What’s up with… Telefónica, TSMC, AI in South Korea

• CriteriaCaixa increases its stake in Telefónica;
• TSMC cashes in on US chipmaking ambitions;
• South Korea to invest heavily in AI R&D and semiconductors

In today’s industry news roundup: CriteriaCaixa increases its stake in Telefónica to 5% amid shareholding shake-up; TSMC to receive nearly $12bn to accelerate chip production efforts in the US; South Korean officials reportedly plan to invest billions in AI, including to support AI semiconductor companies; and more!

CriteriaCaixa, an investment holding company that is a significant shareholder in CaixaBank, has increased its stake in Telefónica. The investment company announced that its ownership has risen from a 2.69% direct stake to a 5% shareholding in the telco. The increased ownership comes after CaixaBank reduced its shareholding in Telefónica from 3.51% to 2.51% last month. CriteriaCaixa described its stake in the telco group as “strategic and long term”, adding that “its main goal is to provide the highest shareholder stability to the telecommunications operator, an essential company both for the country and for the industry at an international level.” It is worth noting that towards the end of last month, the Spanish authorities, through state investor Sociedad Estatal de Participaciones Industriales (SEPI), made inroads into Telefónica’s share capital with the €698m purchase of a 3% stake in the operator. This is largely seen as an attempt by the Spanish government to become the largest stakeholder in the national operator after Saudi telco group STC acquired a 9.9% stake in Telefónica in September 2023 to become the Spanish telco’s top shareholder.

Telefónica is feeling bullish about the role it plays in boosting the economic and social welfare in the markets in which it operates. It has calculated that its group-wide activity generated some €49.15bn in gross domestic product (GDP) in the countries in which it had a presence during 2023. In a statement, it explained that for every euro generated, an additional €1.6 was gained through expenditure and investment, and that it had indirectly created or induced a total of 1.3 million jobs. The telco group’s overall tax contribution has amounted to €7.58bn over the past year, while procurement volume surpassed €23bn, with more than 83% of this going to local suppliers. Furthermore, the operator claimed to be the global leader in fibre-to-the-home (FTTH) deployments, having reached 173 million premises in 2023. In terms of mobile coverage, it noted it now offers 92% of 4G/LTE services worldwide and that it has launched 5G in its main markets. “In this new era, Telefónica is uniquely positioned to bring together the best that technology and people have to offer,” said José María Álvarez-Pallete, chairman and CEO of Telefónica. The company’s update comes as the government in its domestic market of Spain is striving to be the telco’s largest shareholder, in order to preserve the strategic capabilities of essential importance for the country’s national interests – see What’s up with… Telefónica, Vodafone, the chip supply chain.

Taiwanese chipmaker TSMC has scored as much as US$11.6bn in funding from the US Department of Commerce to help beef up semiconductor production in the US, as part of the government’s Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act. In a statement, the chipmaker noted that a preliminary memorandum of terms would see it receive $6.6bn in direct funding, plus another $5bn in loans to bolster its production of computer chips. The company is in the process of completing its first factory and has started construction of its second fab, both of which are at its Arizona subsidiary. Alongside the new financial injection, TSMC announced plans to build a third facility in the same state, to address “strong customer demand leveraging the most advanced semiconductor process technology in the United States”, adding that its third fab will represent the largest foreign direct investment in Arizona’s history, with TSMC’s total capital expenditure (capex) for the site exceeding $65bn.

Still with the semiconductor industry… The president of South Korea, Yoon Suk Yeol, has reportedly unveiled plans for the nation to invest 9.4tn Korean won (US$6.95bn) in AI by 2027, to help it maintain a leading position in new semiconductor chips. The country’s officials also plan to splash out a further 1.4tn won ($1bn) to support AI semiconductor companies, according to Reuters. The report cited Yoon as saying that the current rivalry in the chip industry is an industrial war between nations. With the new funding, South Korea plans to enhance its R&D efforts in AI chips, such as artificial neural processing units (NPUs) and next-generation high-bandwidth memory chips. Reuters added that the South Korean president aims to make South Korea one of the top-three countries in terms of AI technology, with at least a 10% share of the global system semiconductor market by 2030.

Continuing on the AI thread… Microsoft has unveiled plans to open an AI hub in the UK capital of London. The facility will “drive pioneering work to advance state-of-the-art language models and their supporting infrastructure, and to create world-class tooling for foundation models, collaborating closely with our AI teams across Microsoft and with our partners, including OpenAI”. The London hub will be led by Jordan Hoffmann, an AI scientist and engineer who has previously held roles at AI companies Inflection and DeepMind. Microsoft noted that it plans to make “a significant, long-term investment in the region as we begin hiring the best AI scientists and engineers into this new AI hub”. The move builds upon the tech giant’s recent announcement for a £2.5bn investment in AI infrastructure and upskilling in the UK.

The traditional roaming market will face disruption in the next five years, according to Juniper Research forecasts. In its latest study examining the field, the research house estimates that the global number of travel embedded SIM (eSIM) users will surpass 215 million in 2028, up by a staggering 440% from the 40 million estimated in 2024. The rising cost of roaming internationally is pinpointed as the main driving force behind the adoption of travel eSIM packages, which offer an alternative to operators’ roaming services as they let travellers download a temporary local profile onto their device, thus avoiding roaming fees. Furthermore, the increasing penetration of eSIM-capable devices in many countries will also contribute to the expected user growth. On this note, according to the research, more than half of connected devices in the US will have eSIMs installed this year, creating a large addressable market for travel eSIMs. This will result in operators losing more than $11bn globally to travel eSIMs, unless telcos develop their own travel eSIM solutions to complement existing roaming packages. Read more.

Eutelsat Group (the combined operation of Eutelsat and OneWeb) has launched low-earth orbit (LEO) connectivity services in Antarctica for the British Antarctic Survey (BAS), the UK’s national polar research institute. According to Eutelsat’s statement, the current communications and internet connectivity speed in the continent is limited to between 1Mbit/s and 5Mbit/s, but with the company’s new satellite services, speeds are expected to reach up to 120Mbit/s. The satellite player noted that “consistent high-speed, low-latency connectivity has the potential to totally transform the activity” at the research stations and in the wider Antarctic region. “It will also provide vital connectivity to help improve the welfare of the scientists, outside of working hours, as they are often deployed for 18 months at a time in one of the remotest and geographically challenging areas of the world,” Eutelsat added. Find out more.

- The staff, TelecomTV