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War Over Taiwan Is Doubtful, and Unaffordable by China or Anyone

China ‘War Games’ Threaten Fragile Electronics Ecosystem

By Bolaji Ojo

What’s at stake:

China’s claim over Taiwan is creating a negative effect the communist nation may not want. Signs are emerging that Taipei is warming to the idea of TSMC setting up more overseas fabs, possibly depriving China of future access to the foundry’s world-class semiconductor fabrication plants. Western fabless IC suppliers will have more sourcing options, but at a higher price. Is the tradeoff going to be worth it?

If China has its eyes on Taiwan’s jewel semiconductor fabs – in addition, of course, to reunifying the island and mainland – it is going about it in a way that may produce the opposite result.

In the last week, the Communist nation has ringed Taiwan with warships, battle aircrafts, naval assault ships, and military personnel, all in a bid to reinforce its opposition to any move towards independence by Taipei.

There are implications for the island’s technology industry, especially its world-leading semiconductor manufacturing ecosystem. China’s threats may have finally spurred the government in Taipei to greenlight a major move it had previously opposed: the establishment of more fabs by Taiwan’s top chipmaker in locations outside the island.

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Tech Leaders Struggle to Mount Opposition to Geopolitics

By Bolaji Ojo

What’s at stake:

Tech enterprises are chafing under severe export and manufacturing restriction terms set by Western and Chinese political leaders. In the semiconductor sector, regular operational functions involving capex, IP, R&D, and other activities are being dictated or influenced by state actors. The relentless use of technology restrictions to achieve political goals now threaten large swaths of the market although the totality of the impact remains hidden.

The barriers to Nvidia Corp. selling its most advanced AI chips and systems in China are artificially created. But they are no less formidable.

Soon, too, under rules that are under consideration, electric vehicles (EVs) made in China or with Chinese components will be banned, severely restricted or attract heavy tariffs in the United States and EU.

The actions of these governments are being executed sometimes with but often without the total consent of Western semiconductor suppliers, electronicsOEMs, systems builders, automotive makers, and tier-one suppliers.

So far, the response of the industry has been muted, even from companies like Nvidia, AMD and Intel that are experiencing downward sales pressures in China. Determining winners and losers in this environment will be difficult, at least until the dust settles, which may take several years.

Read More »Tech Leaders Struggle to Mount Opposition to Geopolitics

Memory Makers’ Fat Years are Here but for How Long?

By Bolaji Ojo

What’s at stake:

The memory semiconductor market is characterized by dizzying price swings, none more severe than the recent rounds. DRAM makers are soaring again after a severe dip, but this upswing is riding on the wings of artificial intelligence and high-bandwidth memory. It rests on nothing stronger. With the leading players rushing to build more fabs, within the next few years, the sector is certain to slide into another depression. The next one may be even more severe.

Sanjay Mehrotra must have skins tougher than the hides of a rhinoceros.

It’s hard to see how else Mehrotra, president and CEO of memory semiconductor vendor Micron Technology Inc., managed to cope with the market’s sharp downturn over the last couple of years. That swing, which resulted in negative margins, has suddenly reversed.

Micron is thriving again, enjoying a massive 62 percent increase in annual sales and the prospects of another round of double-digit revenue growth in the next two years.

The Boise, Idaho-based company is not alone. Demand for memory is hot, especially high-bandwidth memory (HBM), the much sought after components AI vendor Nvidia and its rivals crave so much for.

It would be tempting to believe the memory market has overcome its notorious challenges of overcapacity, undercapacity, pricing and margin swings and market opacity. It hasn’t. In fact, even as the market swings higher now, a wary eye must be kept on the veracity of current orders to avoid a repeat of recent errors.

Read More »Memory Makers’ Fat Years are Here but for How Long?
Proposed US Rule Threatens China-made Cars in America

Proposed US Rule Threatens China-made Cars in America

By Bolaji Ojo

What’s at stake:

China’s dream of seizing a large chunk of the US autonomous vehicle market may be heading straight for a brick wall as the Commerce Dept. moves advances its proposal for a ban on the sale and importation of Chinese vehicles equipped with connectivity devices, systems and components. American automakers may rue the move one day, but for now, the proposal favors them.

Shed some tears for China’s automotive manufacturers. Their aspiration for domination of the global automotive market may be about to implode, courtesy of the US Department of Commerce’s Bureau of Industry & Security (BIS).

While you are at it, though, spare a few moments to cry for Detroit’s big automakers, and perhaps even Tesla, too. Their production operations or intentions in China may need to be aborted and shifted to more favorable terrains.

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Intel’s Last Hope: Private Equity LBO?

Intel’s Last Hope: Private Equity LBO?

By Bolaji Ojo

What’s at stake:

The US government’s multi-billion dollar bet on Intel is at risk under the company’s current leadership, which continues to vacillate, doling out timid reorganization moves when what the business requires is radical surgery. A new player not tied to its past may be Intel’s last hope.

Intel Corp., the giant of America’s chip world, is at risk of becoming a plaything of richer enterprises.

Speculations are rife about rivals circling Intel, seeking to purchase it even as many analysts a deal for the microprocessor vendor will be difficult to seal due to regulatory hurdles at home and abroad. In the process, Intel – once the undisputed leader of the chip world in both sales and market capitalization – has become an object of pity and scorn. It’s a very sad turn of events for the company, its customers and supporters in the American government.  

The unconfirmed speculations about who is in talks to acquire the company continues to swirl. If the current trend persists, Intel is at risk of being poked, inspected and weighed for break-up value like a rusty, unserviceable truck at a vehicle auction. Still, the speculations may be masking a route to eventual recovery for Intel in the form of a buyout by private equity investors using the famed leverage buyout (LBO) tool of the past to gain control of the company and accelerate its reorganization.

Read More »Intel’s Last Hope: Private Equity LBO?