japan enlargement.

In Asia, ASE has operations within the Philippines, Malaysia, Singapore, South Korea, Taiwan and China. An organization government stated that as a result of chip packaging sometimes has decrease revenue margins and a decrease stage of automation in comparison with chip manufacturing, it is among the most difficult components of the provision chain for the US and Europe to onshore.

“The required technical infrastructure for superior chip packaging is solely not as developed within the US and Europe,” the chief stated. So even when chip manufacturing will increase in these areas, nearly all of packaging will doubtless proceed to be performed in Asia.

iPhone key phrases: India and AI

Apple has begun assembling its newest iPhone 16 collection, together with the premium Professional fashions, in India, Nikkei Asia’s Lauly Li and Cheng Ting-Fang write. This marks a major milestone, as India is now producing Apple’s highest-end iPhones virtually concurrently with China, the corporate’s major manufacturing hub.

Previously, India targeted on assembling older iPhone fashions, lagging behind China. Nevertheless, this hole has narrowed considerably over the previous yr. Whereas India has made progress, its functionality to supply extra invaluable elements stays restricted. Many of the digital elements are nonetheless manufactured in China and assembled into modules earlier than being shipped to India for remaining meeting.

Apple has additionally positioned substantial orders with its suppliers for the iPhone 16 collection, hinting that it expects robust gross sales, significantly for the premium fashions with new Apple Intelligence options. The corporate has forecast manufacturing orders for between 88mn and 90mn items, with some suppliers receiving even larger estimates.

Doubling down

China’s high tech gamers are going all-in on AI, doubling their capital spending to $7bn within the first half of 2023, in response to the Monetary Instances’ Ryan McMorrow and Eleanor Olcott.

Corporations together with Alibaba, Tencent, ByteDance and Baidu are pouring money into shopping for processors and infrastructure to energy superior AI fashions, regardless of US sanctions that purpose to stymie China’s efforts within the area.

Alibaba alone boosted its spending by 123 per cent from a yr earlier. Its enterprise renting AI GPUs to start-ups is lastly beginning to reinvigorate its cloud arm.

TikTok dad or mum ByteDance can also be investing closely, leveraging its $50bn money pile to construct AI infrastructure in China and Malaysia. The corporate is a serious purchaser of Nvidia’s throttled for-China chip referred to as the H20.

Nevertheless, Chinese language tech teams’ spending nonetheless pales compared to US tech giants, which collectively shelled out $106bn within the first half of the yr.

A chilling blaze

A fireplace sparked by a Mercedes-Benz electrical automobile within the port metropolis of Incheon has despatched shockwaves by way of South Korea’s auto market. The nation has been a frontrunner in EV adoption, pushed by authorities incentives and a robust battery and automobile trade. The incident may even have world implications and ripple results for EV and battery producers, Nikkei Asia’s Kim Jaewon writes.

Mercedes-Benz and South Korea’s Hyundai Motor had been each within the world high 10 for EV shipments within the first half of 2024.

In response to the fireplace, South Korean policymakers moved to require all EV makers to reveal their battery suppliers. Mercedes-Benz’s EQE 350+ mannequin, the one concerned within the incident, used a battery from China’s Farasis Vitality, whereas Hyundai’s major provider is SK On, a South Korean firm. LG Vitality Options and China’s CATL are additionally main suppliers for Hyundai.

Whereas the fireplace has led to some unfavourable press for EVs, some battery makers, corresponding to LG Vitality Options, have used the chance to focus on their very own security data and battery administration techniques with a watch in direction of increasing their market share.

Good, however not fairly adequate

Nvidia reported one other blockbuster quarterly earnings on robust demand for AI computing. Even its gross sales to the China market — the place it should supply downgraded variations of some chips to adjust to US export controls — elevated on the yr, Yifan Yu of Nikkei Asia writes.

However traders, who’ve develop into used to anticipating the unimaginable from Nvidia, had been lower than impressed. Many are actually sceptical of how lengthy the AI demand growth will proceed, as most tech firms are nonetheless struggling to monetise the brand new expertise. Nvidia’s share value tumbled in after-hours buying and selling, dragging down shares in Asia’s morning buying and selling.

The corporate reported $3.7bn in income from China, a 33.8 per cent year-over-year improve and a 47.2 per cent improve from the earlier quarter. China accounted for as much as 25 per cent of information centre income, primarily pushed by AI computing. Nvidia CFO Colette Kress acknowledged China’s important contribution to the corporate’s information centre enterprise for the quarter but in addition famous that it was under pre-export management ranges and competitors out there was rising.