• The US wants to regain its leadership within the chip industry, and Commerce Sec. Raimondo targets 20% domestic production of leading-edge chips by 2030.
• The US currently produces none; hence, the ambitious goal is set for the end of this decade.
• Biden admin aims to bring memory chip production to the US “at scale.”

As the global demand for semiconductors surges, the US has embarked on a bold mission to revitalize its chip manufacturing industry. Last February, the Commerce Department launched the CHIPS for America program, echoing the ambitious spirit of the space race era. While US companies lead in AI development, the absence of domestic chip production poses a critical challenge. However, with a strategic focus on talent development, R&D, and manufacturing, the US aims to fill this gap and produce 20% of the world’s leading-edge chips by 2030. 

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Commerce Secretary Gina Raimondo remains optimistic about the program’s potential to transform America’s industrial landscape. The US aims to fortify its supply chains and reduce reliance on geopolitical rivals by investing in leading-edge logic chip manufacturing and onshoring memory production. “Our investments in leading-edge logic chip manufacturing will put this country on track to produce roughly 20% of the world’s leading-edge logic chips by the end of the decade,” Commerce Secretary Gina Raimondo said during a speech at the Center for Strategic and International Studies (CSIS) on February 26, 2024.

“That’s a big deal,” Raimondo added. “Why is that a big deal? Because folks, today we’re at zero.” Her speech came a year after the initiation of funding applications under the 2022 CHIPS and Science Act by the US Department of Commerce. With a staggering US$39 billion earmarked for manufacturing incentives, the stage has been set for a transformative journey in the semiconductor landscape. 

US Commerce Secretary Gina Raimondo speaks during the UK Artificial Intelligence (AI) Safety Summit at Bletchley Park. (Photo by TOBY MELVILLE/POOL/AFP).

Raimondo’s ambitious vision, unveiled concurrently, delineates the path ahead. By 2030, the US aims to spearhead the design and manufacture of cutting-edge chips, establishing dedicated fabrication plant clusters to realize this audacious objective. She claims that, besides everything else, there has been a significant shift in the need for advanced semiconductor chips due to AI. 

“When we started this, generative AI wasn’t even part of our vocabulary. Now, it’s everywhere. Training a single large language model takes tens of thousands of leading-edge semiconductor chips. The truth is that AI will be the defining technology of our generation. You can’t lead in AI if you don’t lead in making leading-edge chips. And so our work in implementing the CHIPS Act became much more important,” Raimondo emphasized.

If the US achieves its goals, it will result in “hundreds of thousands of good-paying jobs,” Raimondo said Monday. “The truth of it is the US does lead, right? We do lead. We lead in the design of chips and the development of large AI language models. But we don’t manufacture or package any leading-edge chips that we need to fuel AI and our innovation ecosystem, including chips necessary for national defense. We don’t make it in America, and the brutal fact is the US cannot lead the world as a technology and innovation leader on such a shaky foundation,” she iterated.

Why is there a gap between US and chip manufacturing?

The US grappled with a significant gap in chip manufacturing for several reasons. Firstly, many semiconductor companies outsourced their manufacturing operations overseas to cut costs, leading to a decline in domestic chip production capacity. Secondly, as semiconductor technology advanced, the complexity and cost of building cutting-edge fabrication facilities increased, discouraging investment in new fabs. 

Meanwhile, global competitors like Taiwan, South Korea, and China expanded their semiconductor industries rapidly, intensifying competition. While other countries provided substantial government support to their semiconductor industries, the US fell behind. Then, there were regulatory hurdles, and environmental regulations make building and operating semiconductor fabs in the US challenging and costly. 

A combination of outsourcing, technological challenges, global competition, lack of government support, and regulatory issues contributed to the US’s gap in chip manufacturing, with none of the world’s leading-edge chips being produced domestically.

And then the world woke up one morning in dire need of leading-edge chips to underscore the technology behind the next industrial revolution, and America realized its mistake.

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“We need to make these chips in America. We need more talent development in America. We need more research and development in America and just a lot more manufacturing at scale,” Raimondo said in her speech at CSIS.

2030 vision: prioritizing future-ready projects

US President Joe Biden greets attendees at a TSMC chip manufacturing facility. (Photo by Brendan SMIALOWSKI/AFP).

In Raimondo’s speech, she declared that the US will first prioritize projects that will be operational by the end of this decade. “I want to be clear: there are many worthy proposals that we’ve received with plans to come online after 2030, and we’re saying no, for now, to those projects because we want to maximize our impact in this decade,” she clarified.

In short, the US will give way to “excellent projects that could come online this year” instead of granting incentives to projects that will come online in 10 or 12 years from now. She also referred back to the goal mentioned last year – when the US is all said and done with this CHIPS initiative – is to have at least two new large-scale clusters of leading-edge logic fabs, each of those clusters employing thousands of workers. 

“I’m pleased to tell you today we expect to exceed that target,” she claimed. So far, the Commerce Department has awarded grants to three companies in the chip industry as part of the CHIPS Act: BAE Systems, Microchip Technology, and, most recently, a significant US$1.5 billion grant to GlobalFoundries. Additional funding is anticipated for Taiwan Semiconductor Manufacturing Co. and Samsung Electronics as they establish new facilities within the US.

Raimondo also highlighted her nation’s commitment to supporting the production of older-generation chips, referred to as mature-node or legacy chips. “We’re not losing sight of the importance of current generation and mature node chips, which you all know are essential for cars, medical devices, defense systems, and critical infrastructure.”

Yet, the lion’s share of investments, totaling US$28 billion out of US$39 billion, is earmarked for leading-edge chips. Raimondo emphasized that this program aims for targeted investments rather than scattering funds wisely. She disclosed that the department has received over US$70 billion in requests from leading-edge companies alone.

For now, anticipation is high for the Commerce Department’s new round of grant announcements, scheduled to coincide with President Joe Biden’s State of the Union address on March 7. Among the expected recipients is TSMC, which is establishing new Arizona facilities.

The post US aims for chip supremacy: From zero to 20% by 2030 appeared first on TechHQ.

• Apple labels PQ3 as “Level 3” security, highlighting its robust properties for iMessage.
• PQ3 adds a post-quantum key to Apple device registration for iMessage.
• PQ3 adds a rekeying mechanism for iMessage, enhancing security.

