Product Management Confabulation
What Product Managers are talking about.
India has approved allocating up to $15.2 billion (1.26 trillion Indian rupees) to build three new semiconductor plants, including its first semiconductor fab facility — part of the country’s big bid to take on China, Taiwan and other countries in the chip race. Significantly, although AI chips are very much the talk of the industry […]
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Arm, the U.K.-based chipmaker owned by Japan’s SoftBank since 2016, has filed for a Nasdaq listing under the ticker symbol “ARM,” five months after announcing it had filed confidential, preliminary IPO paperwork with U.S. regulators.
The outfit didn’t provide a projected share price in its F-1 paperwork. SoftBank recently bought a 24.99% stake in the company from its Vision Fund unit that reportedly valued it at just over $64 billion, which is twice the $32 billion valuation where it was valued when SoftBank bought the company seven years ago.
SoftBank has marked up its own deals in the past to bad effect. Most famously, SoftBank plowed $4.4 billion into the co-working company WeWork in the summer of 2017 when it was still privately held, at a reported valuation of $20 billion. SoftBank invested in WeWork again in early 2019 at a $47 billion valuation. (At the time, SoftBank had invested roughly $10.5 billion into WeWork both directly and via its Vision Fund arm. It famously went on to invest even more in the company and, as famously, to lose nearly its entire investment.)
Arm produces core semiconductor components that are used in nearly every smartphone made, and its customers include Apple, Advanced Micro Devices, and Qualcomm.
Analysts expect Arm’s IPO to be the biggest of 2023, though not everyone agrees that the company is worth what SoftBank thinks it is worth. Late last month, Bernstein analysts assessed Arm’s fair-market value to be about $40 billion based on its preliminary analysis of the limited financial information that was available at the time.
It isn’t clear as of this writing whether Bernstein will revise that estimate based on the financial formation provided in Arm’s F-1, including reported net income of $524 million on $2.68 billion in revenue in its fiscal 2023, which ended in March, which is almost exactly what it saw in 2022 sales ($2.7 billion).
Arm agreed to sell itself to chipmaker Nvidia for $40 billion in 2020, but the deal was called off in February 2022, owing to “significant regulatory challenges preventing the consummation of the transaction.” Plans for an IPO began coming together immediately afterward.
In an indictment of past administrations, a senior Indian minister blamed their strategic and political vision and “a big dose of incompetence” as significant contributors to the country’s underdeveloped semiconductor industry.
“India has missed the bus repeatedly on electronics and semiconductors. There was a lack of strategic and political vision and a big dose of incompetence,” Rajeev Chandrasekhar (pictured above), deputy minister for IT, told a group of reporters Thursday.
“Fairchild semiconductors, which is the precursor to Intel, came to India in 1957 for a packaging unit and we chased them away. That packaging unit went on to become Asia’s largest packaging hub in Malaysia. We set up a fab for silicon and germanium transistors that had shut down. India’s major VLSI facility, Semi-Conductor Laboratory (SCL), perished, as a mysterious fire in 1989 halted production until 1997. In 1987, India was just two years behind the latest chip manufacturing technology. Today, we are 12 generations behind – this is how far behind as a nation on semiconductors,” said Chandrasekhar, who has been a major proponent of India’s foray into chips.
As part of its strategic push into high-value manufacturing, prime minister Narendra Modi’s administration has targeted the global semiconductor market. The past two years saw India unveil considerable production-linked incentives to attract investment in critical sectors, from electronics to automobiles and solar energy.
“The demand for electronics, digital products and services is only intensifying. Electronics is at the core of our lives today and semiconductors in turn at the core of electronics. Prime minister Shri Narendra Modi has rebuilt our electronics ecosystem and we are one of the world’s fastest growing electronics manufacturers. We were almost nothing in 2014 in the semiconductor ecosystem and today we are increasingly becoming a big presence in the global value chain for electronics,” said Chandrasekhar, who also serves as a union minister for State for skill development and entrepreneurship.
