Automotive chip market, previously enjoying robust growth among the semiconductor sector, is now showing signs of slowing down.

According to a report from WeChat account DRAMeXchange, the major foundry UMC announced that it expects customer inventories in the communications, consumer electronics, and computer sectors to return to seasonal levels as usual in the second half of this year, and to reach healthy levels by the end of the year.

However, demand in the automotive end market remains weak, which may extend the period of inventory adjustment, with healthy levels anticipated only by the first quarter of next year.

Another foundry giant, TSMC, warned in its latest financial statement that the automotive market might decline this year in spite of a quarter-on-quarter increase of 5% in the revenue of its automotive electronics end market in 2Q24.

Meanwhile, the sluggish growth trend in the automotive chip market is also exemplified by the business performance of three leading automotive chip companies—Texas Instruments, STMicroelectronics, and NXP as they all saw declines in revenues.

Texas Instruments’ revenue for 2Q24 was USD 3.82 billion, down 16% YoY and the sales of its industrial and automotive business continue to decrease.

STMicroelectronics delivered revenue of USD 3.23 billion, down 25.3% YoY, with automotive business revenue falling short of expectation, offsetting growth in personal electronics sales.

NXP’s achieved revenue of USD 3.13 billion, down 5.2% YoY and its automotive business generated revenue of USD 1.728 billion, down 7.4% YoY, indicating the decline widened compared to the first quarter.

Despite the strong growth in the automotive chip market in 2023, the industry believes that as the overall automotive end market fails to advance as expected and there is an overcapacity in some automotive chip markets, automotive chip market growth will slow down in 2024, with the growth rate dropping to single digits in the coming years.

It’s learned that automotive semiconductor can be broadly categorized into microcontroller (MCU), computing chip (CPU, GPU, NPU, etc.), sensing chip (radar, image sensor, photoelectric sensor, etc.), memory chip (DRAM, NAND Flash, etc.), communication chip (CAN bus chip, connectivity chip, etc.), and power chip (IGBT, silicon carbide, etc.), among others.

In the view of the industry, current MCU and other chips are facing significant inventory pressure due to the declining automotive end market demand. However, power chip and autonomous driving chip continue to see strong demand driven by the wave of automotive electrification and intelligence.

Therefore, while the automotive semiconductor market may slow down in the short term, the automotive chip market still possesses growth potential in the long run with the continuous adoption of silicon carbide and autonomous driving chips in the increasingly popular EV and smart vehicle markets.

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(Photo credit: Pixabay)

In addition to the strong memory momentum which contributes to Samsung’s soaring profits in the second quarter, the tech giant’s progress on the foundry and chip business also attracts attention. According to its press release on July 31st, Samsung expects its foundry revenue growth to outpace the market in 2024 on the back of the full-scale mass production of second-generation 3nm GAA technology.

Earlier in May, Samsung announced the tape-out of its first 3nm mobile SoC, which used the Synopsys.ai EDA suite to verify the design. It signifies a major milestone as it is the first smartphone AP taped out with its 3nm GAA process. Before that, Samsung’s SF3E node has only been utilized for cryptocurrency mining chips.

The Korean semiconductor heavyweight now notes that the initial response to the new SoC for wearables, which features the industry’s first 3nm technology, has been favorable, and adoption of 3nm SoCs by key customers is expected to expand in the second half of the year. It also plans to ensure a stable supply of the Exynos 2500 for flagship models.

It is worth noting that another focus for Samsung in 2H24 will be the expansion for the application of 200-megapixel sensors from main wide camera to tele cameras. Samsung states it plans to expand sales of DDI products with the start of mass production of new models for a customer based in the US. According to an earlier report by The Verge, Apple may begin using Samsung camera sensors as early as 2026, ending Sony’s decade-long role as the exclusive supplier of the phone’s camera sensors.

Samsung also draws an ambitious roadmap, saying that it will expand its order intake for AI and HPC applications, targeting a fourfold increase in the customer base and a ninefold increase in sales by 2028 from the levels in 2023.

Samsung announced its financial results for the second quarter today, posting KRW 74.07 trillion in consolidated revenue and operating profit of KRW 10.44 trillion (approximately USD 7.5 billion). Its DS Division posted KRW 28.56 trillion in consolidated revenue and KRW 6.45 trillion in operating profit for the second quarter, posting a 94% and 1081% YoY growth, respectively.

Its Foundry Business saw improved earnings as a result of increased demand across applications. Due to higher orders for sub-5nm technology, the number of AI and HPC customers increased twofold from a year earlier. The Foundry Business also distributed the process development kit (PDK) for 2nm Gate-All-Around (GAA) technology to customers ahead of mass production in 2025.

On July 9^th, Samsung confirmed that it has received the first client for its 2nm process, and will provide turnkey semiconductor solutions using the 2nm process and the advanced 2.5D packaging technology Interposer-Cube S (I-Cube S) to Japanese AI company Preferred Networks.

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(Photo credit: Samsung)

Recently, it was reported that Huawei filed a patent infringement lawsuit against MediaTek in a Chinese local court. According to a report from TechNews, in response, MediaTek and its subsidiaries, HFI Innovation and MTK Wireless, have initiated countermeasures by filing a lawsuit against Huawei in a UK court, accusing Huawei of patent infringement.

