On May 9th, China’s leading semiconductor foundry, SMIC International, announced its financial report for the first quarter of this year. It revealed a revenue of USD 1.75 billion, a year-on-year increase of 19.7%, and a net profit of USD 71.8 million, marking a significant 68.9% decrease compared to the same period last year, falling below market expectations of USD 76.8 million.

According to its financial data, SMIC’s gross profit margin for the first quarter of this year was 13.7%, not only lower than the 16.4% in the fourth quarter of 2023 but also significantly lower than the 20.8% in the first quarter of 2023.

Per a report from Economic Daily News, SMIC’s management stated that global customer’s willingness for restocking had increased in the first quarter, with the company shipping 1.79 million 8-inch equivalent wafers, a 7% increase from the previous quarter. The capacity utilization rate reached 80.8%, up 4 percentage points from the previous quarter.

For the second quarter of this year, SMIC estimates that the early pull-in demand from some customers is still ongoing, with the company giving revenue guidance of a 5% to 7% increase from the previous quarter. With the expansion of production capacity, depreciation is increasing each quarter, the gross margin guidance is between 9% and 11%.

SMIC further indicated that, assuming no significant changes in the external environment for the full year, the company’s goal is for sales revenue growth to exceed the industry average.

In addition, China’s second-largest semiconductor foundry, Hua Hong, also released its first-quarter financial report, with revenue of CNY 3.297 billion, a year-on-year decrease of 24.62%, and a net profit of CNY 220 million, a year-on-year decrease of 78.76%.

Hua Hong estimates that its main business for the second quarter of 2024 will be between USD 470 million and 500 million, with a gross margin of approximately 6% to 10% for its main business.

Regarding the development of China’s foundry industry, TrendForce previously reported that from 2023 to 2027, propelled by policies and incentives promoting local production and IC development, China’s mature process capacity is anticipated to grow from 29% this year to 33% by 2027. Leading the charge are giants like SMIC, HuaHong Group, and Nexchip. Globally, the ratio of mature (>28nm) to advanced (<16nm) processes is projected to hover around 7:3.

Read more

• [News] Sales Decline Leads to Sharp Profit Drop for SMIC in 2023
• [News] SMIC’s Net Profit Halved Last Year, Faces Further Reductions This Year

(Photo credit: SMIC)

Intel has secured its supply of the new High-NA EUV (high-numerical aperture extreme ultraviolet) lithography equipment from ASML, which the semiconductor heavyweight will allegedly use on its 18A (1.8nm) and 14A (1.4nm) nodes, according to reports from TheElec and Wccftech.

According to sources cited by TheElec, the Dutch fab equipment maker is manufacturing five units of the kit this year, which will all go to Intel, while Samsung and SK Hynix are expected to wait until the second half of 2025 to obtain the aforementioned equipment.

For companies aiming to produce 2-nanometer chips, High-NA EUV lithography equipment may be critical, with each unit priced at over 5 trillion Korean won (approximately US$ 370 million), indicating Intel’s total investment on ASML’s first batch of High-NA EUV kits may amount to US$ 2 billion, according to TheElec and Wccftech.

Intel has confirmed in mid-April that it has received and assembled the industry’s first High-NA EUV lithography system, which is expected to be able to print features up to 1.7x smaller than existing EUV tools. This will enable 2D feature scaling, resulting in up to 2.9x more density.

Compared to 0.33NA EUV, High NA EUV (or 0.55NA EUV) can deliver higher imaging contrast for similar features, which enables less light per exposure, thereby reducing the time required to print each layer and increasing wafer output.

Intel expects to use both 0.33NA EUV and 0.55NA EUV alongside other lithography processes in developing and manufacturing advanced chips, starting with product proof points on Intel 18A in 2025 and continuing into production of Intel 14A.

According to TSMC’s press release in late April, A16, TSMC’s next technology on its roadmap which will combine its Super Power Rail architecture with nanosheet transistors, is scheduled for production in 2026. However, citing Kevin Zhang, TSMC’s senior vice president of business development, Reuters reported that TSMC does not believe it needs to use ASML’s new High-NA EUV lithography tool machines to build the A16 chips.

(Photo credit: ASML)

According to a report from Bloomberg, Intel, the chip giant, expects its revenue for the current quarter to be impacted after the US government revoked chip sales licenses to Huawei. Intel estimates that its revenue for the second quarter of this year will be below USD 13 billion, though still within the previously projected range of USD 12.5 billion to 13.5 billion. The company’s full-year financial forecast remains unchanged, with both revenue and profits expected to grow.

The U.S. government has reportedly revoked the licenses of Intel and Qualcomm to supply semiconductor chips used in laptops and handsets to Huawei. According to Reuters citing sources, some companies received notices on May 7th, and the revocation of the licenses took immediate effect.

Huawei unveiled its first AI notebook last month, which is powered by Intel chips. This has sparked dissatisfaction among some US lawmakers, who have called for the revocation of related export licenses.

In 2019, the US government added Huawei to the “Entity List,” prohibiting suppliers from providing goods to Huawei without an export license. However, US suppliers such as Intel and Qualcomm were granted permission to continue supplying certain chips to Huawei, including central processors for laptops and 4G smartphone chips.

Amid the escalating US-China tech war, these export licenses have allowed some companies to maintain stable revenue from the Chinese market.

