In response to the recovery in the memory market and the increasing demand for High Bandwidth Memory (HBM) driven by AI chips, South Korean memory giant SK Hynix is reportedly planning to upgrade part of its DRAM production equipment at its Wuxi plant to the fourth-generation of 10-nanometer process this year.

According to a report by Seoul Economic Daily, the Wuxi plant is a core production base for SK Hynix, contributing approximately 40% of its total DRAM production. Currently, the Wuxi facility is producing second and third-generation DRAM, which falls under the category of older products in the late 10-nanometer class.

As the semiconductor market enters a recovery phase, the expansion of SK Hynix’s high-performance chip capacity has become urgent. To maintain its market share in the High Bandwidth Memory (HBM) market, SK Hynix needs advanced products such as the fourth-generation of 10-nanometer DRAM or higher versions.

According to a previous TrendForce press release, in terms of competitive positioning, SK Hynix’s HBM3 products are leading other manufacturers and serve as the primary supplier for NVIDIA Server GPUs. Samsung, on the other hand, focuses on meeting orders from other cloud service providers.

SK hynix’s fifth-generation HBM (HBM3E), which began mass production in the first half of this year, has a maximum capacity of 36GB (288Gb) in its next-stage product. It achieves this through stacking 12 chips of 24Gb DRAM. In 2022, SK hynix first adopted the fourth-generation DRAM process to realize 24Gb DRAM. HBM3E requires the use of the fourth generation or higher versions of the DRAM manufacturing process to meet customer demands.

SK Hynix, in response to increasing HBM3E orders from key customers like NVIDIA, must find ways to convert the Wuxi DRAM process in addition to utilizing the capacity of its Icheon headquarters factory.

SK Hynix has been using Extreme Ultraviolet (EUV) lithography since the production of the fourth-generation of 10-nanometer DRAM. However, due to the inability to introduce EUV exposure equipment to Wuxi, the production of this DRAM becomes challenging. Notably, constrained by U.S. restrictions on the export of EUV exposure eqipment to China, transitioning the Wuxi plant to the fourth-generation of 10-nanometer DRAM and beyond will pose a significant challenge.

The report indicates that SK Hynix plans to complete part of the fourth-generation DRAM process on the Wuxi production line, then transport the chips to the Icheon plant for EUV application, and finally return them to Wuxi to complete the entire process. SK Hynix has experience with a similar approach during the Wuxi plant fire in 2013, overcoming disruptions in DRAM production.

Regarding the rumors about the Wuxi plant upgrade, SK Hynix stated that it cannot confirm the specific operational plans for the factory.

(Image: SK Hynix)

According to recent reports, Huawei is expected to unveil its flagship P70 series later this year, alongside the introduction of the new Kirin 9010 chipset. However, there are indications that the older Kirin 9000S might be utilized in a specific model.

Wccftech suggests that the P70 series will include the P70, P70 Pro, and P70 Art, followed by the Mate 70 series. Notably, not all P70 models will feature the new Kirin 9010.

As per insights from the Weibo account Smart Pikachu, the P70 series will boast a custom curved display that is easy on the eyes and power-efficient but lacks a 2K resolution, and the standard version of the P70 is tested with the Kirin 9000S. This may potentially impact the motivation for users who have already purchased the Mate 60 and might not find sufficient reasons to upgrade to the P70.

Wccftech suggests that the adoption of the 9000S in some models could be attributed to the limited supply of the Kirin 9010. The Kirin 9000S, produced by SMIC using a 7nm process, faces production challenges due to the use of older-generation DUV equipment, resulting in a time-consuming and costly manufacturing process with lower yields.

Despite this, there is a glimmer of hope for Huawei’s pricing competitiveness, as the production cost of the Kirin 9000S is expected to be lower than that of the Kirin 9010. This cost advantage could potentially contribute to Huawei’s goal of reaching an estimated shipment volume of 100 million smartphones in 2024, especially considering the company’s historical strength in offering competitive pricing for its base models.

(Image: Huawei)

According to a report by China’s financial media outlet Yicai, in 2023, China’s import quantity and value of integrated circuits experienced a significant decline, influenced by factors such as the overall downturn in the global chip market and the U.S. ban on the sale of chips to China.

The latest data from the Chinese Customs Administration indicates that in 2023, China imported a total of 479.5 billion integrated circuits, a 10.8% decrease compared to 2022, with an import value of $349.4 billion, marking a 15.4% year-on-year decline.

Industry experts suggest that the soft importation of integrated circuits and semiconductor equipment in China reflects the global economic headwinds in 2023, especially the impact of sluggish sales of Chinese smartphones and laptops. Simultaneously, Chinese companies are striving to increase domestic chip production to reduce dependence on imported chips.

Despite the time required for China to achieve mass production in the field of artificial intelligence chips, the push by the Chinese government to establish a more resilient chip supply chain has motivated local manufacturers to actively increase production capacity in mature nodes. These chips are used in devices such as automobiles and home appliances, unaffected by the current U.S. restrictions.

