According to the news from ChinaTimes, Qualcomm announced on the 11th that it has reached a three-year agreement with Apple to supply 5G communication chips for Apple’s smartphones from 2024 to 2026. This also implies that Apple’s efforts to develop its own 5G modem chips may fall through, and the contract manufacturer TSMC stands to benefit the most.

Qualcomm did not disclose the value of this deal but mentioned that the terms of the agreement are similar to previous ones. Previous supply agreements have been highly profitable for Qualcomm but costly for Apple. According to UBS estimates from last month, Qualcomm’s sales of modem chips to Apple in the previous fiscal year amounted to $7.26 billion, accounting for approximately 16% of the company’s revenue.

This also highlights that Apple’s progress in developing modem chips may not be as expected, leading to a delay in their use in their flagship smartphones. Currently, Apple’s iPhones use 5G modem chips from Qualcomm.

Only a few companies worldwide have the capability to produce communication chips, including Qualcomm, MediaTek, and Samsung. In 2019, Apple acquired Intel’s smartphone modem business for $1 billion, along with 2,200 employees and a series of patents. Intel faced difficulties in developing 5G modem chips, resulting in annual losses of around $1 billion.

The market expects Apple to gradually reduce its reliance on third-party chip suppliers. Qualcomm originally estimated that by 2023, their 5G chips would make up only 20% of iPhones. However, Qualcomm’s CFO stated in November of the previous year that “most” of Apple’s phones in 2023 would contain their chips.

(Source: https://www.chinatimes.com/newspapers/20230912000097-260202?chdtv)

On August 29, 2023, Huawei quietly launched its new smartphone, the Huawei Mate 60 Pro, on its official website without the usual fanfare associated with new product releases. Unlike previous events or those held by other brands, Huawei chose to communicate with consumers solely through a letter. What intrigued the market most was the specification of the new device’s System-on-Chip (SoC). Initially, Huawei did not provide any official information about it. However, the release of this new smartphone demonstrates China’s determination to achieve semiconductor self-sufficiency.

Key Insights from TrendForce:

• Overcoming U.S. Sanctions, Huawei Makes a Comeback

In the past, Huawei secured its position as the second-largest player in the global smartphone market by leveraging the differentiating advantage of its in-house developed Kirin SoC chips. However, since May 2019, Huawei has been affected by U.S. sanctions. In September 2020, TSMC, which previously manufactured chips for Huawei, announced the cessation of production. With no supply from TSMC, Huawei’s inventory of 5G chips was depleted by the third quarter of 2022.

Unable to acquire high-end chips, Huawei’s market share in the smartphone industry saw a significant decline. The company could only source 4G chips not subject to U.S. sanctions from Qualcomm or UNISOC. It was believed that U.S. sanctions would severely impact Huawei’s smartphone supply chain and push the company into a dire situation. However, upon analyzing Huawei’s latest release, it is evident that the new smartphone not only features an in-house developed SoC chip by Huawei’s semiconductor subsidiary HiSilicon but also incorporates components and designs from various Chinese manufacturers.

• China’s Semiconductor Self-Sufficiency Continues to Strengthen, Minimal Impact on Taiwanese Supply Chain Expected

China’s pursuit of semiconductor self-sufficiency has become an inevitable outcome of industry development. Although Huawei has not provided detailed specifications for the SoC chip in the Mate 60 Pro, it is speculated that this chip likely uses SMIC’s N+2 process. Due to sanctions, SMIC has been unable to obtain essential EUV equipment. Furthermore, based on the chip’s performance benchmarking, it is comparable to Qualcomm’s flagship Snapdragon 888 chip released in 2021. This suggests that the SoC’s process technology likely falls in the range of 7-14nm, which still lags behind current advanced processes. Nevertheless, this achievement underscores China’s commitment to semiconductor self-sufficiency.

As China gains the ability to independently develop and produce chips, the question arises of whether other Chinese smartphone brands, apart from Huawei, will begin their own chip development efforts. Will this development impact Taiwanese IC design house and foundries that previously held related orders? MediaTek, for instance, primarily supplies chips to brands such as OPPO and vivo. Given that Huawei competes strongly with OPPO and vivo in the smartphone market, it is unlikely that these two brands will entrust their smartphone core SoCs to Huawei’s HiSilicon. Additionally, developing proprietary chips comes with significant costs. Therefore, under these circumstances, it is expected that OPPO and vivo will maintain their partnerships with MediaTek. MediaTek’s chip designs can also utilize TSMC’s advanced processes, giving OPPO and vivo a key competitive advantage against Huawei. Consequently, it is inferred that as long as there is a significant gap between the processes and yields of SMIC and TSMC, Taiwanese foundries will not be significantly affected.

(Photo credit: Huawei)

As applications like AIGC, 8K, AR/MR, and others continue to develop, 3D IC stacking and heterogeneous integration of chiplet have become the primary solutions to meet future high-performance computing demands and extend Moore’s Law.

Major companies like TSMC and Intel have been expanding their investments in heterogeneous integration manufacturing and related research and development in recent years. Additionally, leading EDA company Cadence has taken the industry lead by introducing the “Integrity 3D-IC” platform, an integrated solution for design planning, realization, and system analysis simulation tools, marking a significant step towards 3D chip stacking.