MediaTek has stated that the case against Huawei is now in the judicial process and has declined to comment further. On the other hand, Huawei has not publicly responded to the matter.

A report from Chinese media outlet YiCai further cited sources, revealing that the dispute between MediaTek and Huawei over patent fees has been continuing for two to three years, yet the two parties are still unable to reach an agreement due to pricing issues.

On July 18, a report from Nikkei indicated that Huawei had filed a patent infringement lawsuit against MediaTek in a Chinese local court, drawing industry attention. On July 19, MediaTek issued an announcement stating that the lawsuit has no significant impact on the company, that it has entered the judicial process, and that the company will not comment further.

Industry sources cited by TechNews further suggest that Huawei’s lawsuit against MediaTek for patent infringement likely involves 5G (and possibly 4G, 3G, etc.) cellular network mobile communication technology. Reportedly, the reason for the lawsuit is that Huawei proposed a corresponding fee to MediaTek based on terminal patent licensing prices, but MediaTek considered the price too high, leading to the impasse.

Notably, both Huawei and MediaTek hold a large number of related patents. As of the end of 2022, Huawei possessed over 120,000 validly authorized patents worldwide. According to another report from YiCai, it owns 20% of the world’s 5G and Wi-Fi 6 patents, 10% of 4G patents, and 15% of NB-IoT and LTE-M patents.

As for MediaTek, it held over 13,000 patents globally by the end of 2022, with 1,200 patents granted in that year alone. These figures only include granted patents, excluding pending applications. Additionally, MediaTek ranks first among Taiwanese companies in the number of global patents for 5G, Wi-Fi, and HEVC/VVC technologies.

Industry sources cited by the Commercial Times also note that in recent years, China’s technological capabilities have significantly improved, and companies have been actively applying for patents domestically and internationally. With the support of the Chinese government, they have also started to frequently engage in patent litigation. Last year, Chinese courts received 5,062 technical intellectual property and monopoly cases.

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(Photo credit: MediaTek)

With the U.S.-China tech war heating up as the U.S. election approaches, industry sources cited by the Economic Daily News report that Chinese IC design companies are rushing to place more orders with TSMC for chip production using advanced processes before the U.S. potentially imposes stricter control policies. At the same time, they are initiating a backup plan by shifting orders to Samsung for chips manufactured with advanced nodes to avoid potential future U.S. bans on Chinese companies using Taiwanese foundries.

As a result, Samsung is becoming a beneficiary of the escalating U.S.-China tech conflict, sparking a new round of competition for orders with TSMC. As of the deadline for this report, TSMC has not responded to these rumors.

Per TSMC’s second-quarter financial report, the revenue proportion from China increased significantly from 9% in the first quarter to 16% in the second quarter. This surpasses other Asia-Pacific regions, making China the second-largest source of revenue after North America, which accounts for 65%.

The same report cites sources indicating that the increase in TSMC’s revenue share from China last quarter is likely due to Chinese IC design companies sensing potential future U.S. pressure that could prevent them from placing orders with TSMC.

As a result, these companies have been placing larger orders in advance to stockpile chips, similar to the situation previously seen when Huawei’s HiSilicon placed massive orders with TSMC to stockpile chips just before being blacklisted by the U.S.

It is understood that although the related Chinese IC companies may not using the most advanced processes, they are employing relatively advanced processes, which have been developed over several years, and applied in areas such as ADAS, mobile phones, and high-speed computing. Recently, these customers have continued to place orders with TSMC and have also begun evaluating backup plan, which involves switching orders to Samsung.

Sources cited by the report also pointed out that while Chinese IC design houses would like to diversify risks regarding the relatively advanced nodes by placing orders with companies other than TSMC, they may not be allowed to collaborate with Intel. This is why Samsung may emerge as an option.

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(Photo credit: TSMC)

According to sources cited in a report from Reuters, NVIDIA is said to be planning to design a new flagship AI chip tailored for the Chinese market, which will still comply with current U.S. export control regulations.

NVIDIA, the global AI chip giant, unveiled its Blackwell chip series in March this year, with mass production expected to start later this year. The B200 chip in this series boasts powerful performance, capable of completing chatbot response tasks at speeds up to 30 times faster than the previous generation.

The sources cited by Reuters further point out that NVIDIA will collaborate with China’s Inspur to launch and sell this chip, tentatively codenamed B20. Inspur is one of NVIDIA’s primary distribution partners in China.

Currently, NVIDIA’s spokesperson has declined to comment on this news, and Inspur has also not issued any statements.

The U.S. government, citing national security concerns, began strictly tightening controls on the export of advanced semiconductors to China in 2023. Since then, NVIDIA has released three chips specifically for the Chinese market.

Per a previous report from TechNews citing industry sources, it is also believed that the US will significantly escalate the trade war after the presidential election, intensifying export restrictions on China.

It is noteworthy that the US government previously announced the imposition or increase of tariffs on Chinese electric vehicles, semiconductors, lithium batteries, and other products, with the semiconductor tariff rate set to rise from 25% to 50% by 2025.  Meanwhile, for the future direction of the US, it can be inferred that chips manufactured in Taiwan and South Korea may also face tariffs.

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(Photo credit: NVIDIA)