Public information reveals that SMIC, Hua Hong Group, and Nexchip are among the most active in expanding production, focusing on specialty processes such as driver ICs, CIS/ISP, and power semiconductor ICs.

With China’s significant investment in mature nodes, it is positioned at a time when the global chip industry is poised for recovery. According to a recent TrendForce’s data, China currently has 44 operational semiconductor wafer fabs, with an additional 22 under construction. By the end of 2024, 32 Chinese wafer fabs will expand their capacity for 28-nanometer and older mature chips.

TrendForce predicts that by 2027, China’s share of mature process capacity in the global market will increase from 31% in 2023 to 39%, with further growth potential if equipment procurement progresses smoothly.

(Image: SMIC)

According to Commercial Times, TSMC, the leading semiconductor foundry, will hold its investor conference on the 18th. Market attention will be focused on eight key questions, including the 2024 full-year revenue forecast, advanced process development, and progress in overseas facility expansion.

Key points of interest for investors include: 1. TSMC’s 2024 full-year gross margin trends and changes in the first and second quarter gross margins. 2. Intel’s aggressive pursuit of advanced processes and how TSMC views it. 3. Chairman Mark Liu’s announcement of retirement in 2024 and whether TSMC’s overseas expansion plans will change. 4. Strategies for expanding advanced packaging production capacity. 5. Annual capital expenditures. 6. Views on the semiconductor industry’s recovery. 7. Trends in utilization rates for each process. 8. Full-year revenue outlook.

The market is closely watching TSMC’s first-quarter gross margin. Morgan Stanley semiconductor industry analyst Charlie Chan pointed out that due to the price reduction for 3-nanometer process foundry services provided to Apple, coupled with the recent appreciation of the New Taiwan Dollar against the U.S. Dollar and accelerated depreciation, TSMC’s gross margin for 2024 is under pressure.

According to industry sources, TSMC may slightly slow down the transition from 5-nanometer to 3-nanometer process equipment this quarter. The lowest point in the annual gross margin may fall in the second quarter, rather than the originally estimated first quarter, meaning that TSMC’s quarterly gross margin will not experience a cliff-like plunge.

As for TSMC’s full-year revenue outlook, after Goldman Sachs and UBS Securities expressed optimism about TSMC’s revenue growth exceeding 20% for the year, JPMorgan Securities also noted that, driven by inventory replenishment, AI demand, and the expansion of the 3-nanometer process, TSMC’s revenue is expected to grow by 20% in 2024. The acceleration from AI accelerators and system-on-chip (SoC) for smartphones will lead to better-than-expected capacity utilization rates for the 5-nanometer and 4-nanometer processes.

(Image: TSMC)

According to a report from IJIWEI, research by Barclays analysts indicates that China’s chip manufacturing capacity is expected to more than double within the next 5 to 7 years, surpassing market expectations significantly. The analysis of 48 chip manufacturers with production facilities in China suggests that 60% of the expected additional capacity may come online within the next 3 years.

TrendForce statistics reveal that, excluding 7 dormant wafer fabs, China currently has 44 wafer fabs, with 25 of them being 12-inch facilities, 4 of them 6-inch, and 15 8-inch wafer fabs/lines. Additionally, there are 22 wafer fabs under construction, with 15 of them being 12-inch facilities and 8 being 8-inch wafer fabs.

Companies like SMIC, Nexchip, CXMT and Silan plan to construct 10 more wafer fabs, including 9 12-inch and 1 8-inch wafer fab, by the end of 2024, bringing the total to 32 large-scale wafer fabs, all focusing on mature processes.

Chinese firms have accelerated the procurement of crucial chip manufacturing equipment to support capacity expansion. According to the previous report from South China Morning Post, the import value of lithography equipment from the Netherlands, a primary exporter, surged by 1050%, reflecting substantial orders for semiconductor equipment from China in 2023.

Barclays analysts suggest that most of the new capacity will be used for producing chips using older technologies. These mature semiconductors (28nm and above) lag behind the most advanced chips by at least a decade but are widely used in household appliances and automotive systems.

While these chips could theoretically lead to a market oversupply, Barclays believes it will take several years, possibly as early as 2026, depending on quality and any new trade restrictions.

Earlier, TrendForce released statistics projecting a global ratio of mature (>28nm) to advanced (<16nm) processes around 7:3 from 2023 to 2027. With China’s mature process capacity expected to grow from 29% to 33% by 2027, driven by policies promoting local production, giants like SMIC and HuaHong Group are anticipated to lead the charge, potentially causing a flood of mature processes into the global market and triggering a price war.

TrendForce notes that as China’s mature process capacities emerge, localization trends for Driver IC, CIS/ISP, and Power Discretes will become more pronounced, leading to risks of client attrition and pricing pressures for second and third-tier foundries with similar processes.