Compared to last week, there is no notable change in DRAM spot price. It is relatively stable in this week. On NAND Flash, there was a 20%+ growth in NAND Flash wafer contract prices last month, making buyers stock and sellers negotiate the price. It leads a surge in the NAND flash wafer spot price in this week.

DRAM Spot Market

The spot market has not changed noticeably from the previous week, and prices are starting to weaken as more used DDR4 chips are released into the market. Kingston has yet to adjust its module prices, so other module houses are hesitant to raise their prices as well. On the whole, the spot market remains fairly quiet in terms of trading activities, and the general price trend there is relatively flat. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.99% from US$1.712 last week to US$1.729 this week.

NAND Flash Spot Market

Overall retail sales of NAND Flash have yet to surpass performance of past years, though the growth of more than 20% in contract prices for Flash wafers during November that stimulated aggressive stocking activities among buyers had led to a more adamant approach in sellers’ negotiations, and had prompted 512Gb to surpass US$3 on a continual basis. 512Gb TLC wafer spots have risen by 5.35% this week, arriving at US$3.015.

In an announcement on December 5th, Taiwan’s National Science and Technology Council(NSTC) has designated 22 technologies, such as IC manufacturing and heterogeneous integration packaging, as national core key technologies. This inaugural list prioritizes technologies with leading advantages and immediate protection requirements.

NSTC, in collaboration with relevant ministries, plans to conduct a comprehensive review three months later, anticipating a second wave of additions or adjustments, as per reported by UDN News.

NSTC emphasized that the theft of classified national core key technologies through economic espionage will prompt legal investigations with enhanced penalties. Moreover, individuals receiving government subsidies exceeding half in national key technology businesses must obtain permission for travel to China.

Highlighting the significance of the semiconductor industry, especially considering Taiwan’s global market share and interconnected supply chain, the listed technologies include IC manufacturing for 14nm process and advanced processes beyond, encompassing critical gases, chemicals, and equipment. Heterogeneous integration packaging technologies, such as wafer and silicon photonics integration packaging, along with their essential materials and equipment, are also covered. Additionally, the list features chip security, post-quantum cryptography protection, and proactive network defense technologies, reflecting their relevance to information security.

NSTC highlighted the ongoing thoroughness of the list to safeguard industries. In this regard, it plans to collaborate with relevant ministries, keeping pace with technological advancements and the industrial development trajectories of nations like the United States and South Korea.

According to CNA’s report, the council will actively seek input from industry, government, academia, and research communities. A second wave of the list is expected to be presented after a comprehensive review three months later.

According to South Korean media Chosun Biz’s report, the prices of all memory products, encompassing servers, mobile devices, and PCs, are on the rise. This trend, combined with the thriving development of the AI market, is expected to result in even higher profitability for High-Bandwidth Memory (HBM) than initially anticipated.

Major memory manufacturers Samsung and SK Hynix are beginning to emerge from a business downturn, leading to upward revisions in their financial outlook for the fourth quarter of 2023.

The report notes that the adjustments in Q4 financial outlook by Samsung and SK Hynix indicate a rapid increase in demand for HBM due to the thriving AI market. Additionally, the recovery of the largest sales item, DRAM, is contributing to better operational performance for both companies in the fourth quarter.

Market experts reveal that Samsung’s projected operating profit for Q4 is expected to be KRW 3.487 trillion, showing slight growth compared to the estimate from a week ago. As for SK Hynix, the expected loss in Q4 is KRW 294.4 billion, reflecting a convergence from the market estimate of KRW 335.3 billion a week earlier, despite remaining in a deficit.

In addition, Micron, the American company considered one of the three major global DRAM manufacturers along with South Korean companies Samsung and SK Hynix, has also revised its financial forecast for the first quarter of the 2024 fiscal year.

The initial estimate in November of USD 4.4 billion has been adjusted to USD 4.7 billion , while the expected Earnings per Share has been raised from USD -1.07 to USD -1.

Regarding trends in the memory industry, TrendForce indicated in a recent report that a key turning point in the third quarter for the NAND Flash market was Samsung’s decision to actively reduce production.

Previously, buyers maintained a low inventory and slow procurement strategy due to concerns about low visibility of end demand and worries about a lackluster market peak season. With the leading supply-side companies significantly reducing production, buyers, anticipating a significant reduction in supply, have shifted to a more positive procurement attitude. By the end of the third quarter, contract pricing for NAND Flash had shifted toward stabilization and even price increases.

TrendForce predicts that NAND Flash products will experience both increased volume and prices in the fourth quarter. The average selling price for all products is estimated to increase by 13%, and the overall revenue growth for the NAND Flash industry in the quarter is expected to exceed 20%.

Contrarily, in the case of DRAM, prices have been on a downward trend since 2023, but they started to rise from October. TrendForce believes that the three major global DRAM manufacturers have begun intensive production cuts, and as market demand begins to recover, the pricing power of memory manufacturers is gradually increasing.

In terms of DRAM supply in the fourth quarter, memory manufacturers have a clear upward pricing attitude, as TrendForce projects a noticeable increase of approximately 13-18% in contract prices during this period. However, the recovery in demand is not as strong as in previous peak seasons.

Overall, while there is demand for stocking up, in the current scenario, the server sector remains passive in terms of procurement due to high inventory levels. The shipment growth in the DRAM industry for the fourth quarter is expected to be limited.