Differences between 2.5D and 3D Packaging

The main difference between 2.5D and 3D packaging technologies lies in the stacking method. 2.5D packaging involves stacking chips one by one on an interposer or connecting them through silicon bridges, primarily used for assembling logic processing chips and high-bandwidth memory. On the other hand, 3D packaging is a technology that vertically stacks chips, mainly targeting high-performance logic chips and SoC manufacturing.

CPU and HBM Stacking Demands

With the rapid development of applications like AIGC, AR/VR, and 8K, it is expected that a significant amount of computational demand will arise, particularly driving the need for parallel computing systems capable of processing big data in a short time. To overcome the bandwidth limitations of DDR SDRAM and further enhance parallel computing performance, the industry has been increasingly adopting High-Bandwidth Memory (HBM). This trend has led to a shift from the traditional “CPU + memory (such as DDR4)” architecture to the “Chip + HBM stacking” 2.5D architecture. With continuous growth in computational demand, the future may see the integration of CPU, GPU, or SoC through 3D stacking.

3D Stacking with HBM Prevails, but CPU Stacking Lags Behind

HBM was introduced in 2013 as a 3D stacked architecture for high-performance SDRAM. Over time, the stacking of multiple layers of HBM has become widespread in packaging, while the stacking of CPUs/GPUs has not seen significant progress.

The main reasons for this disparity can be attributed to three factors: 1. Thermal conduction, 2. Thermal stress, and 3. IC design. First, 3D stacking has historically performed poorly in terms of thermal conduction, which is why it is primarily used in memory stacking, as memory operations generate much less heat than logic operations. As a result, the thermal conduction issues faced by current memory stacking products can be largely disregarded.

Second, thermal stress issues arise from the mismatch in coefficients of thermal expansion (CTE) between materials and the introduction of stress from thinning the chips and introducing metal layers. The complex stress distribution in stacked structures has a significant negative impact on product reliability.

Finally, IC design challenges from a lack of EDA tools, as traditional CAD tools are inadequate for handling 3D design rules. Developers must create their own tools to address process requirements, and the complex design of 3D packaging further increases the design, manufacturing, and testing costs.

How EDA Companies Offer Solutions

Cadence, during the LIVE Taiwan 2023 user annual conference, highlighted its years of effort in developing solutions. They have introduced tools like the Clarity 3D solver, Celsius thermal solver, and Sigrity Signal and Power Integrity, which can address thermal conduction and thermal stress simulation issues. When combined with Cadence’s comprehensive EDA tools, these offerings contribute to the growth of the “Integrity 3D-IC” platform, aiding in the development of 3D IC design.

“3D IC” represents a critical design trend in semiconductor development. However, it presents greater challenges and complexity than other projects. In addition to the challenges in Logic IC design, there is a need for analog and multi-physics simulations. Therefore, cross-platform design tools are indispensable. The tools provided by EDA leader Cadence are expected to strengthen the 3D IC design tool platform, reducing the technological barriers for stacking CPU, GPU, or SoC to enhance chip computing performance.

This article is from TechNews, a collaborative media partner of TrendForce.

(Photo credit: TSMC)

In its FY2Q24 earnings report for 2023, NVIDIA disclosed that the U.S. government had imposed controls on its AI chips destined for the Middle East. However, on August 31, 2023, the U.S. Department of Commerce stated that they had “not prohibited the sale of chips to the Middle East” and declined to comment on whether new requirements had been imposed on specific U.S. companies. Both NVIDIA and AMD have not responded to this issue.

TrendForce’s analysis:

• Close ties between Middle Eastern countries and China raise U.S. concerns:

In NVIDIA’s FY2Q24 earnings report, it mentioned, “During the second quarter of fiscal year 2024, the USG informed us of an additional licensing requirement for a subset of A100 and H100 products destined to certain customers and other regions, including some countries in the Middle East.” It is speculated that the U.S. is trying to prevent high-speed AI chips from flowing into the Chinese market via the Middle East. This has led to controls on the export of AI chips to the Middle East.

Since August 2022, the U.S. has imposed controls on NVIDIA A100, H100, AMD MI100, MI200, and other AI-related GPUs, restricting the export of AI chips with bidirectional transfer rates exceeding 600GB/s to China. Saudi Arabia had already signed a strategic partnership with China in 2022 for cooperation in the digital economy sector, including AI, advanced computing, and quantum computing technologies. Additionally, the United Arab Emirates has expressed interest in AI cooperation with China. There have been recent reports of Saudi Arabia heavily acquiring NVIDIA’s AI chips, which has raised concerns in the U.S.

• Huawei is expected to release AI chips comparable to NVIDIA A100 in the second half of 2024; competition is yet to be observed:

Affected by U.S. sanctions, Chinese companies are vigorously developing AI chips. iFlytek is planning to launch a new general-purpose LLM (Large Language Model) in October 2023, and the AI chip Ascend 910B, co-developed with Huawei, is expected to hit the market in the second half of 2024, with performance claimed to rival that of NVIDIA A100. In fact, Huawei had already introduced the Ascend 910, which matched the performance of NVIDIA’s V100, in 2019. Considering Huawei’s Kirin 9000s, featured in the flagship smartphone Mate 60 Pro released in August 2023, it is highly likely that Huawei can produce products with performance comparable to A100.

