GlobalWafers has achieved a milestone by successfully advancing silicon carbide (SiC) crystal growth to 8-inch wafers, aligning with major international players in the industry. The company foresees the commencement of small-scale shipments of 8-inch SiC products in Q4 2024, with substantial growth expected in 2025, surpassing the proportion of 6-inch wafers by 2026.

Accourding to CTEE, Doris Hsu, Chairwoman of GlobalWafers, shared that the yield for 8-inch SiC crystal growth has been excellent, with ample room for further expansion, currently exceeding 50%.

The company emphasizes its readiness with 8-inch SiC crystal growth, cutting, grinding, and polishing capabilities, with sample deliveries set for the first half of next year.

Hsu highlighted customers’ eagerness for GlobalWafers to expedite the transition from 6-inch to 8-inch SiC production, aiming for an “8-inch dominant, 6-inch secondary” approach. The increasing demand for 8-inch SiC is primarily driven by automotive customers.

In terms of technology, SiC is moving from 6-inch to 8-inch wafers due to increased demand. TrendForce’s insights indicated, “Currently, the silicon carbide industry is mostly using 6-inch wafers, accounting for nearly 80% of the market share, while 8-inch wafers make up less than 1%. Expanding the wafer size to 8 inches is considered crucial for further reducing the cost of silicon carbide devices.”

From a cost perspective, 8-inch wafers indeed offer substantial advantages, but the challenge of yield has consistently plagued SiC. TrendForce’s earlier research suggests that, when it reaches maturity, an 8-inch wafer’s selling price is approximately 1.5 times that of a 6-inch wafer, and the number of die an 8-inch wafer can produce is about 1.8 times that of a 6-inch SiC wafer, significantly improving wafer utilization.

While GlobalWafers currently manufactures SiC substrates in Taiwan, the future SiC epitaxy will take place in the United States, with plans to expand with two additional substrate and two additional epitaxy facilities.

The production of SiC crystals involves high-temperature and closed-environment growth, which demands meticulous furnace design and crucible material selection, adding complexity to equipment and operations.

GlobalWafers has designed and developed specialized SiC crystal growth furnaces, enhancing material quality control and lowering crystal growth costs. SiC’s high hardness and brittleness make wafer processing challenging, but GlobalWafers employs higher process accuracy and more efficient wafer handling methods to achieve ultra-thin SiC wafer processing.

(Image: GlobalWafers)

According to Reuter’s report, the merger negotiations between Western Digital and Japan’s Kioxia Holdings have been terminated as the two companies could not reach an agreement on the terms. This potential merger aimed to create one of the largest memory chip manufacturers globally but faced obstacles in its path.

Notably, South Korea’s SK Hynix, a significant investor in Kioxia, expressed its opposition to the deal, citing concerns about its impact on investment asset value.

TrendForce’s Insights:

While the merger talks between Western Digital and Kioxia faced obstacles, primarily involving a major shareholder, SK Hynix, and disagreements over the acquisition price, it is still anticipated that such acquisitions will eventually materialize. This expectation is rooted in the broader context of the NAND Flash industry.

NAND Flash global demand has seen a decline in its growth rate, shifting from approximately 30% before 2020 to around 20% in recent years. Furthermore, TrendForce’s data reveals that in 2023, all NAND Flash suppliers have experienced their most significant operating losses since 2014. Given these challenges, NAND Flash suppliers are compelled to explore strategies to sustain their competitiveness in a changing industry landscape.

Explore more:

• After a Low Base Year in 2023, DRAM and NAND Flash Bit Demand Expected to Increase by 13% and 16% Respectively in 2024, Says TrendForce

On October 17, 2023, the U.S. government unveiled an updated set of regulations for semiconductor exports, introducing stricter standards for advanced AI chips. Additionally, these regulations expand control over the export of exposure equipment and include Chinese GPU design startups on an Entity List.

TrendForce’s Insights: 

1. New regulations cover chips, manufacturing equipment, and related companies, signaling an effort to restrain China’s AI development.