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(Photo credit: Samsung)

Germany is currently caught in a budget dispute that led to the rejection of a planned multi-billion-euro official subsidy for semiconductor companies. Sources suggest that if the German government reduces the initially committed subsidy, TSMC might need to reopen discussions on its investment in a wafer fabs in Dresden, Germany. This would include revisiting agreements with German joint venture partners, with the worst-case scenario being the abandonment of the investment initiative.

According to Financial Times, an individual familiar with discussions between TSMC and the German government said, “Worst case is that if it turns out nine months from now that there will be no subsidies, we will have to cancel the project.”

Initially, the German government had pledged substantial support for foreign chipmakers investing in the country. Recently, the German cartel office officially approved Bosch, NXP, and Infineon’s involvement in TSMC’s German company, ESMC. Each of these companies will secure a 10% stake, while TSMC will maintain substantive control with over 50% ownership. The investment of EUR 10 billion to establish a wafer fab in Dresden has received a government commitment of EUR 5 billion in subsidies.

On the other hand, Intel, the semiconductor giant, had also planned a significant investment of EUR 30 billion for constructing two new fabs in Magdeburg, Eastern Germany, with a subsidy of EUR 9.9 billion. It is also the largest foreign investment since World War II.

However, the German Federal Constitutional Court’s recent ruling declared the shift of the initially allocated EUR 60 billion credit limit, intended for the new COVID-19 pandemic, to the “Climate Transformation Fund” as unconstitutional. The subsidies for chipmakers, including Intel and TSMC, from the German government were supposed to originate from this fund, raising industry-wide concerns due to the court’s decision.

German political and business figures, along with industry experts, express apprehension that semiconductors might become collateral damage in the budget dispute, potentially tarnishing Germany’s standing.

The current ESMC plan is still under observation for potential changes.  According to TrendForce’s previous research that ESMC’s initial total planned production capacity is approximately 40Kwspm. The fab is set to focus on 28/22nm and 16/12nm processes, with groundbreaking expected in the latter half of 2024 and full-scale production in 2027. Forecast from TrendForce suggest that TSMC’s overseas capacity share will rise from 9% in 2023 to 15% by 2027.

(Image: TSMC)

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On November 22, 2023, NVIDIA released its financial report for the third quarter of 2023 (FY3Q24: August 2023 to October 2023), with a revenue of USD 18.1 billion. This represents a quarterly increase of 34% and a yearly increase of 206%.

NVIDIA also provided a revenue guidance for the fourth quarter of 2023 (FY4Q24: November 2023 to January 2024), with a median estimate of USD 20 billion. This reflects a quarterly increase of 10.5% and a yearly increase of 231%.

TrendForce’s Insight:

1. Downgraded Chips Expected by Year-End 

NVIDIA continues its robust performance in the third quarter of 2023 (FY3Q24). The Datacenter division reported a revenue of USD 14.5 billion, marking a 41% quarterly increase and a staggering 279% annual increase. This segment now constitutes 80% of the overall revenue, with a 4% increase from the previous quarter.

The growth is primarily driven by the HGX Hopper GPU, along with the commencement of shipments and revenue recognition for L40S and GH200. Approximately 50% of Datacenter revenue comes from CSP customers, while the remaining 50% is contributed by Consumer Internet and enterprise clients.

In terms of revenue outlook, the China region accounts for approximately 20-25% of NVIDIA’s Datacenter revenue. The management acknowledges the significant impact of the U.S. restrictions on China’s revenue for the fourth quarter of 2023 but expresses confidence that revenue from other regions can offset this impact.

This confidence stems from the current high demand and low supply situation for AI chips. Notably, NVIDIA’s anticipated release of lower-capacity chips, including HGX H20, L20 PCIe, and L2PCIe, originally slated for November 16, 2023, is now expected to be delayed until the end of 2023, presumably due to ongoing negotiations with the U.S. Department of Commerce.

2. NVIDIA Unveils HGX H200, High-Capacity Version of H100; Next-Gen B100 Anticipates Doubling Performance

In a significant product announcement, NVIDIA introduced HGX H200 on November 14, 2023. The new offering is a high-capacity version of H100 and is fully compatible with HGX H100 systems. This compatibility ensures that manufacturers using H100 don’t need to modify server systems or software specifications when transitioning to H200.

HGX H200 is slated for release in the second quarter of 2024, with initial customers including AWS, Microsoft Azure, Google Cloud, and Oracle Cloud. Additionally, CoreWeave, Lambda, and Vultr are expected to adopt HGX H200 in their setups.

Comparing H200 SXM with H100 SXM, it’s evident that H200 SXM has a 76% increase in memory capacity and a 43% increase in bandwidth compared to H100 SXM. Additionally, it upgrades from HBM3 to HBM3e, while the remaining specifications remain the same. This indicates that H200 SXM is essentially a high-capacity version of H100 SXM.

Given the sensitivity of performance to memory capacity and bandwidth, inference on the Llama2 with 7 billion parameters shows that the performance of H200 SXM can reach 1.9 times that of H100 SXM.

Moreover, NVIDIA plans to launch the B100, truly representing the next generation of products with the new Blackwell architecture in 2024. Utilizing Chiplet technology, it is speculated that the architecture will transition from a single die + 6 HBM3 configuration in H100 to a dual-die + 8 HBM3e configuration in B100, potentially doubling the performance compared to H100.

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• [News] H200 Unveiled: NVIDIA Integrates HBM3e for Enhanced AI Performance

(Photo credit: NVIDIA)