The US government, according to a report from Reuters, is asking allies to stop domestic companies from servicing certain chip-making tools for Chinese customers, a U.S. Commerce department official said on March 27th.

“We’re pushing for not servicing of those key components and these are the discussions we are having with our allies,” stated export controls chief Alan Estevez, as reported by Reuters during an annual conference. “We are working with our allies to determine what is important to service and what is not important to service,” hinting that the US is not proposing restrictions on non-core components that Chinese firms can repair themselves.

The recent trigger for heightened vigilance in the US was Huawei’s launch of a new 5G smartphone in August last year, equipped with domestically manufactured advanced 7-nanometer chips from China. According to a recent Bloomberg report, the chips supplied to Huawei by its partner SMIC are manufactured using equipment from US suppliers such as Applied Materials and Dutch company ASML.

Since then, the US has reportedly been increasing pressure on allies such as the Netherlands, Germany, South Korea, and Japan, urging them to further tighten restrictions on China’s access to advanced chip technology.

Additionally, the US has restricted equipment suppliers like Applied Materials from providing maintenance services for entities in China subject to sanctions. However, neither the Netherlands nor Japan has implemented similar maintenance bans on their domestic companies, prompting the US to encourage allied firms to follow suit.

Gina Raimondo, the US Secretary of Commerce, previously responded by stating that the US will take “as strong and effective action as possible” to uphold national security interests.

Companies that have been listed on the Entity List by the US Department of Commerce include Huawei, SMIC (Semiconductor Manufacturing International Corporation), and Shanghai Micro Electronics. Additionally, China’s other major memory manufacturer, Yangtze Memory Technology Corp, was added to this restriction list in 2022.

Read more

• [News] US Government Considers Adding ChangXin Memory Technologies to Entity List, Imposing Further Sanctions on Chinese Firms
• [News] US Considers Sanctioning Huawei-Linked Chinese Chip Network, Huawei-Related Enterprises Blacklisted

(Photo credit: iStock)

SMIC, the leading semiconductor foundry in China, announced its financial results on March 28th. The company’s revenue for 2023 was USD 6.32 billion, a decrease of 13.1% compared to the previous year. However, the net profit for the full year plummeted by a staggering 50.4%, dropping to USD 903 million.

According to SMIC’s financial report cited by Sina Finance, SMIC’s gross profit margin for 2023 was 19.3%, with an average annual utilization rate of 75%, essentially meeting the initial guidance for the year. As of the end of 2023, SMIC’s total assets amounted to USD 47.8 billion. The asset structure remained robust, with an equivalent monthly capacity of 806,000 wafers for 8-inch production lines

Last year, SMIC’s revenue share from the China region increased from 74.2% to 80.1%, while revenue from the US region decreased from 20.8% to 16.4%, and revenue from the Europe and Asia region fell to 3.5%.

In terms of application categories, revenue from smartphone chip manufacturing dropped from 27% to 26.7%, while revenue from computer and tablet segments increased from 17.5% to 26.7%, and revenue from IoT and wearable devices decreased from 18% to 12.1%.

SMIC produced 6.074 million wafers last year, a 19.1% decrease year-on-year, with inventory increasing by 40.1% to 724,000 wafers. 8-inch wafers accounted for 26.3% of revenue, while 12-inch wafers accounted for 73.7%.

SMIC also announced its guidance for 2024, aiming for sales revenue growth not lower than the industry average, with a single-digit increase expected mid-year.

Additionally, the company plans to continue advancing its announced 12-inch plant and capacity construction projects in 2024, with capital expenditure expected to remain roughly the same as the previous year.

SMIC pointed out that the decline in revenue in 2023 was primarily due to a decrease in wafer sales volume. Additionally, the decrease in gross profit was attributed to lower capacity utilization, reduced wafer sales, and changes in product mix. Moreover, the group is in a high investment phase, resulting in higher depreciation compared to 2022.

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] SMIC’s Net Profit Halved Last Year, Faces Further Reductions This Year
• [News] Over 350 China’s Semiconductor Industry Projects Thriving in 2023

(Photo credit: SMIC)

Recently, South Korean media Alphabiz reported that Samsung may exclusively supply 12-layer HBM3e to NVIDIA.

The report indicates NVIDIA is set to commence large-scale purchases of Samsung Electronics’ 12-layer HBM3e as early as September, who will exclusively provide the 12-layer HBM3e to NVIDIA.

NVIDIA CEO Jensen Huang, as per Alphabiz reported, left his signature “Jensen Approved” on a physical 12-layer HBM3e product from Samsung Electronics at GTC 2024, which seems to suggest NVIDIA’s recognition of Samsung’s HBM3e product.

HBM is characterized by its high bandwidth, high capacity, low latency, and low power consumption. With the surge in artificial intelligence (AI) industry, the acceleration of AI large-scale model applications has driven the continuous growth of demand in high-performance memory market.

According to TrendForce’s data, HBM market value accounted for approximately 8.4% of the overall DRAM industry in 2023, and this percentage is projected to expand to 20.1% by the end of 2024.

Senior Vice President Avril Wu notes that by the end of 2024, the DRAM industry is expected to allocate approximately 250K/m (14%) of total capacity to producing HBM TSV, with an estimated annual supply bit growth of around 260%.