The imperative for impregnable security measures has reached a crescendo in the ever-accelerating march toward quantum computing dominance. Today, as the quantum supremacy specter looms, the clamor for steadfast cryptographic shields has amplified. So, in a groundbreaking move, Apple has unveiled PQ3, a cutting-edge post-quantum cryptographic protocol tailored for iMessage. Touted by the tech giant as possessing “unparalleled” security features, PQ3 represents a paradigm shift in communication security.

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At the heart of Apple’s embrace of post-quantum cryptography (PQC) lies a deep understanding of the evolving threat landscape. Simply put, as quantum computing advances, traditional cryptographic methods face unprecedented challenges, making the integration of PQC imperative for safeguarding sensitive data and preserving user privacy. 

For context, with their exponential computational power, quantum computers can potentially render existing encryption algorithms obsolete, posing significant risks to data security. Recognizing this, Apple has proactively invested in research and development to pioneer cryptographic solutions capable of withstanding quantum attacks.

That’s where the latest addition to Apple’s cryptographic arsenal, the PQ3 protocol, represents a paradigm shift in communication security. By introducing a new post-quantum encryption key within the iMessage registration process, Apple ensures that data exchanged through its platform remains protected against future quantum threats. PQ3 also incorporates advanced security features, such as a rekeying mechanism within iMessage conversations, designed to mitigate the impact of critical compromises and bolster overall resilience. 

“To our knowledge, PQ3 has the strongest security properties of any at-scale messaging protocol in the world,” Apple’s Security Engineering and Architecture (SEAR) team stated in a blog post a week ago.

PQ3 for iMessage integrates post-quantum key establishment and ongoing self-healing ratchets. Source: Apple

A quantum leap in messaging security

Traditionally, messaging platforms rely on classical public key cryptography like RSA, elliptic curve signatures, and Diffie-Hellman key exchange for secure end-to-end encryption. These algorithms are based on complex mathematical problems deemed computationally intensive for conventional computers, even with Moore’s law in play. But the advent of quantum computing poses a new challenge.

A powerful enough quantum computer could solve these mathematical problems in novel ways, potentially jeopardizing the security of end-to-end encrypted communications. While quantum computers capable of decryption aren’t yet available (as far as we know, supervillains notwithstanding), well-funded attackers can prepare by exploiting cheaper data storage. They accumulate encrypted data now, planning to decrypt it later with future quantum technology—a tactic called “harvest now, decrypt later.”

When iMessage launched in 2011, it became the first widely available messaging app with default end-to-end encryption. Over the years, Apple has continually enhanced its security features. In 2019, the iPhone maker bolstered the cryptographic protocol by transitioning from RSA to elliptic curve cryptography (ECC) and safeguarding encryption keys within the secure enclave, increasing protection against sophisticated attacks. 

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“Additionally, we implemented a periodic rekey mechanism for cryptographic self-healing in case of key compromise. These advancements underwent rigorous formal verification, ensuring the robustness of our security measures,” the blog post reads. So, the cryptographic community has been developing post-quantum cryptography (PQC) to address the threat of future quantum computers. These new public key algorithms can run on today’s classical computers without requiring quantum technology. 

Designing PQ3

Designing PQ3 involved rebuilding the iMessage cryptographic protocol to enhance end-to-end encryption, meeting specific goals:

1. Post-quantum cryptography: PQ3 protects all communication from current and future adversaries by introducing post-quantum cryptography from the start of a conversation.
2. Mitigating key compromises: It limits the impact of critical compromises by restricting the decryption of past and future messages with a single compromised key.
3. Hybrid design: PQ3 combines new post-quantum algorithms with current elliptic curve algorithms, ensuring increased security without compromising protocol safety.
4. Amortized message size: To minimize additional overhead, PQ3 spreads message size evenly, avoiding excessive burdens from added security.
5. Formal verification: PQ3 undergoes standard verification methods to ensure robust security assurances.

According to Apple, PQ3 introduces a new post-quantum encryption key during iMessage registration, using Kyber post-quantum public keys. These keys facilitate the initial critical establishment, enabling sender devices to generate post-quantum encryption keys for the first message, even if the receiver is offline.

PQ3 also implements a periodic post-quantum rekeying mechanism within conversations to self-heal from crucial compromise and protect future messages. This mechanism creates fresh message encryption keys, preventing adversaries from computing them from past keys.

The protocol utilizes a hybrid design, combining elliptic curve cryptography with post-quantum encryption during initial critical establishment and rekeying. Rekeying involves transmitting fresh public key material in line with encrypted messages, with the frequency of rekeying balanced to preserve user experience and server infrastructure capacity.

PQ3 continues to rely on classical cryptographic algorithms for sender authentication and essential verification to thwart potential quantum computer attacks. These attacks require contemporaneous access to a quantum computer and cannot be performed retroactively. However, Apple noted that future assessments will evaluate the need for post-quantum authentication as quantum computing threats evolve.

Apple iPhone 15 series devices are displayed for sale at The Grove Apple retail store on release day in Los Angeles, California, on September 22, 2023. (Photo by Patrick T. Fallon / AFP)

Why PQ3 on iMessage matters for iPhone Users

Integrating PQ3 into iMessage signifies a monumental leap forward in privacy and security for iPhone users. With the exponential growth of data and the looming specter of quantum computing, traditional encryption methods face unprecedented challenges. PQ3 mitigates these risks by providing quantum-resistant protection, ensuring that your conversations remain shielded from future threats. 

In essence, PQ3’s implementation in iMessage demonstrates Apple’s interest in safeguarding user privacy and staying ahead of emerging security threats. Beyond its robust encryption capabilities, PQ3 introduces a host of additional security features designed to enhance the overall integrity of iMessage. These include secure fundamental establishment mechanisms, cryptographic self-healing protocols, and real-time threat detection capabilities. 

By incorporating these advanced security measures, Apple ensures that iMessage remains a bastion of privacy in an increasingly interconnected world.

When can iPhone users expect the update?

Support for PQ3 will begin with the public releases of iOS 17.4, iPadOS 17.4, macOS 14.4, and watchOS 10.4. Already available in developer previews and beta releases, PQ3 will automatically elevate the security of iMessage conversations between devices that support the protocol. As Apple gains operational experience with PQ3 globally, it will gradually replace the existing protocol within all sustained conversations throughout the year.