In this latest set of regulations, the U.S. has relaxed the I/O bandwidth restrictions for AI chips and introduced three additional conditions beyond a total processing performance (TPP) of ≥ 4800 TOPS:

(1) Total processing performance ≥ 1600 TOPS and performance density (PD) ≥ 5.92

(2) Total processing performance ≥ 2400 TOPS but < 4800 TOPS and performance density ≥ 1.6 but < 5.92

(3) Total processing performance ≥ 1600 TOPS and performance density ≥ 3.2 but < 5.92

As a result of these new conditions, NVIDIA’s A800, H800 GPU, and the recent launched L40S GPU for the Chinese market are now included in the list of controlled exports, similar to the A100 and H100 GPUs that were added in September 2022.

Concerning manufacturing equipment, the control threshold for exposure equipment has shifted from single-machine (specified substrate) coverage precision of ≤ 1.5nm to > 1.5nm but ≤ 2.4nm. This change directly led to the inclusion of ASML’s 1980Di DUV lithography machines.

On the corporate front, Chinese domestic GPU design startups such as Birentech, Moore Threads, and high-speed DSP design company Superfusion Semiconductor, along with their related entities, have been placed on the Entity List by the U.S. Department of Commerce.

In summary, these new regulations encompass chips, manufacturing equipment, and related companies. The U.S. is not only controlling the current mainstream AI product lines and applications of DUV lithography machines for 28-7nm processes but is also making a clear effort to interfere Chinese domestic manufacturers’ development of AI computation chips, indicating a strong determination to restrict China’s growth in the AI sector.

2. Priority for Chinese Enterprises: Securing AI Computing Resources through Cloud Service Providers

In light of the impact of the new U.S. semiconductor control regulations, Chinese domestic companies will be limited to AI chip performance not exceeding that of NVIDIA L40 GPU. As leading companies like NVIDIA, AMD, Intel, and others continuously boost the performance of their AI chips, the gap between the AI computing resources established by Chinese companies and their international counterparts will continue to widen.

Looking at it from an angle of independent research and development, with the inclusion of 1980Di and more advanced DUV lithography machines in the control list and the U.S. Department of Commerce placing Chinese IC design companies on the Entity List, short-term mass production of high-performance server AI chips in China seems unlikely.

Faced with challenges in both outsourcing and in-house production, the primary path for Chinese domestic companies to develop AI technology and applications is to obtain high-performance AI computing resources from international cloud service providers (CSP). It is worth noting that the U.S. government is also exploring limitations on Chinese firms attempting to evade semiconductor control policies through CSP. For Chinese companies, establishing robust customer relationships and building extensive AI computing resources are pressing priorities before related policies are enacted.
(Image: Pixabay)

The US Department of Commerce issued new restrictions on AI chips on October 17, 2023, with a focus on controlling the export of chips to China, including NIVIDA’s A800, H800, L40S, and RTX4090, among others. Taiwanese manufacturers primarily serve cloud service providers and brand owners in North America, with relatively fewer shipments to Chinese servers. However, Chinese manufacturers, having already faced two chip restrictions imposed by the US, recognize the significance of AI chips in server applications and are expected to accelerate their in-house chip development processes.

TrendForce’s Insights:

1. Limited Impact on Taiwanese Manufacturers in Shipping AI Servers with H100 GPUs

Major Taiwanese server manufacturering companies, including Foxconn, Quanta, Inventec, GIGABYTE, and Wiwynn, provide AI servers equipped with H100 GPUs to cloud data centers and brand owners in Europe and the United States. These Taiwanese companies have established some AI server factories outside China, in countries such as the US, the Czech Republic, Mexico, Malaysia, and Thailand, focusing on producing L10 server units and L11 cabinets in proximity to end-users. This strategy aligns with the strategic needs of US cloud providers and brand owners for global server product deployment.

On the other hand, including MiTAC, Wistron, and Inventec, also provide server assembly services for Chinese brands such as Inspur and Lenovo. Although MiTAC has a significant share in assembling Inspur’s servers, it acquired Intel DSG (Data Center Solutions Group) business in July 2023. Therefore, the focus of AI servers remains on brand manufacturers using H100 GPUs, including Twitter, Dell, AWS, and European cloud service provider OVH. It is speculated that the production ratio of brand servers will be adjusted before the new restrictions are enforced.

Wistron is a major supplier for NVIDIA’s AI server modules, DGX A100, and HGX H100. Its primary shipments are to end-users in Europe and the United States. It is expected that there will be adjustments in the proportion of shipments to Chinese servers following the implementation of the restrictions.

