The AI landscape witnesses a robust surge with the consecutive launches of AMD’s “Instinct MI300” series AI chips and NVIDIA’s upcoming “B100” GPU structure. This wave of innovation propels a flourishing demand for AI-related Outsourced Semiconductor Assembly And Test Services (OSAT), surpassing initial estimates by over 10%. OSAT companies like ASE Holdings, King Yuan Electronics (KYEC), and Sigurd are poised to experience a notable uptick in revenue, as reported by UDN News.

According to reports, AMD is launching the “Instinct MI300” series AI chips this week, and NVIDIA plans to unveil the next-gen “B100” GPU next year. This successive release of new AI products by the two giants is boosting momentum in related OSATs collaboration.

NVIDIA is gearing up for the 2024 launch of its next-gen Blackwell architecture B100 GPU, saying AI performance exceeding twice that of the H200 GPU under the Hopper architecture, signifying a substantial leap in computational prowess.

Positive Outlook in 2024 for OSATs Amid AI Chip Development

Industry source indicates that due to the AI extensive computation requirements, advanced packaging is gradually becoming mainstream. This involves stacking chips and packaging them on a substrate. Depending on the arrangement, it is divided into 2.5D and 3D packaging. The advantage of this packaging technology is the ability to reduce chip space while also reducing power consumption and costs.

It is said the surge in AI chip orders from AMD and NVIDIA has led to a bottleneck in TSMC CoWoS advanced packaging capacity. This unexpected demand has exceeded projections for related OSATs, including ASE Holdings, KYEC, and Sigurd.

In the case of ASE Holdings, its subsidiary Siliconware Precision Industries (SPIL) possesses the advanced packaging capacity essential for generative AI chips. Joseph Tung, CFO of ASE Holdings, notes that while AI currently in its early-stage and is set to drive explosive growth. As AI integrates into existing and new applications, the demand for advanced packaging is expected to fuel the industry’s entry into the next super growth cycle.

For KYEC, a significant expansion in AI chip testing capacity since Q2 this year positions the company to benefit from the surge in demand.

Sigurd’s COO Tsan-Lien Yeh addresses that, with the release of AI phones, recognizing the doubled testing time for phone chips, which now carry APU/NPU for AI computing compared to general 5G chips. Sigurd has upgraded its equipment to align with future customer needs.

(Image: ASE VIPack’s video)

Advancements continue in China’s semiconductor landscape with progress reported in five major semiconductor projects. Companies like BYD Semiconductor, Empyrean Technology, CGEE, Sinopack, and CETC (Shanxi) have witnessed recent developments across semiconductor materials, design, packaging and testing, and power semiconductors.

BYD Semiconductor: completed the first phase of power devices and sensor controller project

BYD Semiconductor has successfully completed the first phase of its Power Devices and Sensor Controller project, focusing on automotive-grade semiconductors. This project aims to establish a production line capable of producing 720,000 power device products and CNY 6 billion (about USD 847 million) sets of optical microelectronics products annually, contributing to an expected annual output value of CNY 15 billion (about USD 2.1 billion). The devices produced are critical components for new energy vehicles.

Empyrean Technology: 7 semiconductor-related projects signed to build in Xi’an

Empyrean Technology is an EDA and services provider, focusing on analog design and digital SoC solution.

Empyrean Technology’s Xi’an R&D base, along with six other projects, has been signed in Xi’an High-tech Zone. Empyrean Technology envisions its Xi’an R&D base as the largest center in northwest China. According to CCTV, these projects included fields such as integrated circuits and network security, providing essential technical support to address challenges arising from the U.S. bans.

CGEE: completed headquarters production and R&D center project

CGEE specialize in semiconductor-grade single crystal silicon furnaces (8-12 inches), 6-8 inch SiC, GaN, and associated crystal growth equipment and processes.

On November 28, CGEE highlighted the completion of the opening ceremony for its headquarters production and R&D center project. Focused on expanding production capacity, the company clarified that this project is an extension of its core business. It involves technical research, development, and upgrades in crystal growth equipment and processes, hastening the industrialization of research outcomes. This strategic move aims to assist the company in diversifying its product line to better align with customer demands.

