TSMC operates at full capacity, AMD aims for AI chips reportedly seeks CoWoS-like supply chain.

In 2023, NVIDIA led the global AI chip development, and in 2024, the global demand for AI chips is expected to continue to surge due to the expansion of end-user applications such as PCs and mobile phones.

Meanwhile, AMD has not stopped in AI chip development either, with the expected MI300 products poised to heat up the global AI business opportunities. However, the key to supply lies in advanced packaging, and AMD will seek outsourced semiconductor assembly and test (OSAT) service providers to offer support similar to CoWoS.

According to Taiwan’s Commercial Times, TSMC’s CoWoS capacity has long been fully loaded, and even if it expands production this year, it will mainly be reserved for NVIDIA. Market sources pointed out that TSMC will continue to increase CoWoS capacity to support AMD’s demand, but it takes six to nine months to establish a new production line. Therefore, it is expected that AMD will seek cooperation with other companies with CoWoS-like packaging capabilities. ASE, Amkor, Powertech, and KYEC are the first batch of potential partners.

TSMC has been outsourcing part of its CoWoS operations for some time, mainly targeting small-volume, high-performance chips. TSMC maintains in-house production of the CoW, while the back-end WoS is handed over to test and assembly houses to improve production efficiency and flexibility. This model will continue in the future 3D IC generation.

ASE and Amkor both received WoS orders last year. ASE has strengthened the development of advanced packaging technology and has a complete solution for the entire CoWoS process. ASE previously stated that it sees the strong potential of AI and expects related revenue to double in 2024.

According to reports citing market sources, the monthly production capacity of the ASE Group’s 2.5D packaging is about 2,000 to 2,500 pieces. Some experts believe that test and assembly houses will maintain the business model of TSMC or UMC providing the interposer. Therefore, in 2024, a significant increase in CoWoS production capacity is expected.

KYEC is responsible for testing Nvidia AI chips and is expected to benefit from AMD’s search for CoWoS-like capacity. Nvidia is currently KYEC’s second-largest customer.

KYEC’s testing of Nvidia A100 and H100 chips is mainly in the final test (FT), with a market share of up to 70%. KYEC provides comprehensive IC burn-in testing, has self-developed burn-in equipment, and has been in the industry for more than a decade, accumulating many patents and technologies.

AMD stated at the end of 2023 that AI chip revenue could reach US$2 billion in 2024, excluding other HPC chips. AMD pointed out that the annual compound growth rate of the AI chip market in the next four years will reach 70%, and it is estimated that it will reach US$400 billion in 2027.

(Image: AMD)

Global memory giants continue to reduce production, coupled with the situation where market demand is increasing due to the rise in artificial intelligence and high-performance computing applications, as well as inventory replenishment from the smartphone market. This combination is driving a continuous increase in memory prices, especially the astonishing surge in NAND Flash.

According to a report from TechNews, there are once again rumors in the market today that the upward trend in DRAM prices is resurfacing. This includes plans from both Samsung and Micron to implement a price increase ranging from 15% to 20% in the first quarter of 2024.

Currently, the market anticipates tight DRAM supply in 2024 due to the increasing adoption of artificial intelligence and high-performance computing, along with a gradual recovery in the smartphone and PC markets. As the contract price negotiation for the first quarter is underway, industry sources reveal that memory manufacturers have begun adjusting DRAM prices since January, urging customers to plan for future usage demands.

There are reports in the market that Samsung recently announced that DRAM prices will increase by at least 15% starting in the first quarter of 2024. While there is no clear indication of the NAND Flash memory price hike at the moment, it is expected to continue to rise. The upward trend in DRAM prices is expected to persist until the end of 2024.

Apart from Samsung, Micron, with a modest 2-3% increase in DRAM prices in December 2023, lower than the 10% increase in 3D TLC NAND, is reportedly considering a DRAM price hike of around 15-20%.

Regarding the price trend of DRAM in the first quarter of 2024, TrendForce currently maintains a forecast of a seasonally increased average of 13-18%, with the highest increase observed in the mobile DRAM category, while server DRAM appears relatively conservative. According to TrendForce’s observation, due to the uncertain demand outlook for the entire year 2024, memory manufacturers believe that a continued reduction in production is necessary to maintain the supply-demand balance in the memory industry.

Read more

• Market Anticipates a 50% Price Surge for NAND Flash in Short-Term

(Image: Samsung )

Dutch semiconductor equipment leader ASML Holding N.V. has announced that export licenses for certain equipment have been partially revoked by the Dutch government.

In a press release issued on January 1st, 2024, ASML stated, “A license for the shipment of NXT:2050i and NXT:2100i lithography systems in 2023 has recently been partially revoked by the Dutch government, impacting a small number of customers in China. We do not expect the current revocation of our export license or the latest U.S. export control restrictions to have a material impact on our financial outlook for 2023.”

The press release further stated, “In recent discussions with the US government, ASML has obtained further clarification of the scope and impact of the US export control regulations. The latest US export rules (published October 17, 2023) impose restrictions on certain mid critical DUV immersion lithography systems for a limited number of advanced production facilities.”