These efforts are showing signs of progress: U.S. memory chip firm Micron announced last month that it will invest up to $825 million to build a semiconductor plant in India. Apple has also accelerated production of its iPhone 14 lineup in the country. But there are also some concerns. A multi-billion-dollar venture between Foxconn and Indian conglomerate Vedanta ended earlier this month. Indian officials blamed “internal issues” between the firms for the discontinuation of the joint venture and said the development will not impact India’s semiconductor goals. Foxconn has since said that it remains committed to India and will apply to avail the incentives.
“Based on our discussions with govt officials and industry participants, we believe India possesses several key ingredients for success such as rising demand, low manufacturing cost, large fiscal support and strategic goodwill with the West; although, might need to strengthen supply chains and tech partnerships,” Jefferies analysts wrote in a recent note.
Chinese auto chip maker Black Sesame has recently filed to go public in Hong Kong, offering a glimpse into the business prospect and challenges of an industry that’s increasingly important amid an autonomous driving boom and China’s stride towards semiconductor independence.
Founded by veterans of Bosch and OmniVision, Black Sesame is seen as one of the potential domestic players that can potentially replace the likes of Nvidia, Qualcomm and NXP Semiconductors in the auto chip space. The seven-year-old company has seen its revenue grow significantly over the last three years, but its losses have also ballooned. The question, then, is whether Black Sesame can continue to pour money into R&D until it becomes profitable.
Black Sesame makes system-on-chips (SoCs) to power autonomous driving cars and other intelligent car functionalities. Its most advanced chip, the Huashan A1000 Pro designed for Level 3 autonomous driving (meaning a vehicle can handle all aspects of driving but still requires human intervention if necessary), offers 160+ TOPS, a unit for measuring computing power. It’s also in the progress of developing a version with 200+ TOPS, which will put it on par with Nvidia’s Drive Orin, which features 254 TOPS and has been in production.
While Black Sesame plays a role in helping China achieve independence in auto chips, its own products rely heavily on access to the global supply chain. For instance, it depends on TSMC to manufacture its SoCs. Its production is vulnerable because the U.S. has been pushing to block TSMC from manufacturing for certain Chinese chip design firms, especially on the higher end.
As stated in the prospectus, Black Sesame’s ability to receive supplies from the fab could be “adversely affected by international trade policies, geopolitics and trade protection measures, including imposition of trade restrictions and sanctions.”
The company’s chips also feature core parts that are dependent on third-party IPs. Though not specified, these IPs could be subject to the U.S.’s expanding semiconductor war on China.
Black Sesame’s revenue tripled from 53 million yuan ($7.33 million) to 165.4 million yuan between 2020 and 2022, but its losses grew to 1 billion yuan ($140 million) in 2022, a more than 200% increase from 293 million yuan in 2020. It’s not expected to be profitable in the foreseeable future, for it estimates losses this year to “significantly” increase as it’s in the stage of “expanding” its business, which demands substantial R&D investments. In 2022, its R&D expense surged to 764.1 million yuan ($106 million).
Its gross profit at the end of 2022 was 29.4%, dwarfed by Nvidia’s enviable 65%.
To date, Black Sesame has raised approximately $115 million from outisde investors including Nio Capital, the venture fund of EV maker Nio’s founder, a state-owned Dongfeng Motor investment vehicle, and Bosch’s China-focused fund Boyuan, according to Crunchbase data. As of 2022, the company had total assets worth $140 million and a runway of 24 months.
Like many companies in China’s critical industries, Black Sesame receives government grants and tax incentives because it operates in the field of automotive SoCs. But it could lose a significant source of funding if these benefits were to end.
Its financial performance also hinges on its major customer, which accounted for as much as 43.5% of its revenue last year. It currently supplies over 30 original equipment manufacturers and Tier 1 suppliers, including FAW Group, Dongfeng, JAC, HYCAN, ECARX, Baidu, Bosch, ZF Group, and Marelli.
Black Sesame, Chinese auto chip challenger to Nvidia, burns $140M a year by Rita Liao originally published on TechCrunch
China has banned some sales of Micron products after launching a probe into the American memory chip giant for cybersecurity risks in early April.
The decision is widely seen as part of the tic-for-tac in the ongoing U.S.-China economic competition, which has started to upend a deeply intertwined global tech supply chain.
Last year, the U.S. added China state-backed memory chip maker Yangtze Memory Technologies Corporation to the entity list, barring U.S. companies from supplying it without approval. The U.S. has also restricted Nvidia from exporting H100, its state-of-the-art GPU for generative AI training, to China.