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• The inaugural deal for 2nm chips marks a significant milestone for Samsung, signaling a challenge to TSMC and its dominance.
• The deal could significantly change the power balance in the industry.
• Samsung has a strategy to offer lower prices for its 2nm process, reflecting its aggressive approach to attracting customers, particularly eyeing Qualcomm’s flagship chip orders.

In the race for technological supremacy and market dominance, Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics lead the charge in semiconductor manufacturing. As demand for advanced chips surges in the 5G, AI, and IoT era, competition intensifies, driving innovation. Both companies vie to achieve smaller nanometer nodes, which are pivotal for technological advancement. 

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When it comes to semiconductor innovation, TSMC spearheads the charge, with ambitious plans for 3nm and 2nm chips, promising a leap in performance and efficiency. Meanwhile, Samsung, renowned for its memory chip prowess, is mounting a determined challenge to TSMC’s supremacy. Recent reports suggest that Samsung is on the brink of unveiling its 2nm chip technology, marking a significant milestone in its bid to rival TSMC.

In a notable turn of events disclosed during Samsung’s Q4 2023 financial report, the tech world buzzed with news of Samsung’s foundry division securing a prized contract for 2nm AI chips. Amid speculation, Samsung maintained secrecy about the identity of this crucial partner.

But earlier this week, a revelation from Business Korea unveiled that the patron happens to be Japanese AI startup Preferred Networks Inc. (PFN). Since its launch in 2014, PFN has emerged as a powerhouse in AI deep learning, drawing substantial investments from industry giants like Toyota, NTT, and FANUC, a leading Japanese robotics firm.

Samsung vs TSMC

Samsung, headquartered in Suwon, South Korea, is set to unleash its cutting-edge 2nm chip processing technology to craft AI accelerators and other advanced AI chips for PFN, as confirmed by industry insiders on February 16, 2024. 

Should news of this landmark deal be legitimate, it would prove mutually advantageous. It would empower PFN with access to state-of-the-art chip innovations for a competitive edge while propelling Samsung forward in its fierce foundry market rivalry with TSMC, according to insider reports.

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Ironically, PFN has had a longstanding partnership with TSMC dating back to 2016, but is opting to shift gears from here on out, going with Samsung’s 2nm node for its upcoming AI chip lineup, according to a knowledgeable insider. PFN also chose Samsung over TSMC due to Samsung’s full-service chip manufacturing capabilities, covering everything from chip design to production and advanced packaging, sources revealed.

Experts also speculate that although TSMC boasts a more extensive clientele for 2nm chips, PFN’s strategic move to Samsung hints at a potential shift in the Korean giant’s favor. This pivotal decision may pave the way for other significant clients to align with Samsung, altering the competitive landscape in the chipmaking realm.

No doubt, in the cutthroat world of contract chipmaking, TSMC reigns supreme, clinching major deals with industry giants like Apple Inc. and Qualcomm Inc. But, as the demand for top-tier chips escalates, the race for technological superiority heats up, with TSMC and Samsung at the forefront of the battle. While TSMC currently leads the pack, boasting 2nm chips for clients like Apple and Nvidia, Samsung is hot on its heels. 

“Apple is set to become TSMC’s inaugural customer for the 2nm process, positioning TSMC at the forefront of competition in the advanced process technology,” TrendForce said in its report. Meanwhile, according to Samsung’s previous roadmap, its 2nm SF2 process is set to debut in 2025. 

Samsung’s Foundry Forum (SFF) plan.

“As stated in Samsung’s Foundry Forum (SFF) plan, Samsung will begin mass production of the 2nm process (SF2) in 2025 for mobile applications, expand to high-performance computing (HPC) applications in 2026, and further extend to the automotive sector and the expected 1.4nm process by 2027,” TrendForce noted.

Compared to the second-generation 3GAP process at 3nm, it offers a 25% improvement in power efficiency at the same frequency and complexity and a 12% performance boost at the same power consumption and complexity while reducing chip area by 5%. In short, with TSMC eyeing mass production of 2nm chips by 2025, the competition between these tech titans is set to reach new heights.

Yet, in a strategic maneuver reported by the Financial Times, Samsung is gearing up to entice customers with discounted rates for its 2nm process, a move poised to shake up the semiconductor landscape. With its sights set on Qualcomm’s flagship chip production, Samsung aims to lure clients away from TSMC by offering competitive pricing. 

This bold initiative signals Samsung’s determination to carve out a larger market share and challenge TSMC’s dominance in the semiconductor industry.

The post Samsung seizes 2nm AI chip deal, challenging TSMC’s reign appeared first on TechHQ.

• Brussels regulators investigated Apple following a Spotify complaint, leading to a hefty penalty.
• The EU focused on the rule by Apple preventing app developers from linking to outside subscription sign-up pages.
  
• The battle between Spotify and Apple has been ongoing for years – and Apple is expected to vigoroulsy appeal.

A colossal clash has between two industry behemoths – streaming powerhouse Spotify and tech titan Apple – has been unfolding for months. Spotify has leveled charges of anti-competitive behavior against Apple, contending that the Silicon Valley giant employs its market dominance to throttle competition and hobble rival services. But it’s not just the combatants locked in this struggle; European regulators have also stepped onto the battlefield, poised to challenge Apple’s stronghold over its app store empire. 

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Spotify clashes with Apple but isn’t so angelic itself

Spotify argues that Apple’s strict regulations and steep fees are barriers to competition, stifling creativity and limiting consumer options. The contentious issue of the “Apple tax” looms large – a term coined to describe the substantial commission fees exacted by Apple on in-app purchases. 

For Spotify, this translates to navigating a landscape where every musical note played carries a hefty price tag, jeopardizing its ability to maintain a competitive edge and sustain profitability. Beyond financial concerns, Spotify alleges that Apple’s influence permeates the user experience, with accusations of preferential treatment towards its music streaming service, Apple Music, fueling claims of anti-competitive behavior and igniting industry-wide debate and dissent.

At the forefront of Spotify’s battle is CEO Daniel Ek, who’a spearheading the fight against what he views as Apple’s monopolistic grip on the music streaming sector. In an October 2023 op-ed for the UK’s (avowedly right-wing) Daily Mail, Ek condemned Apple’s imposition of a 30% tax and restrictive regulations on developers, many of whom played pivotal roles in shaping iOS into its current form. Ek also highlighted Apple’s shifting stance towards these developers, now seen as adversaries by the tech giant.

