Belgium-based IMEC Microelectronics Research Center has announced the leading role in establishing the NanoIC pilot line project, for which it has received a total of EUR 2.5 billion from public and corporate donations.

As one of the four advanced semiconductor pilot line projects designated by the European Chips Joint Undertaking (Chips JU), the NanoIC pilot line is to bridge the technology gap between the lab and the fab, accelerating the development, design, and testing of proof-of-concept products through small-scale production.

According to the European Chips Act, which has a total budget of EUR 15.8 billion by 2030, the “European Chips Initiative” is regarded as a key part. This initiative aims to significantly enhance advanced chip technologies and innovation. The European Chips Initiative will gather EU, member states, and resources from the stakeholders from third-party countries related to EU programs, which is expected to be driven by the Chips Joint Undertaking (Chips JU).

In addition to spearheading the NanoIC pilot line project, IMEC will also be a part of two other projects: the advanced FD-SOI process pilot line and the advanced heterogeneous system integration pilot line. The NanoIC pilot line will focus on developing sub-2nm process SoC, providing prototype development PDK to participants from academia to industry, thereby reducing the risk of chip R&D and improving development efficiency.

Of the EUR 2.5 billion in funding, EUR 1.4 billion comes from Chips JU and the Belgian government, while the remaining EUR 1.1 billion comes from partners such as  ASML. IMEC President and CEO Luc Van den hove stated that the support from the EU, the Belgian government, and corporate partners will enable IMEC to maintain a top position and better align with market demands.

This investment will double output and learning speed, accelerate the pace of innovation, strengthen the European chip ecosystem, and hence promote economic growth in Europe.

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(Photo credit: IMEC)

Sources have revealed that major Chinese chip manufacturers such as SMIC (Semiconductor Manufacturing International Corporation) and CXMT (ChangXin Memory Technologies) are striving to localize the supply of critical chip materials and chemicals. This move is expected to counteract U.S. export controls and could potentially exclude global suppliers from the Chinese market.

According to a report from Nikkei News, since last year, SMIC has accelerated its efforts to require customers to help monitor, verify, and adopt local suppliers. This adoption covers a range of materials used in the chip manufacturing process, including wafers, chemicals, gasses, and other essential materials. Since being added to the U.S. entity list at the end of 2020, SMIC has been continuously exploring local supply alternatives.

Reportedly, CXMT is also actively launching a similar initiative to investigate local suppliers to replace foreign sources.

These actions indicate that China’s latest localization efforts extend beyond merely increasing the use of local chip manufacturing equipment. They now encompass hundreds of chemicals, materials, and gasses, which could potentially push foreign suppliers out of the local market.

Another source cited in a report from Nikkei news mentioned that chip manufacturers are maintaining ties with global suppliers of chip chemicals to avoid sudden impacts on production quality. However, strong incentives are stimulating the development of Chinese material suppliers. For example, National Silicon Industry Group is growing into a competitor against industry leaders like Shin-Etsu Chemical, Sumco, and GlobalWafers.

Chinese chip manufacturers are also expanding their use of local sputter targets, polishing pads, slurry, and ultra-high purity chemicals and gasses. These critical chip manufacturing materials markets have traditionally been dominated by foreign suppliers such as 3M, DuPont, and Sumitomo Chemical.

Sources cited in Nikkei’s report further indicate that these actions initially apply to less advanced chip manufacturing processes, such as 55nm and 40nm, but will eventually extend to processes below 28nm.

However, as per another report from Economic Daily News, some Taiwanese companies have indicated that the impact is limited. The areas that Chinese manufacturers can capture are mostly lower-end products, while mid-to-high-end products still heavily rely on foreign suppliers for the time being.

Taiwanese companies cited by Economic Daily News point out that China has been promoting the localization of its semiconductor supply chain for many years. While policy does provide some momentum, the key issues remain quality and yield rates. Customers are said to be reluctant to frequently adopt new suppliers, making it difficult to achieve comprehensive replacement.

Industry sources cited in the same report further note that China’s localization efforts in semiconductors are primarily focused on mature processes, with more noticeable progress in the mid-to-low-end sectors. For advanced materials like photoresists and polishing slurry, products from Japan and Western countries still hold a competitive advantage in terms of yield.

Additionally, industry sources mention that China is advancing its localization efforts more rapidly in the area of small-sized silicon wafers, which are mainly used for testing rather than production. However, for 8-inch and 12-inch silicon wafers, the market is still predominantly controlled by major foreign manufacturers.