The Cyberspace Administration of China on Sunday told domestic firms that provide “key information infrastructure” to stop buying from Micron. Products of Micron “have serious cybersecurity issues and pose a big risk to the country’s key information supply chains, raising cybersecurity concerns.”
Micron, which opened its first factory in China 16 years ago, specializes in producing computer memory and data storage such as dynamic random-access memory, known as DRAM, and flash memory. China is its third-largest market, accounting for 10.7% of its annual revenue in 2022. We’ve reached out to Micron for comment.
“Key information infrastructure”, as China defines it, includes telecommunication, energy, transportation, finance, defense and any other area that concerns national interests.
The authority did not specify in what ways Micron poses a cybersecurity risk, but it did cite China’s Cybersecurity Law that took effect in 2016, a wide-ranging regulation aimed at strengthening the government’s oversight on the internet, with rules like real-name verification and storing local user data on local servers.
Micron anticipated its challenges in China in its 2022 annual report.
In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities, such as Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc. (“CXMT”), that is intended to advance China’s stated national policy objectives. In addition, the Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies.
The ban could benefit Micron’s competitors in China, the South Korean giants Samsung Electronics and SK Hynix. But the U.S. also urged South Korea not to fill China’s market gap in memory chips if Micron gets banned, according to the Financial Times.
In response to the ban, the U.S. Department of Commerce said it will “engage directly with Chinese authorities to detail the U.S. position and will engage with key allies and partners to address what it termed as distortions of the memory-chip market caused by China’s actions.”
In recent years, China has been working to shore up its technological self-reliance in key industries like advanced semiconductors, which have historically depended on foreign suppliers. For example, there’s been a push to substitute foreign hardware and software with domestic alternatives across state-owned enterprises.
China bans Micron chips in key infrastructure over ‘national security’ risks by Rita Liao originally published on TechCrunch
Micron Technology said it will invest up to 500 billion yen ($3.6 billion) in Japan for the next few years with support from the Japanese government to up its game in next-generation memory chips.
The move indicates that the Japanese government is ambitiously pushing ahead with its semiconductor space resurgence and bringing chip technology into the country to strengthen the chip supply chain amid the rising tension between U.S. and China.
The U.S. chip giant plans to install extreme ultraviolet (EUV) lithography in Japan to make the next generation of dynamic random access memory (DRAM), called the 1-gamma chips, at its Hiroshima plant.
The 1-gamma node, which follows the current industry’s most advanced 1-beta node, will be the smallest cell size in the world. Micron expects to “ramp EUV into production on the 1-gamma node in Taiwan and Japan from 2025 onwards,” it said in a statement. In November, Micron began mass production of its 1-beta DRAM at the Hiroshima plant.
Micron, the only company that makes DRAM in Japan, will be the first to bring the EUV chip-making equipment to Japan. The EUV technology with the 1-gamma node will enable the next-generation node “to deliver faster, more power-efficient and higher-performance memory products.”
The U.S. chip juggernaut manufactures about one-thrids of the DRAM the Japanese companies use in sectors including automotive, data center, 5G infrastructure and medical equipment.
“We are proud to be the first to use EUV in Japan and to be developing and manufacturing 1-gamma at our Hiroshima fab,” Micron CEO Sanjay Mehrotra said in the statement.
Japan has been supporting the country’s chip industry.
Last year, the Japanese government, with a handful of tech firms, including Kioxia, SoftBank, Sony, Toyota, and NEC, backed Rapidus, which aims to make 2-nanometer chips by 2027. It also earmarked subsidies for a joint chip research center and chipmakers such as Kioxia, TSMC, and Micron to establish their plants in Japan.
Rahm Emanuel, United States ambassador to Japan, said: “This partnership demonstrates how allies, when working together, can create economic opportunity and security in cutting-edge technologies.”
Meanwhile, Micron has been in an ongoing cybersecurity probe in China, launched a month ago by the country’s cybersecurity watchdog.
Micron, which now has more than 4,000 engineers and technicians in Japan, has hired over 1,500 workforces in the country over the past five years.