Daniel Ek, Founder & CEO, Spotify, makes progress in his Apple battle. (Photo by Noam Galai/GETTY IMAGES NORTH AMERICA/Getty Images via AFP).

Frustrated by what he sees as Apple’s anti-competitive practices, Ek has not shied away from taking his concerns public. In a bold move, Spotify filed a complaint with the European Commission in December 2023, alleging that Apple’s behavior violates EU competition law. The legal battle has ever since underscored the high stakes involved. Neither Apple not Spotify has shown a willingness to blink first.

For Ek, the fight against Apple is more than just a business dispute – it’s allegedly a matter of principle, inasmuch as such things can be said to apply to big business. Ek claims to envision a future where innovation flourishes in “a fair and open marketplace,” where consumers have genuine choice, and competition breeds excellence. To achieve this vision, Ek remains steadfast in his commitment to holding Apple accountable for its actions and advocating for a level playing field for all players in the music streaming industry.

This of course should not detract from Spotify’s own pitiful remuneration of artists who appear on the streaming platform. There are matters of principle and matters of profit involved in both companies’ operations – and it’s rare that they can be counted on to intersect.

What is the outcome for Apple and Spotify in the EU?

Before the latest complaint filed in December 2023, Spotify lodged an official antitrust grievance with the European Commission nearly four years ago, citing Apple’s anti-competitive practices that impeded innovation and detrimentally affected developers and consumers globally, especially in Europe. Despite the passage of time, the situation remains essentially unchanged, according to the streaming giant.

Spotify noted that the absence of definitive regulatory intervention has encouraged Apple to persist in its questionable conduct. Despite a growing chorus of advocates clamoring for action, regulators have been slow to act decisively, leaving a palpable frustration among stakeholders.

Before the complaint was filed two months ago, Spotify and seven other companies and organizations in sectors including publishing, audio streaming, dating, communications, and marketplaces sent a joint letter in January 2023 to call for meaningful regulatory action against Apple’s long-standing allegedly anti-competitive European practices.

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After much back and forth between regulators and the tech giants, on February 19, 2024, the bloc announced its intention to fine Apple for allegedly breaching EU law concerning access to its music streaming services. This historic penalty marks a pivotal moment in the ongoing battle between regulatory authorities and Silicon Valley giants, underscoring the EU’s commitment to enforcing fair competition practices in the digital realm.

The EU’s decision to impose its first-ever fine on Apple also sends a clear message to the tech industry: compliance with EU regulations is non-negotiable. Reports indicate that this development follows a protracted investigation by EU authorities, drawing on insights from five individuals intimately familiar with the case. Their direct knowledge sheds light on the intricate details of the long-running probe, revealing the meticulous scrutiny of Apple’s business practices.

“In a closed-door meeting between EU officials and Apple in June last year, the tech firm told regulators it had already addressed any possible competition concerns arising from Spotify’s complaint,” a report by Bloomberg reads. For Apple, although accustomed to navigating complex regulatory landscapes, this fine represents a significant setback. 

When contacted for comment, Bloomberg also noted that Apple referred to a previous statement, which said that the “App Store has helped Spotify become the top music streaming service across Europe.” The translation of that terse statement is that Apple is expected to vigorously challenge the fine, using its formidable legal and financial resources to defend its practices. Nevertheless, the EU’s unwavering stance underscores the imperative of upholding fair competition principles to safeguard consumer choice and innovation within the digital ecosystem. 

This decision has broader implications for the tech industry. As the tech landscape continues to evolve, this fine against Apple is a poignant reminder of the regulatory challenges confronting industry titans. With the EU leading the charge in enforcing antitrust laws, the repercussions of this decision will surely reverberate across the global tech industry, shaping the future of digital competition and regulation for years to come.

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• SMIC sets up new production lines in Shanghai for mass-producing Huawei-designed 5nm chips.
• SMIC’s 5nm process won’t use EUV lithography due to tool unavailability from ASML. Stockpiled DUV lithography will be used instead.
• Experts anticipate Huawei’s smartphone performance boost with this new production node this year.

In the dynamic landscape of the global semiconductor industry, China has emerged as a critical player, striving for self-sufficiency in chip production. Semiconductor Manufacturing International Corp (SMIC), China’s largest state-backed chipmaker, stands at the forefront of this endeavor, spearheading efforts to bolster the country’s semiconductor industry and reduce reliance on imports. Despite facing sanctions and technological hurdles, the company had most recently made significant strides in advancing chip fabrication processes by establishing new semiconductor production lines in Shanghai aimed at mass-producing chips using cutting-edge 5nm fabrication technology.

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This move underscores SMIC’s commitment to staying abreast of technological advancements and positioning China as a global leader in semiconductor manufacturing. A recent report by the Financial Times claims SMIC will be collaborating with Huawei Technologies to produce next-generation smartphone processors this year. “The country’s biggest chipmaker, SMIC, has put together new semiconductor production lines in Shanghai, according to two people familiar with the move, to mass produce the chips designed by technology giant Huawei.” 

SMIC’s collaboration with tech giant Huawei is poised to play a pivotal role in China’s semiconductor push. Through this partnership, SMIC aims to produce high-performance chips designed by Huawei, using its state-of-the-art fabrication capabilities. 

In short, this strategic alliance enhances SMIC’s technological prowess and underscores the synergy between state-backed enterprises and leading technology firms in driving China’s semiconductor revolution.

Ultimately, the goal is to reduce dependence on foreign chip imports. 

The move came when Beijing combined strategic partnerships and international collaborations to accelerate its semiconductor advancements. The country has forged partnerships with leading semiconductor companies and research institutions worldwide, facilitating technology transfer and knowledge exchange to bolster its semiconductor ecosystem.

But China’s semiconductor ambitions have not been without challenges and controversies. China’s semiconductor industry still lags behind its global counterparts in some critical regions, such as advanced process technology and design capabilities. Achieving true technological sovereignty remains an uphill battle, requiring sustained investments, talent cultivation, and policy support. 

To top it off, the country has faced accusations of intellectual property theft, industrial espionage, and unfair trade practices, prompting scrutiny and backlash from the international community. 

What does SMIC have planned for its 5nm collaboration with Huawei?

The decision to advance chip production despite sanctions reflects China’s strategic imperative to reduce reliance on foreign technology and assert its technological prowess on the world stage. China has invested heavily in semiconductor research and development in recent years, aiming to close the technological gap with leading chip-producing nations such as the US and Taiwan.