Huawei has become the epicenter of the US-China trade conflict, with the US restricting Huawei’s access to Qualcomm’s latest 5G chips and implementing comprehensive controls on NVIDIA’s AI chips, limiting Huawei’s business growth. On the other hand, China has initiated countermeasures, demanding the telecom industry to cease using foreign chips by 2027.

The US Republican Representative Elise Stefanik believes that revoking the licenses will strengthen U.S. national security, protect U.S. intellectual property rights, and thus weaken the technological advancement capabilities of communist China.

Akash Palkhiwala, Qualcomm’s CFO, stated in early May that as the Chinese telecom industry shifts towards 5G development and stops procuring Qualcomm’s approved 4G chips, the company anticipates earning no revenue from Huawei by 2025.

Read more

• [News] U.S. Imposes Further Sanctions, Revoking Intel and Qualcomm’s License to Supply Chips to Huawei
• [News] U.S. Department of Commerce Claims Huawei Chips Not as Advanced, Lag Behind U.S. Chips by Several Years

(Photo credit: iStock)

Samsung Electronics is ramping up its entry into the semiconductor glass substrate market by advancing its equipment procurement and installation to September, with trial production slated to begin in the fourth quarter, one quarter earlier than originally planned. According to a report from South Korean media outlet ETNews, Samsung Electronics aims to commence mass production of glass substrates for high-end System-in-Package (SiP) applications starting in 2026.

In order to manufacture highly complex multi-chiplet SiPs, Samsung has decided to expedite the trial production schedule at its Sejong plant in South Korea to gain more expertise in glass substrate manufacturing. Samsung’s competitor, Intel, also plans to offer packaging technology on glass substrates in the future.

Reportedly, Samsung Electronics plans to have all necessary equipment installed on the trial production line by September and commence operations in the fourth quarter. Partners for the trial production line include companies such as Philoptics, Chemtronics, Joongwoo M-Tech, and Germany’s LPKF, which will provide equipment components.

According to a report from Tom’s Hardware, Compared to traditional organic substrates, glass substrates offer significant advantages, including excellent flatness, which enhances exposure and focusing capabilities, as well as outstanding dimensional stability suitable for next-generation chip interconnects with multiple small chips. Additionally, glass substrates exhibit better thermal and mechanical stability, making them suitable for high-temperature durable applications in data centers.

Intel has been developing glass substrates for nearly a decade and plans to introduce commercial products by 2030. Intel believes that the characteristics of glass substrates will significantly increase interconnect density, which is crucial for efficient power transmission and signal routing in advanced SiP technology.

Previously, Intel also elaborated on its progress on the glass-based substrate packaging technology. According to Intel’s previous press release, glass substrates can tolerate higher temperatures, offer 50% less pattern distortion, and have ultra-low flatness for improved depth of focus for lithography as well as the dimensional stability needed for extremely tight layer-to-layer interconnect overlay.

As a result of these distinctive properties, a 10x increase in interconnect density is possible on glass substrates. Furthermore, improved mechanical properties of glass enable ultra-large form-factor packages with very high assembly yields.

Meanwhile, Absolics, a subsidiary of SKC America, aims to start production of glass substrates for customers as early as the second half of 2024.

Read more

• [News] Samsung Bullish on Glass Substrate Applications, Setting Up Production Line for Mass Production Starting in 2026
• [News] Glass Substrates in Advanced Packaging With Intel Leads, TSMC Quietly Innovates

(Photo credit: Intel)

SK Hynix has reportedly decided to sell the subsidiary equipment of its Chinese manufacturing plant to an investment company owned by the Wuxi Municipal Government, leading to speculation that SK Hynix may be withdrawing from its Chinese manufacturing business.

According to reports from The Korea Economy Daily and Reuters, industry sources have revealed that SK Hynix’s subsidiary, SK Hynix System IC, which operates 8-inch wafer manufacturing, recently held a board meeting and decided to sell a 21.3% stake in SK Hynix System IC (Wuxi) for KRW 205.4 billion (roughly USD 150.8 million) to Wuxi Industry Development Group.

Additionally, as per the Reuter’s report, SK Hynix System IC said it will also sell its intangible assets, including process technology to its Wuxi unit for KRW 123.8 billion.

The sources cited by The Korea Economy Daily‘s report have revealed that Wuxi Industry Development Group has additionally issued new shares to acquire a 28.6% stake, indicating that SK hynix is highly likely to sell nearly 50% of its shares.

Just in March, per a report from Chosun Daily, SK Hynix planned the closure of its Shanghai-based company established in 2006, shifting its focus to Wuxi, where its semiconductor manufacturing plant is located, making it the new business hub in China. However, this recent withdrawal suggests that SK hynix may be considering a complete exit from the Chinese semiconductor foundry market.

SK Hynix’s decision to downsize its Chinese foundry business comes amid a worsening semiconductor market, compounded by aggressive capacity expansions by domestic companies, making it difficult to maintain competitiveness. Additionally, China is actively expanding its 8-inch wafer plants to counter US export restrictions and is heavily investing in nurturing leading domestic foundry enterprises such as SMIC and Hua Hong Semiconductor.

As per data from the National Bureau of Statistics of China, semiconductor capacity in China surged by 40% in the first quarter, with SMIC’s overall capacity increasing by over 12%, despite a slowdown in foundry demand.

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• [News] Three-way Contest for HBM Dominance, Uncertainties Surrounding China’s Supply Chain Involvement
• [News] Increasing HBM Capacity to Sustain Market Share, SK Hynix Rumored to Upgrade Wuxi Plant

(Photo credit: SK Hynix)