Micron to invest $3.6B in Japan for next-gen memory chips by Kate Park originally published on TechCrunch
Chinese smartphone giant Oppo is disbanding its young chip design unit Zeku as weak global demand forces major handset manufacturers to cut costs and restrategize.
The decision comes as a surprise to those who believe the phone maker is bolstering its in-house chip development as rising geopolitical tensions with the U.S. threatens to cut Chinese firms off key suppliers. In the foreseeable future, Oppo will have to revert back to relying on third-party chip partners.
While Oppo managed to finish Q1 2023 as the world’s fourth-largest smartphone vendor, its shipment dropped 8%, according to market research firm Canalys. Other than Apple, all five of the top phone makers saw a decline in shipments. All in all, the global smartphone market shrank by 13% in the quarter.
Oppo explained its decision to cut its once-promising chip team in a statement issued today: “Due to the uncertainties in the global economy and the smartphone industry, we have to make difficult adjustments for long-term development. Therefore, the company has decided to cease the operation of Zeku.”
In December 2021, Zeku revealed its first self-developed chipset, MariSilicon X, a neural processing unit designed to boost photo and video performance through machine learning, following Apple’s path to bring chip design in-house. Zeku also set up a research base in Palo Alto.
The end of Zeku comes off as abrupt given Zeku was still hiring over 100 positions a month ago, according to its LinkedIn page.
It’s unclear how the move will affect the over 2,000 employees at Zeku, which has been offering competitive salaries to attract talent from other established chip firms. Oppo is reticent about the whereabouts of the team for now, saying only “the company will properly arrange related matters and continue to deliver great products and service to users worldwide.”
Oppo’s retreat from chips signals another struggle from Chinese phone companies to strengthen their control over the semiconductor supply chain. Huawei lost access to advanced chips from the U.S. due to Trump-era sanctions, and its attempt to design its own high-end chips through HiSilicon floundered after the U.S. cut it off major foundries. The company resorted to spinning out its budget handset brand Honor, a move seen as a way to help the subsidiary circumvent the sanctions that have decimated Huawei’s consumer business.
China’s phone giant Oppo disbands chip design unit as shipment slumps by Rita Liao originally published on TechCrunch
Chinese smartphone giant Oppo is disbanding its young chip design unit Zeku as weak global demand forces major handset manufacturers to cut costs and restrategize.
The decision comes as a surprise to those who believe the phone maker is bolstering its in-house chip development as rising geopolitical tensions with the U.S. threatens to cut Chinese firms off key suppliers. In the foreseeable future, Oppo will have to revert back to relying on third-party chip partners.
While Oppo managed to finish Q1 2023 as the world’s fourth-largest smartphone vendor, its shipment dropped 8%, according to market research firm Canalys. Other than Apple, all five of the top phone makers saw a decline in shipments. All in all, the global smartphone market shrank by 13% in the quarter.
Oppo explained its decision to cut its once-promising chip team in a statement issued today: “Due to the uncertainties in the global economy and the smartphone industry, we have to make difficult adjustments for long-term development. Therefore, the company has decided to cease the operation of Zeku.”
In December 2021, Zeku revealed its first self-developed chipset, MariSilicon X, a neural processing unit designed to boost photo and video performance through machine learning, following Apple’s path to bring chip design in-house. Zeku also set up a research base in Palo Alto.
The end of Zeku comes off as abrupt given Zeku was still hiring over 100 positions a month ago, according to its LinkedIn page.
It’s unclear how the move will affect the over 2,000 employees at Zeku, which has been offering competitive salaries to attract talent from other established chip firms. Oppo is reticent about the whereabouts of the team for now, saying only “the company will properly arrange related matters and continue to deliver great products and service to users worldwide.”
Oppo’s retreat from chips signals another struggle from Chinese phone companies to strengthen their control over the semiconductor supply chain. Huawei lost access to advanced chips from the U.S. due to Trump-era sanctions, and its attempt to design its own high-end chips through HiSilicon floundered after the U.S. cut it off major foundries. The company resorted to spinning out its budget handset brand Honor, a move seen as a way to help the subsidiary circumvent the sanctions that have decimated Huawei’s consumer business.
China’s phone giant Oppo disbands chip design unit as shipment slumps by Rita Liao originally published on TechCrunch