So SMIC’s efforts to set up new semiconductor production lines in Shanghai signify a pivotal moment in China’s quest, especially by harnessing Huawei’s expertise in chip design and SMIC’s manufacturing capabilities. What’s more, the collaboration between SMIC and Huawei highlights the synergy between state-backed enterprises and leading technology companies in China. 

Can the SMIC 5nm process build on the success of the Huawei Mate Pro 60?

Two sources familiar with the plans revealed to the FT that SMIC intends to utilize its current US and Dutch equipment inventory to manufacture more minor 5nm chips. This production line will manufacture Kirin chips developed by Huawei’s HiSilicon unit, slated for upcoming iterations of its flagship smartphones.

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Despite trailing behind the cutting-edge 3nm chips, the adoption of 5nm technology signifies China’s semiconductor sector’s steady advancement despite US export restrictions. “With the new 5nm node, Huawei is well on track to upgrade its new flagship handset and data center chips,” one person familiar with the plans told the FT.

How will this advancement help Huawei?

For context, SMIC’s 7nm and 5nm chip production lines utilize US machines accumulated before facing restrictions. Additionally, its fab includes ASML lithography machines acquired last year. However, the Dutch government’s recent revocation of export licenses for advanced machines has hindered ASML from selling to China.

“SMIC is facing a more significant roadblock for production expansion after the US and its alliance tightened export restrictions on advanced chipmaking gear,” one person close to the company told the FT. “Still, the fate of China’s chip industry and its technological development in the coming years will depend on these production lines by SMIC.”

Huawei has recently made waves with its Mate 60 Pro, boasting a 7nm processor that spurred a 50% surge in Chinese shipments in 2023. If successful for smartphones, SMIC’s 5nm product could extend to Huawei’s Ascend 920, narrowing the gap with Nvidia’s GPUs. Of course, the push for more advanced chips has resulted in added expenses. 

Sources close to Chinese chip firms revealed that SMIC charges 40 to 50% higher prices for products from its 5nm and 7nm nodes than TSMC. Additionally, SMIC’s yield, or the number of usable chips, is less than one-third of TSMC’s.

The post 5nm milestone: SMIC and Huawei defy US Sanctions in semiconductor push appeared first on TechHQ.

• Ultimately, Meta wants to break free from Nvidia’s AI chips while challenging other tech giants making their silicon.
• Meta expects an additional US$9 billion on AI expenditure this year, beyond the US$30 billion annual investment.
• Will Artemis mark a decisive break from Nvidia, after Meta hordes H100 chips?

A whirlwind of generative AI innovation in the past year alone has exposed major tech companies’ profound reliance on Nvidia. Crafting chatbots and other AI products has become an intricate dance with specialized chips largely made by Nvidia in the preceding years. Pouring billions of dollars into Nvidia’s systems, the tech behemoths have found themselves straining against the chipmaker’s inability to keep pace with the soaring demand. Faced with this problem, industry titans like Amazon, Google, Meta, and Microsoft are trying to seize control of their fate by forging their own AI chips. 

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After all, in-house chips would enable the giants to steer the course of their own destiny, slashing costs, eradicating chip shortages, and envisioning a future where they offer these cutting-edge chips to businesses tethered to their cloud services -creating their own silicon fiefdoms, rather than being entirely dependent on the likes of Nvidia (and potentially AMD and Intel).

The most recent tech giant to announce plans to go solo is Meta, which is rumored to be developing a new AI chip, “Artemis,” set for release later this year. 

The chip, designed to complement the extensive array of Nvidia H100 chips recently acquired by Meta, aligns with the company’s strategic focus on inference—the crucial decision-making facet of AI. While bearing similarities to the previously announced MTIA chip, which surfaced last year, Artemis seems to emphasize inference over training AI models. 

H100 Tensor Core GPU. Source: Nvidia.

However, it is worth noting that Meta is entering the AI chip arena at a point when competition has gained momentum. It started with a significant move last July, when Meta disrupted the competition for advanced AI by unveiling Llama 2, a model akin to the one driving ChatGPT. 

Then, last month, Zuckerberg introduced his vision for artificial general intelligence (AGI) in an Instagram Reels video. In the previous earnings call, Zuckerberg also emphasized Meta’s substantial investment in AI, declaring it as the primary focus for 2024. 

2024: the year of custom AI chips by Meta?

In its quest to empower generative AI products across platforms like Facebook, Instagram, WhatsApp, and hardware devices like Ray-Ban smart glasses, the world’s largest social media company is racing to enhance its computing capacity. Therefore, Meta is investing billions to build specialized chip arsenals and adapt data centers. 

Last Thursday, Reuters got hold of an internal company document that states that the parent company of Facebook intends to roll out an updated version of its custom chip into its data centers this year. The latest iteration of the custom chip, codenamed ‘Artemis,’ is designed to bolster the company’s AI initiatives and might lessen its dependence on Nvidia chips, which presently hold a dominant position in the market. 

Mark Zuckerberg, CEO of Meta, testifies before the Senate Judiciary Committee on January 31, 2024 in Washington, DC. (Photo by Anna Moneymaker/GETTY IMAGES NORTH AMERICA/Getty Images via AFP).

If successfully deployed at Meta’s massive scale, an in-house semiconductor could trim annual energy costs by hundreds of millions of dollars, and slash billions in chip procurement expenses, suggests Dylan Patel, founder of silicon research group SemiAnalysis. The deployment of Meta’s chip would also mark a positive shift for its in-house AI silicon project. 

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Meta in the hotseat… again

In 2022, executives abandoned the initial chip version, choosing instead to invest billions in Nvidia’s GPUs, dominant in AI training. The upside of that strategy is that Meta is poised to accumulate many coveted semiconductors. Mark Zuckerberg revealed to The Verge that by the close of 2024, the tech giant will possess over 340,000 Nvidia H100 GPUs – the primary chips used by entities for training and deploying AI models like ChatGPT. 

Additionally, Zuckerberg anticipates Meta’s collection to reach 600,000 GPUs by the year’s end, encompassing Nvidia’s A100s and other AI chips. The new AI chip by Meta follows its predecessor’s ability for inference—utilizing algorithms for ranking judgments and user prompt responses. Last year, Reuters reported that Meta is also working on a more ambitious chip that, like GPUs, could perform training and inference.

