• EC approves €5bn state aid for German chip plant
• AMD buys AI specialist for up to $4.9bn 
• UK FTTP player Cityfibre is Sky high

In today’s industry news roundup: The EC has approved €5bn in German state aid for a new chip fab joint venture that includes Taiwan’s TSMC as one its stakeholders; chip giant AMD splashes up to $4.9bn on datacentre AI infrastructure specialist ZT Systems; UK wholesale fibre broadband player Cityfibre scores significant deal with Sky; and more!

In an effort to help Europe become less reliant on semiconductor imports from Asia and the US, the European Commission has approved €5bn in state aid from the German government to support the construction and operation of a chip manufacturing plant in Dresden that will focus on the needs of the automotive and industrial sectors. The facility is being built by ESMC (European Semiconductor Manufacturing Company), a joint venture between Taiwan Semiconductor Manufacturing Company (TSMC), the largest chip manufacturer in the world, Bosch, Infineon and NXP. “The measure will strengthen Europe's security of supply, resilience and digital sovereignty in semiconductor technologies, in line with the objectives set out in the European Chips Act Communication”, and “will also contribute to achieving the digital and green transitions,” noted the EC. The facility is due to be running at full capacity by 2029 and expected to produce 480,000 silicon wafers “with node sizes covering 28/22nm and 16/12nm” per year. It will be an “open foundry, meaning that any customer – including but not limited to the three other shareholders besides TSMC – can place orders for the production of specific chips,” noted the EC. “This operating model is important for the wider EU ecosystem, especially in view of ESMC's commitments to provide dedicated support to European small and medium enterprises (SMEs) and startups, to strengthen their knowhow and competences. The facility will also provide special access to its production capacities for SMEs and European universities, further supporting research and knowledge creation within Europe,” added the commission. Intel is also building new chip fabs in the country, having agreed last year a new, revised €30bn deal to build two chip plants in Germany. 

In a speech at the groundbreaking ceremony for the plant, EC president Ursula von der Leyen noted that the ESMC plans are “an endorsement for Europe as a global innovation powerhouse. The world's largest chipmaker is coming to our continent and joining forces with three European champions. And the benefits will be felt well beyond Dresden and Saxony – European workers will gain 11,000 new jobs, both here and across our continent. European chip companies will gain access to new technologies and production capacities. European industries will benefit from more reliable local supply chains, and new products that are tailored to their needs. And at a time of growing geopolitical tensions, TSMC will also benefit from geographic diversification to Europe, better access to our European strengths, like automotive… and to our unique Single Market. So this is a true win-win situation for all of us,” stated von der Leyen. She continued:  “It is upon Europe's industrial strength that we have built our European Chips Act. It has been three years now since we set the goal to double Europe's share of global chip production to 20%. And since then, we have seen new state-of-the-art chip factories break ground across Europe. If you take Crolles near Grenoble, or Catania in Sicily and now another here in Dresden. This new fab qualifies under the European Chips Act as a so-called first-of-a-kind facility. In other words, it will manufacture products that are not present or planned in any other facility across Europe. This means that this facility is also entitled to national financial support” – hence the authorisation by the EC of the state aid. “Since we launched the European Chips Act, it has already attracted commitments of public and private investments in the order of €115bn. This is a true investment revolution for Europe's chip sector. And this is just the beginning. Boosting our industrial competitiveness is a central pillar of the new five-year programme of the European Commission that I put forward in July,” added the president. “First, I will propose a new European Competitiveness Fund as part of our new budget. It will invest in strategic technologies, and it will contribute to our Important Projects of Common European Interest, the so-called IPCEI, including in the field of chips and advanced packaging. The next European Commission must be and will be an investment Commission. Second, in the first 100 days of the new mandate, I will propose a new Clean Industrial Deal. One of its central goals will be to ensure access to cheap clean energy… and raw materials. And third, we will establish a Union of Skills. We want European workers to have the training they need for the quality jobs that you are creating for example here. So we must remove all the obstacles that are still slowing us down. And we must invest more in what makes Europe so attractive for companies like yours for example. We all know that the global race for the technologies of tomorrow is on. And I want Europe to really switch gear,” concluded von der Leyen. 