HBM3e: Three Major Original Manufacturers Kick off Fierce Rivalry

Following the debut of the world’s first TSV HBM product in 2014, HBM memory technology has now iterated to HBM3e after nearly 10 years of development.

From the perspective of original manufacturers, competition in the HBM3e market primarily revolves around Micron, SK Hynix, and Samsung. It is reported that these three major manufacturers already provided 8-hi (24GB) samples in late July, mid-August, and early October 2023, respectively. It is worth noting that this year, they have kicked off fierce competition in the HBM3e market by introducing latest products.

On February 27th, Samsung announced the launch of its first 12-layer stacked HBM3e DRAM–HBM3e 12H, which marks Samsung’s largest-capacity HBM product to date, boasting a capacity of up to 36GB. Samsung stated that it has begun offering samples of the HBM3e 12H to customers and anticipates starting mass production in the second half of this year.

In early March, Micron announced that it had commenced mass production of its HBM3e solution. The company stated that the NVIDIA H200 Tensor Core GPU will adopt Micron’s 8-layer stacked HBM3e memory with 24GB capacity and shipments are set to begin in the second quarter of 2024.

On March 19th, SK Hynix announced the successful large-scale production of its new ultra-high-performance memory product, HBM3e, designed for AI applications. This achievement symbolizes the world’s first supply of DRAM’s highest-performance HBM3e in existence to customers.

A previous report from TrendForce has indicated that, starting in 2024, the market’s attention will shift from HBM3 to HBM3e, with expectations for a gradual ramp-up in production through the second half of the year, positioning HBM3e as the new mainstream in the HBM market.

TrendForce reports that SK hynix led the way with its HBM3e validation in the first quarter, closely followed by Micron, which plans to start distributing its HBM3e products toward the end of the first quarter, in alignment with NVIDIA’s planned H200 deployment by the end of the second quarter.

Samsung, slightly behind in sample submissions, is expected to complete its HBM3e validation by the end of the first quarter, with shipments rolling out in the second quarter. With Samsung having already made significant strides in HBM3 and its HBM3e validation expected to be completed soon, the company is poised to significantly narrow the market share gap with SK Hynix by the end of the year, reshaping the competitive dynamics in the HBM market.

Read more

• HBM3 Initially Exclusively Supplied by SK Hynix, Samsung Rallies Fast After AMD Validation, Says TrendForce
• [News] SK Hynix Reportedly Plans to Invest USD 4 Billion in Advanced Packaging Fab in Indiana

(Photo credit: SK Hynix)

SK Hynix is rumored planning to build an advanced packaging fab worth USD 4 billion in West Lafayette, Indiana. According to a report from The Wall Street Journal, it is expected to commence operations by 2028, creating up to 1,000 job opportunities. This initiative may receive support in the form of state and federal tax incentives.

As reported by The Wall Street Journal and Tom’s Hardware, SK Hynix’s investment aims to enhance its capabilities in advanced semiconductor packaging, with a particular emphasis on manufacturing High-Bandwidth Memory (HBM).

Considering a potential capital expenditure of USD 4 billion for the construction, per Tom’s Hardware, if the project proceeds, it will become one of the largest advanced packaging facilities globally. Hence, government support is crucial, with expectations of tax incentives from both state and federal levels in the US.

SK Hynix, a supplier of HBM memory for NVIDIA, is eyeing enhanced capabilities in advanced chip packaging, particularly crucial for manufacturing HBM. The recent NVIDIA Blackwell B200, with each GPU utilizing 8 HBM3e chips, has also underscored SK Hynix’s role in the critical components supply chain for the AI industry.

The recent CHIPS and Science Act allocated USD 8.5 billion to Intel, enhancing US semiconductor competitiveness. SK Hynix’s plan to build a fab in Indiana is a significant stride, fostering US semiconductor growth.

However, US subsidies for chip manufacturing and packaging have been slow, with only three American companies currently benefiting, including BAE Systems, GlobalFoundries, and Microchip Technology.

Reportedly, SK Hynix’s plan remains more of an intention statement than a finalized deal, and whether it proceeds to the construction phase remains to be seen.

Read more

• [News] SK Hynix Reportedly Invests USD 1 Billion in Advanced Packaging to Strengthen HBM Chip Leadership
• [News] SK Hynix Rumored to Propose Collaboration with Kioxia for HBM Production in Japan

(Photo credit: SK Hynix)

DRAM Spot Market:

DRAM spot prices continue to fall as channel demand has been tepid. Furthermore, the decline has become sharper recently for both DDR4 and DDR5 products. At the same time, spot traders who previously accumulated stockpiles are now eager to sell because the overall demand outlook is not particularly positive. Hence, spot prices, on the whole, are weakening. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.77% from US$1.936 last week to US$1.921 this week.

NAND Flash Spot Market:

Continuing from last week, spot prices are lingering at an amplified degree of declination under the persistently sluggish demand from the channel market, though at a slightly lighter sales pressure compared to that of DRAM. For 512Gb wafers, concluded prices are sitting on about US$3.9, which are lower than contract prices, and indicate the yet-to-be recovered level of consumer demand. 512Gb TLC wafer spots have dropped by 1.98% this week, arriving at US$3.764.