Zuckerberg also detailed Meta’s strategy to vie with Alphabet and Microsoft in the high-stakes AI race. Meta aims to capitalize on its extensive walled garden of data, highlighting the abundance of publicly shared images and videos on its platform and distinguishing it from competitors relying on web-crawled data. Beyond the existing generative AI, Zuckerberg envisions achieving “general intelligence,” aspiring to develop top-tier AI products, including a world-class assistant for enhanced productivity.

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• Raimondo warns against unwanted access for China to US cloud technology to build AI.
• The Secretary of Commerce is acting to block use of US tech for AI by China due to “security concerns.”
• The move, impacting players like Amazon and Microsoft, is anticipated to escalate tech tensions with China.

The long-standing rivalry between the US and China has evolved into many facades over the last decade. The intensifying competition underscores economic supremacy and national security concerns, shaping the dynamics of a burgeoning tech war. Last year, the battleground extended into the development of AI, but this year, the US has indicated the desire to control and dominate local cloud computing services. 

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Will US cloud computing restrictions on China have any impact?

Recent proposals suggest stringent measures to curb China’s access to US cloud computing firms, fueled by concerns over the potential exploitation of American technology for AI advancement. In a recent interview, US Secretary of Commerce Gina Raimondo emphasized the need to prevent non-state actors and China from utilizing American cloud infrastructure to train their AI models.

“We’re beginning the process of requiring US cloud companies to tell us every time a non-US entity uses their cloud to train a large language model,” Raimondo said at an event on January 27. Raimondo, however, did not name any countries or firms about which she was particularly concerned. Still, the maneuver is anticipated to intensify the technological trade war between the US and China, and signify a notable step toward the politicization of cloud provision.

The focal point of this battle lies in recognizing that controlling access to cloud computing is equivalent to safeguarding national interests. Raimondo parallels the control exerted through export restrictions on chips, which are integral to American cloud data centers. As the US strives to maintain technological supremacy, closing avenues for potential malicious activity becomes imperative.

Therefore, the proposal mandates explicitly firms like Amazon and Google to gather, store, and scrutinize customer data, resembling the weight of stringent “know-your-customer” regulations akin to those shaping the financial sector. Conversely, China has been aggressively pursuing AI development, seeking to establish itself as a global leader in the field. 

The US concerns stem from the dual-use nature of AI technologies, which can have both civilian and military applications. The fear is that China’s advancements in AI could potentially be leveraged for strategic military purposes, posing a direct challenge to US national security.

Of AI, cloud computing, and the US-China tech war

China’s Premier Li Qiang (R) speaks with US Commerce Secretary Gina Raimondo during their meeting at the Great Hall of the People in Beijing on August 29, 2023. (Photo by Andy Wong/POOL/AFP).

Although the US broadened chip controls in October, focusing on Chinese firms in 40+ nations, a gap remains. That is why it is paramount for the US to address how Chinese companies can still leverage chip capabilities through the cloud. Cloud technology has become the backbone of modern businesses and governments, making it a critical asset in the ongoing tech war. 

From start to finish, cloud computing is inherently political, Trey Herr, director of cyber statecraft at the Atlantic Council, told Raconteur. He said that its reliance on extensive physical infrastructure tied to specific jurisdictions makes it susceptible to local politics, adding that conversations about cloud security inevitably take on political dimensions.

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Huawei ends DC lobbying: What’s next for US-China relations?

In October 2023, Biden mandated the US Department of Commerce mandate disclosures, aiming to uncover foreign actors deploying AI for cyber-mischief. Now, the Commerce Department, building on stringent semiconductor restrictions for China, is exploring the idea of regulating the cloud through export controls. Raimondo said the concern is that Chinese firms could gain computing power via cloud giants like Amazon, Microsoft, and Google.

“We want to make sure we shut down every avenue that the Chinese could have to get access to our models or to train their models,” she said in an interview with Bloomberg last month. In short, China’s strides in AI and cutting-edge technologies are a paramount worry for the administration. After all, despite Washington’s efforts to curtail China’s progress through chip export restrictions and sanctions on Chinese firms, the nation’s tech giants resiliently achieve substantial breakthroughs, challenging the effectiveness of US constraints.

Nevertheless, regulating such activities in the US is still being determined because cloud services, which do not involve physical goods transfer, fall outside export control domains. Thea Kendler, assistant secretary for export administration, mentioned the potential need for additional authority in this space during discussions with lawmakers last month.

Addressing further loopholes, the Commerce Department also plans to conduct surveys on companies developing large language models for their safety tests, as mentioned by Raimondo on Friday. However, specific details about the survey requests were not disclosed.

What are cloud players saying?

As with previous export controls, US cloud providers fear that limitations on their interactions with international customers, lacking reciprocal measures from allied nations, may put American firms at a disadvantage. However, Raimondo said that comments on the proposed rule are welcome until April 29 as the US seeks input before finalizing the regulation.

What is certain is that the cloud will persist as an arena for trade war extensions and geopolitical maneuvers. Nevertheless, this tech war has broader implications for the global tech ecosystem. It prompts questions about data sovereignty, privacy, and the geopolitical alignment of technological alliances. As the US seeks to tighten its grip on the flow of technology, China is compelled to find alternative routes to sustain its AI ambitions.

The outcome will shape the future trajectory of technological innovation, with ramifications extending far beyond cloud computing and AI development. 

US Commerces Secretary Gina Raimondo confirms the full on economic war on China (and US businesses).

The goal of the US is to slow down China's tech advances. US gonna double down on its sanctions on China pic.twitter.com/7MTyq5IpFO

— Carl Zha (@CarlZha) December 7, 2023

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• Sam Altman, CEO of OpenAI, has been wooing investors like G42 and SoftBank, for chip fabs capital.
• His urgency stems from the expected chip supply shortage by the decade’s end.
• Insiders have revealed that the planned network aims to partner with top-tier chip manufacturers and will have a worldwide reach.

In a thought-provoking revelation during The Wall Street Journal’s Tech Live event on October 2023, Sam Altman said he would “never rule out” that OpenAI could end up crafting its own AI chips. While acknowledging that OpenAI is not currently developing proprietary chips, Altman hinted that realizing the grand vision of attaining general AI might necessitate the company venturing into chip creation. Many saw it as a dynamic stance, underlining OpenAI’s adaptability and commitment to pushing boundaries in the ever-evolving landscape of AI. Additionally, if OpenAI were to, for instance own the patent on the chips that made general AI possible, it would essentially own the future of the world.