Of course it isn’t just Europe that’s supporting regional chip manufacturing efforts: Tens of billions of dollars are being poured into new fabs in the US, where TSMC is also spreading its wings, having scored as much as $11.6bn in funding from the US Department of Commerce to help beef up its semiconductor production in the country as part of the government’s Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act. Now, Texas Instruments (TI) and the Department of Commerce have signed a non-binding Preliminary Memorandum of Terms for up to $1.6bn in proposed direct funding under the CHIPS Act to support three 300mm wafer fabs already under construction in Texas and Utah. “In addition, TI expects to receive an estimated $6bn to $8bn from the US Department of Treasury's Investment Tax Credit for qualified US manufacturing investments. The proposed direct funding, coupled with the investment tax credit, would help TI provide a geopolitically dependable supply of essential analog and embedded processing semiconductors,” the chip vendor noted in this announcement. 

In its latest effort to catch up with AI infrastructure market leader Nvidia, US chip giant AMD has struck a deal worth up to $4.9bn to acquire Secaucus, New Jersey-based ZT Systems, which provides AI infrastructure to hyperscalers. “The strategic transaction marks the next major step in AMD’s AI strategy to deliver leadership AI training and inferencing solutions based on innovating across silicon, software and systems,” stated AMD in this announcement. “ZT Systems’ extensive experience designing and optimising cloud computing solutions will also help cloud and enterprise customers significantly accelerate the deployment of AMD-powered AI infrastructure at scale,” the company added. AMD chair and CEO Dr Lisa Su noted: “ZT adds world-class systems design and rack-scale solutions expertise that will significantly strengthen our datacentre AI systems and customer enablement capabilities. This acquisition also builds on the investments we have made to accelerate our AI hardware and software roadmaps. Combining our high-performance Instinct AI accelerator, EPYC CPU, and networking product portfolios with ZT Systems’ industry-leading datacentre systems expertise will enable AMD to deliver end-to-end datacentre AI infrastructure at scale with our ecosystem of OEM and ODM partners.”

Alternative UK wholesale fibre access broadband network operator CityFibre has struck a significant deal with Sky, one of Britain’s largest broadband service providers. With about 5.8 million consumer broadband customers, Sky is neck and neck with Virgin Media O2 (VMO2) to be the country’s second biggest retail ISP (behind clear market leader BT Consumer, which has more than 10 million broadband customers). CityFibre, which continues to nip at the heels of BT’s market-leading wholesale fixed access network unit Openreach, says Sky’s retail broadband services will be available over its infrastructure to more than 1.3 million million UK homes in hard-to-reach areas, where CityFibre is building out its network using funds from the UK government’s Project Gigabit programme. Amber Pine, managing director of connectivity at Sky, said: “Sky’s new partnership with CityFibre will mean we can provide fast, reliable and great value broadband to more homes across the UK. This will mean we are able to reach even more people with full fibre, which is essential for the modern home.” Greg Mesch, CEO at CityFibre, which is upgrading its entire network to 10Gbit/s-capable XGS-PON technology, added: “This partnership with Sky is a huge vote of confidence in our business and has cemented CityFibre’s position as the UK’s third digital infrastructure platform. With demand for digital connectivity continuing to grow, CityFibre’s network can provide the quality and reliability that people need and the infrastructure competition the UK deserves.” The deal is a body blow to BT’s Openreach, which counts Sky as one of its main existing wholesale customers. Following the announcement of the CityFibre/Sky deal, BT’s share price dropped by 7.5% to 134.65 pence on the London Stock Exchange.

– The staff, TelecomTV