However, it’s important to note that the A100 was already announced by NVIDIA in 2020. This means that even if Huawei successfully launches a new AI chip, it will already be four years behind NVIDIA. Given the expected 7nm process for Huawei’s Ascend 910B and NVIDIA’s plan to release the 3nm process-based Blackwell architecture GPU B100 in the second half of 2024, Huawei will also lag behind by two generations in chip fabrication technology. With the parameters of LLM doubling annually, the competitiveness of Huawei’s new AI chip remains to be observed.

• China remains NVIDIA’s dominion in the short term:

Despite the active development of AI chips by Chinese IC design house, NVIDIA’s AI chips remain the preferred choice for training LLM models among Chinese cloud companies. Looking at the revenue performance of the leading Chinese AI chip company, Cambricon, its revenue for the first half of 2023 was only CNY 114 million, a YoY decrease of 34%. While being added to the U.S. Entity List was a major reason for the revenue decline, NVIDIA’s dominance in the vast Chinese AI market is also a contributing factor. It is estimated that NVIDIA’s market share in the Chinese GPU market for AI training exceeded 95% in the first half of 2023. In fact, in the second quarter of 2023, the China market accounted for 20-25% of NVIDIA’s Data Center segment revenue.

The main reason for this is that the Chinese AI ecosystem is still quite fragmented and challenging to compete with NVIDIA’s CUDA ecosystem. Therefore, Chinese companies are actively engaged in software development. However, building a sufficiently attractive ecosystem to lure Chinese CSPs in the short term remains quite challenging. Consequently, it is expected that NVIDIA will continue to dominate the Chinese market for the next 2-3 years.

(Photo credit: NVIDIA)

According to a report from Taiwan’s TechNews, Huawei’s Mate 60 Pro smartphone, powered by its in-house Kirin 9000S processor, quietly appeared on the market recently, testing has shown that its network speed approaches that of 5G. This development has sparked enthusiastic discussions in the market about the manufacturing and development of this chip.

Prominent analyst Andrew Lu also expressed that if the semiconductor manufacturer, SMIC, which handles the production of the Kirin 9000S processor, makes significant breakthroughs in both 7nm process technology and capacity, it should not be underestimated. Additionally, with Huawei’s reintroduction of the Kirin 9000S processor through the Mate 60 Pro, they are expected to continue launching products that are likely to have an impact on the mobile phone and mobile chip market.

Andrew Lu outlined the following points on his personal Facebook fan page:

1. The Kirin 9000S processor is likely manufactured by SMIC using N+2 process technology, with N+1 being a pseudo-7nm process that is closer to 8-9nm. N+2 is a 7nm process (not the rumored 5nm), but it does not use EUV, so multiple exposures are needed. Due to insufficient capacity, shipping 40 million units would likely take several months. Assuming a die size of 169mm² and an 80% yield rate, SMIC would need to prepare 144k N+2 capacity, this indicates a monthly production capacity requirement of 24,000 units. The monthly production capacity appears significantly higher than what was previously anticipated. If these assumptions hold, it indicates that SMIC has made significant breakthroughs in 7nm process technology and capacity.
2. Apple’s iPhone doesn’t emphasize Antutu benchmark scores as much, and Android phones typically fine-tune their systems for benchmarking, making comparisons between iOS and Android phones less fair. However, compared to other Android flagship phones scoring around 1.5-1.6 million, the Mate 60’s 1.1 million still falls short, but it excels in satellite phone functionality.
3. Huawei/Huawei’s HiSilicon’s return is likely to continue with the release of new devices, aiming to reach annual sales of 100 million phones within 5 years, which should not be difficult. This means Huawei/Huawei’s HiSilicon will regain approximately 5-10% of the global market share, while other phone and chip manufacturers will lose 5-10% of their market share with flagship brands likely being more affected.
4. Despite the U.S. putting SMIC on the Entity List, how does SMIC still have so much advanced process capacity? Lu Xingzhi believes that being placed on the Entity List doesn’t entirely prohibit companies from purchasing all advanced U.S. equipment (EUV scanners are absolutely prohibited), but it requires approval from the U.S. Department of Commerce to purchase such equipment. Additionally, the rapid emergence of many semiconductor startups in China (some of which disappear shortly after) makes it challenging for U.S. equipment manufacturers and the U.S. Department of Commerce to determine if the purchased equipment is being resold to SMIC. Therefore, SMIC’s expansion of advanced process capacity is not surprising. According to Lu’s data, SMIC’s capital intensity, capital expenditure as a percentage of revenue, was 110% over the past year, significantly higher than TSMC’s 50% and Samsung LSI’s and GlobalFoundries’ 40% range, indicating that capacity expansion is likely to be considerably higher than peers in the industry.

(Photo credit: Huawei)