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New horizons with OpenAI GPT updates

However, Altman has long emphasized the importance of developing specialized hardware to meet the unique demands of AI. Project Tigris emerges from this vision: to craft a dedicated chip tailored to optimize the processing requirements of OpenAI’s advanced AI models. 

What is the significance of in-house chips for OpenAI?

Developing an in-house chip promises to significantly improve the performance and efficiency of OpenAI’s AI models. By customizing hardware to align with the specific needs of advanced machine learning algorithms, OpenAI aims to push the boundaries of what AI can achieve, potentially unlocking new possibilities in fields ranging from natural language processing to computer vision.

At the heart of Altman’s intention is to keep OpenAI from being thrown off course by the seemingly simple obstacle of microchip shortages. The scarcity of these vital components, crucial for the advancement of AI, has already become a colossal headache for Altman and numerous tech executives striving to replicate OpenAI’s triumphs.

Project Tigris emerges from this vision to craft a dedicated chip tailored to optimize the processing requirements of OpenAI’s advanced AI models. Altman has repeatedly emphasized that the existing chip supply needs to meet OpenAI’s insatiable requirements. 

But Altman’s endeavors faced a temporary hiatus when he was briefly removed as OpenAI CEO in November, 2023. However, soon after his return, the project was reignited. Altman has even explored the possibility with Microsoft, and sources reveal the software giant’s keen interest in the venture.

What has Sam Altman planned for OpenAI now?

The latest development is that Altman has discreetly initiated conversations with potential investors, aiming to secure substantial funds not just for AI chips but for creating whole chip-fabrication plants, affectionately known as fabs. Veiled in anonymity, sources disclosed that among the companies engaged in these discussions was G42 from Abu Dhabi – a revelation by Bloomberg last month – and the influential SoftBank Group.

“The startup has discussed raising between US$8 billion and US$10 billion from G42,” said one of Bloomberg‘s anonymous sources on the story. “It’s unclear whether the chip venture and wider company funding efforts are related,” the report reads. Unbeknown to many, this fab project entails collaboration with top chip manufacturers to use the expertise of established industry players, ensuring that Project Tigris benefits from the latest advancements in semiconductor technology.

While Bloomberg previously hinted at fundraising efforts for the chip venture, the accurate scale and manufacturing focus have yet to be unveiled. Still in their early stages, these talks have not yet finalized the list of participating partners and backers, adding a layer of intrige to this evolving narrative. 

Is OpenAI’s venture into building its chip fabs a viable endeavor?

Altman courting Korean expertise and money? Source: X.com.

Ultimately, Altman advocates for urgent industry action to ensure an ample chip supply by the end of the decade. However, his approach, emphasizing the construction and maintenance of fabs, diverges from the cost-effective strategy favored by many AI industry peers, including Amazon, Google, and Microsoft—OpenAI’s primary investor. 

These tech giants typically design custom silicon and outsource manufacturing to external suppliers. The construction of a cutting-edge fab involves a significant financial investment, often reaching tens of billions of dollars, and establishing a network of such facilities spans several years. A single chip factory’s cost can range from US$10 billion to US$20 billion, influenced by factors such as location and planned capacity. 

For instance, Intel’s Arizona fabs are estimated at US$15 billion each, and TSMC’s nearby factory project is projected to reach around US$40 billion. Moreover, these facilities may require four to five years for completion, with potential delays due to current workforce shortages. Some argue that OpenAI seems more inclined to support leading-edge chip manufacturers like TSMC, Samsung Electronics, and potentially Intel rather than enter the foundry industry. 

In an article in The Register, it’s suggested that the strategy could involve channeling raised funds into these fabrication giants, such as TSMC, where Nvidia, AMD, and Intel’s GPUs and AI accelerators are manufactured. TSMC stands out as a prime candidate, given its role in producing components for significant players in the AI industry. 

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Will OpenAI join other tech giants in making its own AI chips?

“If he gets it done—by raising money from the Middle East or SoftBank or whoever—that will represent a tech project that may be more ambitious (or foolhardy) than OpenAI itself,” Cory Weinberg said in his briefing for The Information.

While the ambition behind Project Tigris is commendable, inherent challenges and risks are associated with developing custom hardware. The intricacies of semiconductor design, production scalability, and compatibility with existing infrastructure pose formidable hurdles that OpenAI will need to overcome to realize the full potential of its in-house chip.

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• The data center will be the first to be operated by Google in the UK.
• Google’s 2022 deal with ENGIE adds 100MW wind energy.
• The aim is for 90% carbon-free UK operations by 2025.

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AI cybersecurity tool in collaboration with Google Cloud

In the ever-evolving landscape of cloud computing, Google Cloud is a formidable player, shaping the global data center market with its leading solutions and heavyweight presence. Google Cloud’s commitment to expanding its global footprint is exemplified by its recent announcement of a US$1 billion investment in a new data center in Waltham Cross, Hertfordshire, UK. 

The move not only underscores the company’s dedication to meeting the needs of its European customer base, but also aligns with the UK government’s vision of fostering technological leadership on the global stage. As it is, one of the critical pillars of Google Cloud’s presence in the UK is its substantial investment in cutting-edge data infrastructure. That said, the upcoming data center would be Google’s first in the country.

Illustration of Google’s new UK data Centre in Waltham Cross, Hertfordshire. Source: Google.

“As more individuals embrace the opportunities of the digital economy and AI-driven technologies enhance productivity, creativity, health, and scientific advancements, investing in the necessary technical infrastructure becomes crucial,” Debbie Weinstein, VP of Google and managing director of Google UK & Ireland, said in a statement last week.

In short, this investment will provide vital computing capacity, supporting AI innovation and ensuring dependable digital services for Google Cloud customers and users in the UK and beyond.

Google already operates data centers in various European locations, including the Netherlands, Denmark, Finland, Belgium, and Ireland, where its European headquarters are situated. The company already has a workforce of over 7,000 people in Britain.

Google Cloud’s impact extends far beyond physical infrastructure, though. The company’s cloud services have become integral to businesses across various sectors in the UK. From startups to enterprises, organizations are using Google Cloud’s scalable and flexible solutions to drive efficiency, enhance collaboration, and accelerate innovation. 