Compal has fewer AI server orders compared to other Taiwanese manufacturers. It has not yet manifested any noticeable changes in Lenovo server assembly proportions. The full extent of the impact will only become more apparent after the enforcement of the ban.

During the transitional period before the implementation of the chip ban in the United States, the server supply chain can still adapt shipments based on local chip demand in China to address market impacts resulting from subsequent chip controls.

2. Chinese Manufacturers Focusing on Accelerating In-House Chip Development

Chinese cloud companies had already started developing their AI chips before the first U.S. chip restrictions in 2022. This included self-developed AI chips like Alibaba Cloud’s T-HEAD, a data center AI chip, and they expanded investments in areas such as DRAM, AI chips, and semiconductors with the aim of establishing a comprehensive IoT system from chips to the cloud.

Baidu Cloud, on the other hand, accelerated the development of its third-generation self-developed Kunlun chip, designed for cloud and edge computing, with plans for an early 2024 release.

Tencent introduced three self-developed chips in 2021, including an AI inference chip called Zixiao, used for Tencent’s meeting business; a video transcoding chip called Canghai, used in cloud gaming and live streaming applications; and a smart network card chip named Xuanling, applied in network storage and computing.

ByteDance made investments in cloud AI chips through its MooreThread initiative in 2022 for applications in AI servers. Huawei released the Ascend 900 chip in 2019 and is expected to introduce the Ascend 930B AI chip in the latter half of 2024. While this chip has the same computational power as the NVIDIA A100 chip, its performance still requires product validation, and it is speculated that it may not replace the current use of NVIDIA GPUs in Chinese AI servers.

Despite the acceleration of self-developed chip development among Chinese cloud server manufacturers, the high technological threshold, lengthy development cycles, and high costs associated with GPU development often delay the introduction of new server products. Therefore, Chinese cloud companies and brand manufacturers continue to purchase NVIDIA GPUs for the production of mid to high-end servers to align with their economic scale and production efficiency.

In response to the new U.S. restrictions, Chinese cloud companies have adopted short-term measures such as increasing imports of existing NVIDIA chips and building up stockpiles before the enforcement of the new restrictions. They are also focusing on medium to long-term strategies, including accelerating resource integration and shortening development timelines to expedite GPU chip manufacturing processes, thus reducing dependency on U.S. restrictions.

According to a report by Bloomberg, Yoshihiro Seki, Secretary-General of the ruling Liberal Democratic Party and a member of the Japanese parliament, has announced that the government is planning to allocate an additional ¥900 billion for the construction of TSMC’s Fab 2 in Kumamoto, Japan. Furthermore, an extra ¥590 billion in subsidies will be provided to support the construction of a wafer fab by the Japanese semiconductor startup Rapidus.

Seki emphasized that subsidies usually cover about one-third of the total investment. With measures like training Japanese engineers and collaborative R&D with local companies, this subsidy could increase to potentially cover up to half of the investment. He also noted that the specific amount remains subject to change as the additional budget has not been finalized yet.

The Japanese government initiated the “Strategy for Semiconductors and the Digital Industry” in 2021 to address economic risks and prepare for the wave of digitalization. At that time, they already provided ¥476 billion in subsidies for TSMC’s Kumamoto 1st Fab. The current subsidy marks an expansion of these efforts.

The local government Kumamoto is eagerly anticipating TSMC’s presence. Ikuo Kabashima, the Governor of Kumamoto Prefecture, recently proposed “New Airport Concept Next Stage” that envisions using the airport as a hub for semiconductor imports and exports over the next decade. This plan aims to stimulate the clustering of semiconductor-related industries and contribute to regional development centered around Kumamoto.

Moreover, the Japanese government has pledged to provide ¥330 billion in funding to enable Rapidus to construct a 2nm wafer fab in Hokkaido. These substantial subsidies underscore the Japanese government’s commitment to these semiconductor projects.

In response to the Japanese government’s additional subsidies, Tetsuro Higashi, Chairman of Rapidus, stated in an interview with Jiji Press on the 24th that apart from the new factory being built in Chitose, Hokkaido, “We also plan to construct second and third factories, and they will also be situated in Chitose, Hokkaido.” Rapidus’s 2nm chip R&D/production facility, Chitose Fab IIM-1, located in the Chitose Meimeimei World industrial park in Chitose, Hokkaido, commenced construction in September. The trial production line is expected to start in April 2025, with mass production slated to begin in 2027.