Bloomberg reported earlier on January 1^st, 2024, citing unnamed sources, that several weeks before the implementation of export controls on advanced semiconductor equipment in the Netherlands, the U.S. government had requested ASML to cancel the export of certain machines destined for China.

Previously, ASML’s CEO, Peter Wennink, stated that these limitations would exclude the vast majority of Chinese customers in response to the U.S. restrictions. This exclusion is due to the fact that these customers are involved in mature nodes, specifically in the production of semiconductors at 28nm and above.

In addition, last week, the South China Morning Post has cited data, indicating that in November 2023, China had imported critical semiconductor manufacturing lithography equipment from the Netherlands, experiencing a significant surge of 1050% in import value.

In an interview with the South China Morning Post, Jan-Peter Kleinhans, Senior Researcher and Head of Technology and Geopolitics Projects at the Berlin-based think tank “Stiftung Neue Verantwortung” (New Responsibility Foundation), mentioned that the impact on sales would not be immediate following the new U.S. restrictions.

Reportedly, this is because ASML has a lead time of approximately 18 months. This implies that the equipment shipped in the fourth quarter of 2023 would have been ordered in the second or third quarter of 2022, and ASML would apply for export licenses at some point thereafter.

Read more

• [News] Surge in Chip Manufacturing Equipment Imports from the Netherlands to China, Soaring Tenfold After U.S. Tightens Restrictions
• [News] EUV as a Strategic Asset in the Most Advanced Processes: Progress in Intel/TSMC/Samsung’s Adoptions

(Photo credit: ASML)

Japanese semiconductor equipment manufacturer Tokyo Electron Limited (TEL) is reportedly set to increase the starting monthly salary for new hires by approximately 40%, breaking the JPY 300,000 barrier for the first time (approximately USD 2,121). This move is expected to align the salary level with international counterparts to attract talent.

According to the report from Nikkei Asia, TEL has been consistently raising salaries and bonuses due to its strong business performance. The company will raise the salary for all new hires by JPY 85,500.

Starting in April 2024, the monthly salary for university graduates joining the company will reach JPY 304,800 (USD 2,161), while those with higher qualifications can receive JPY 320,000. This marks the first salary increase for new employees at TEL in seven years.

As per the survey conducted by the Japan’s National Personnel Authority in the spring of 2023, Japanese private companies offer an average starting salary of around JPY 210,000 (approximately USD 1,484) for university graduates, with those holding higher degrees receiving around JPY 230,000. On the other hand, TEL’s financial statement reveals that the company’s average annual salary as of March 2023 is JPY 13.98 million.

Japan has seen a series of significant investments in the semiconductor industry, including TSMC’s entry into Kumamoto, Kyushu. Semiconductor manufacturers are offering high salaries to attract skilled workers, and this trend is prompting chip equipment suppliers to follow suit.

TEL plans to hire approximately 400 new graduates in the spring, an increase of 50 from the previous year, and envisions increasing the number of new employees to 500 within the next few years.

Read more

• [News] Examining Japan through Semiconductor Foundries: Goals of TSMC’s and PSMC’s New Plants
• [News] Global Chip Equipment Sales Plummet by 11%, Taiwan Nearly Halves, China Breaks Records

(Photo credit: TEL)

TSMC is expected to return to a growth trajectory this year, benefiting from the global semiconductor industry’s recovery, the completion of terminal inventory destocking, and the continuous explosion of AI applications.

According to the report from Economic Daily News, entering 2024, the industry generally holds optimistic views on TSMC’s potential to shake off the operational downturn and restart growth.

TSMC consistently refrains from commenting on analysts’ financial forecasts. When addressing first-quarter outlook issues earlier, the company indicated that it usually provides comments on the business outlook for 2024 during the January earnings conference.

However, TSMC President C.C. Wei mentioned at a supply chain management forum in December of last year that due to external factors such as high inflation and ongoing cost increases, there is still uncertainty for 2024. Nevertheless, with the rapid development of AI applications, 2024 is expected to be a year full of opportunities.

Additionally, during the earnings conference in October of last year, TSMC had forecasted that demand for 3nm technology is better than three months ago, contributing to the company’s healthy growth in 2024.

Industry sources point out that TSMC is expected to benefit this year from the diversified growth in end applications of major customers such as Apple, NVIDIA, and AMD. The global increase in the production value of GPUs is considered the primary driving force.

Simultaneously, the diverse development of customized AI accelerators and Application-Specific Integrated Circuits (ASICs) also contributes to the company’s operations. TSMC’s full-year USD revenue is expected to surpass the USD 80 billion mark for the first time, with a yearly growth rate of approximately 14% to 16%.

Read more

• [News] TSMC President Highlights 2024 Semiconductor Challenges While Envisioning Abundant AI Opportunities
• [News] TSMC 2023 Third Quarter Earnings Call Excerpts

(Photo credit: TSMC)