The comprehensive nature of Google Cloud’s offerings, including infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS), ensures that it caters to the diverse needs of the UK’s business landscape.

That said, the investment in Google’s Waltham Cross data center is part of the company’s ongoing commitment to the UK. It follows other significant assets, such as the US$1 billion acquisition of a Central Saint Giles office in 2022, a development in King’s Cross, and the launch of the Accessibility Discovery Centre, fostering accessible tech across the UK.

“Looking beyond our office spaces, we’re connecting nations through projects like the Grace Hopper subsea cable, linking the UK with the United States and Spain,” Weinstein noted.

“In 2021, we expanded the Google Digital Garage training program with a new AI-focused curriculum, ensuring more Brits can harness the opportunities presented by this transformative technology,” Weinstein concluded. 

Google is investing US$1 billion in a new UK data center to meet rising service demand, supporting Prime Minister Rishi Sunak’s tech leadership ambitions. Source: Google.

24/7 Carbon-free energy by 2030

Google Cloud’s commitment to sustainability also aligns seamlessly with the UK’s environmental goals. The company has been at the forefront of implementing green practices in its data centers, emphasizing energy efficiency and carbon neutrality. “As a pioneer in computing infrastructure, Google’s data centers are some of the most efficient in the world. We’ve set out our ambitious goal to run all of our data centers and campuses on carbon-free energy (CFE), every hour of every day by 2030,” it said.

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AMD to use Google Cloud for enhancing chip design workloads

This aligns with the UK’s ambitious targets to reduce carbon emissions, creating a synergy beyond technological innovation. Google forged a partnership with ENGIE for offshore wind energy from the Moray West wind farm in Scotland, adding 100 MW to the grid and propelling its UK operations towards 90% carbon-free energy by 2025. 

Beyond that, the tech giant said it is delving into groundbreaking solutions, exploring the potential of harnessing data center heat for off-site recovery and benefiting local communities by sharing warmth with nearby homes and businesses.

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• In 2023, Apple surpassed Samsung to become the world’s largest smartphone manufacturer by volume.
• Apple’s success was driven by consumers opting for higher-end models, prioritizing durability and features over price.
• In the past year, Samsung shifted focus to the mid and high-end markets for greater profitability.

Over the past decade, Apple and Samsung have been locked in a fierce smartphone industry rivalry, constantly vying for dominance. With its iPhone series, Apple has consistently set trends while Samsung focused on delivering various devices to cater to multiple market segments. This intense competition has led to a see-saw battle for market share, with each company striving to outdo the other in design, features, and technological advancements. 

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iPhone 15 pushes Apple to record Q3 – despite Huawei’s resurgence

The race for consumer loyalty and the title of “the world’s top smartphone manufacturer” has fueled a continuous cycle of innovation and product evolution, making their rivalry one of the defining narratives in the ever-evolving landscape of mobile technology.

Then came 2023, when Apple finally outperformed Samsung in global smartphone sales – for the first time since 2010.

The iPhone dethroned Samsung Galaxy to become the best-selling smartphone series globally, marking a notable shift in the industry’s competitive landscape. According to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, the iPhone accounted for a substantial fifth of the global smartphone market, with nearly 235 million shipments in the past year. 

“The last time a company not named Samsung was at the top of the smartphone market was 2010, and for 2023, it is now Apple. A shifting of power at the top of the largest consumer electronics market was driven by Apple’s all-time high market share and a first time at the top,” IDC’s report reads. In other words, the unprecedented market share demonstrates Apple’s ability to capture a significant portion of consumer demand, and solidifies its position as a frontrunner in the highly competitive smartphone industry.

Apple’s dominance during the holiday quarter has been a recurring theme recently. However, its unprecedented lead over Samsung throughout the year indicates that Apple is navigating the challenges of an industrywide slump more effectively than its competitors.

Apple vs Samsung: a decade-defying achievement

While Samsung remains a formidable player in the smartphone market, its shipments experienced a double-digit slump in 2023, totaling 226.6 million. “The overall shift in ranking at the top of the market further highlights the intensity of competition within the smartphone market,” said Ryan Reith, group VP with IDC’s Worldwide Mobility and Consumer Device Trackers. 

The iPhone sold more than Samsung’s devices globally in 2023. Source: Bloomberg.

Reith believes that Apple certainly played a part in Samsung’s drop in rank, but also that the overall Android space is diversifying. “Huawei is back and making inroads quickly within China. Brands like OnePlus, Honor, Google, and others are launching very competitive devices in the lower price range of the high-end foldable, and increased discussions around AI capabilities on the smartphone are gaining traction. Overall, the smartphone space is headed towards an exciting time,” he added.

Apple’s surpassing Samsung in global smartphone sales signifies a crucial moment in the industry rivalry. It highlights the enduring popularity of the iPhone series and Apple’s ability to connect with a diverse global audience – though it’s reasonable to ask why this is the first time in over a decade it’s beaten Samsung to the punch. Consumers can expect more innovations and intense competition between these tech giants as the smartphone landscape evolves.

Global smartphone sales

Apple vs Samsung – the battle continues. Source: IDC Worldwide Quarterly Mobile Phone Tracker, January 15, 2024.

Overall, IDC said the global smartphone market remains challenged, but momentum is moving quickly toward recovery. According to initial findings, 2023 witnessed a 3.2% decline in global smartphone shipments, reaching 1.17 billion units. It is also the lowest full-year volume in a decade, primarily driven by macroeconomic challenges and elevated inventory early in the year.

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Memory chip market drags Samsung to its lowest profit in 14 years

The latter half of the year though brought a surge, solidifying expectations for a robust recovery in 2024. IDC noted that the fourth quarter saw 8.5% year-over-year growth and 326.1 million shipments, higher than the forecast of 7.3% growth. “While we saw some strong growth from low-end Android players like Transsion and Xiaomi in the second half of 2023, stemming from rapid growth in emerging markets, the biggest winner is clearly Apple,” said Nabila Popal, research director with IDC’s Worldwide Tracker team. 

“Not only is Apple the only player in the Top 3 to show positive growth annually, but it also bags the number 1 spot annually for the first time. All this despite facing increased regulatory challenges and renewed competition from Huawei in China, its largest market. Apple’s ongoing success and resilience is largely due to the increasing trend of premium devices, which now represent over 20% of the market, fueled by aggressive trade-in offers and interest-free financing plans.”

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