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(Photo credit: SMIC)

According to TrendForce’s latest memory spot price trend report, sellers, in particular Samsung, have increased the chip supply, therefore pushing DRAM prices downward, while DDR4 products suffer from higher inventory. Regarding NAND Flash prices, the retail market is less willing in replenish orders, together with how wafer prices have been surging from the bottom, the depletion of spot prices could carry on. Details are as follows:

DRAM Spot Price:

The spot market has yet to show a demand turnaround; and sellers, in particular Samsung, have increased the chip supply, thereby pushing prices back down again. Looking at different types of DRAM products, module houses and channels have relatively high inventory levels for DDR4 products. Hence, the downward pressure on spot prices of DDR4 products is greater compared with spot prices of DDR5 products. Overall, even though contract prices have again registered significant increases in 2Q24, this rally has no positive effect on spot prices. Instead, spot transactions continue to show declining quantity, and the downward price pressure has become more pronounced. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has dropped by 1.19% from US$1.940 last week to US$1.917 this week.

NAND Flash Spot Price:

The Chinese government’s cracking down on smuggling of memory products, as well as the persistently sluggish demand from the retail market, have prompted module houses to amplify their sales intensity to actively pursue transactions, which led to a loosening in prices. Without replenishment of orders within the retail market, together with how wafer prices have surged from rock bottom to nearly 80% by now, the depletion of spot prices could carry on in the near future. Spot price for 512Gb TLC wafers has dropped by 2.61% this week, arriving at US$3.579.

Micron Technology Inc., the American memory giant, has slightly increased its capital expenditure for this year (2024) and has not updated its financial forecasts for the second quarter (March to May).

According to reports from Reuters, Investing.com, and other global news outlets, Matt Murphy, the CFO of Micron, stated on May 21st that the company’s capital expenditure forecast for 2024 is expected to reach approximately USD 8 billion, up from the previous estimate of USD 7.5 billion. This increase is primarily attributed to investments in High Bandwidth Memory (HBM).

Micron’s Chief Operating Officer, Manish Bhatia, stated that the scale of the HBM business is expected to expand to several billion dollars in the 2025 fiscal year.

As per a previous report by Economic Daily News, Micron’s current 8-layer stacking model offers the advantage of higher heat dissipation efficiency, as fewer layers allow for better cooling, ensuring stable chip performance. Additionally, Micron is planning to launch a 12-layer stacked 36Gb DRAM chip. Per a report from Tom’s Hardware, this new chip’s capacity is expected to be 50% greater than that of the previous 8-layer stack.

In March, Micron CEO Sanjay Mehrotra indicated that the company’s HBM earmarked for AI applications are sold out for 2024, with much of the 2025 supply already allocated.

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(Photo credit: Micron)

Fab inventories have declined for two consecutive quarters, indicating that reducing excess stock may currently be the semiconductor industry’s top priority. According to industry sources cited in a report from Commercial Times, fabs are predicted to wait until the second half of 2024 to resume ordering silicon wafers.

According to the latest quarterly analysis report from SEMI, a major microelectronics association, global silicon wafer shipments in the first quarter of 2024 reached 2,834 million square inches (MSI), marking a 5.4% decrease from the previous quarter and a 13.2% decrease from the same period last year.

SEMI attributes this decline in silicon wafer shipments to the continuing decline in IC fab utilization and inventory adjustments. Consequently, shipments of silicon wafers of all sizes experienced negative growth in the first quarter of 2024.

Industry sources cited by the same report note that, based on recent trends in foundry orders, apart from TSMC, other semiconductor manufacturers have seen capacity utilization rates around 70%. Among these, DRAM and Flash memory wafer shipments have shown year-on-year increases of 20.3% and 1%, respectively, indicating better performance compared to previous periods.

Japanese silicon wafer manufacturer Sumco recently announced in its financial report that in the first quarter, overall demand for 12-inch silicon wafers had bottomed out. Demand for logic chips used in AI and DRAM had increased. However, for applications outside of AI, customers continued to adjust their production.

Sumco estimates that due to customer production adjustments and the recovery of silicon wafer demand, it may take until the second half of 2024 for the situation to improve.

Industry sources cited by Economic Daily News believe that most IC design companies have returned to normal days of inventory (DOI) and are prioritizing urgent orders for foundries. However, the inventory levels of fabs and memory fabs remain historically high, so they will primarily focus on digesting existing long-term contracts (LTA) in the short term.

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(Photo credit: TSMC)