In a recent interview, CGEE highlighted its proactive approach to enter the Taiwan market, engaging in close technical exchanges with customers. The company has not only secured bulk orders but also witnessed a continuous increase in order quantities. Furthermore, there is an active strategic deployment in overseas markets. CGEE emphasized the successful delivery and acceptance of its semiconductor-grade single crystal silicon furnaces and SiC single crystal furnaces in Taiwan.

Sinopack’s subsidiary Bowei: completed third-generation semiconductor power device industrialization project

Bowei focus on GaN communication base station RF device. The project’s annual capacity is planned to reach 6 million units.

On November 27, Sinopack announced that its subsidiary, Bowei, has successfully completed the expansion project for the third-generation semiconductor power device industrialization. The key products of this project include GaN communication base station RF chips and devices, with an annual production capacity planned at 6 million units.

Sinopack highlighted that Bowei primarily engages in integrated circuits design, packaging, testing, and sale of GaN communication RF integrated circuits products. This includes including GaN communication base station RF integrated circuits and devices, along with microwave communication RF integrated circuits and devices.

CETC (Shanxi): Completed Its third-generation semiconductor technology innovation center project

CETC(Shanxi) engage in the research, development, and industrialization of high-purity graphite and carbon-based material equipment.

The third-generation semiconductor technology innovation center of CETC (Shanxi) is situated in the Shanxi Transformation and Comprehensive Reform Demonstration Zone (Shanxi ZGQ). This center includes the trial verification line and supporting projects, along with the microelectronics smart manufacturing industry base project. The construction is planned in two phases. Upon completion of the first phase, it will possess the capacity to produce 600 units/sets of smart manufacturing equipment annually, along with 24,000 pieces/year of ceramic substrates and modular circuits. The facility will also establish a 6-inch wide bandgap semiconductor manufacturing equipment process verification platform and a common technology research and development platform.
(Image: BYD Semiconductor)

According to the expreview’s report, due to the surge in demand for AI applications and the market’s need for more powerful solutions, NVIDIA plans to shorten the release cycle of new products from the original 2 years to 1 year. Regarding its HBM partner, although validations for various samples are still in progress, market indications lean towards SK Hynix securing the ultimate HBM3e supply contract.

In a recent investor presentation, NVIDIA revealed its product roadmap, showcasing the data center plans for 2024 to 2025. The release time for the next-generation Blackwell architecture GPU has been moved up from Q4 2024 to the end of Q2 2024, with plans for the subsequent “X100” after its release in 2025.

Photo credit: NVIDIA

According to Business Korea, NVIDIA has already signed a prioritized supply agreement with SK Hynix for HBM3e, intended for the upcoming GPU B100.

While NVIDIA aims for a diversified supply chain, it has received HBM3e samples from Micron and Samsung for verification testing, and formal agreements are expected after successful validation. However, industry insiders anticipate that SK Hynix will likely secure the initial HBM3e supply contract, securing the largest share.

With this transaction, SK Hynix’s revenue for the fourth quarter of the 2023 fiscal year is poised to surpass KRW 10 trillion, marking a resurgence after a hiatus of 1 year and 3 months.

In the upcoming NVIDIA products scheduled for release next year, the newly added H200 and B100 will incorporate 6 and 8 HBM3e modules, respectively. As NVIDIA’s product line transitions to the next generation, the usage of HBM3e is expected to increase, contributing to SK Hynix’s profit potential.

SK Hynix is actively engaged in the development of HBM4, aiming to sustain its competitive edge by targeting completion by 2025.

TrendForce’s earlier research into the HBM market indicates that NVIDIA plans to diversify its HBM suppliers for more robust and efficient supply chain management. The progress of HBM3e, as outlined in the timeline below, shows that Micron provided its 8hi (24GB) samples to NVIDIA by the end of July, SK hynix in mid-August, and Samsung in early October.

Given the intricacy of the HBM verification process—estimated to take two quarters—TrendForce expects that some manufacturers might learn preliminary HBM3e results by the end of 2023. However, it’s generally anticipated that major manufacturers will have definite results by 1Q24. Notably, the outcomes will influence NVIDIA’s procurement decisions for 2024, as final evaluations are still underway.

(Photo credit: SK Hynix)

On December 1, the Ministry of Trade, Industry, and Energy (MOTIE) of South Korea disclosed that Korea’s export value in November experienced a notable YoY increase of 7.8 %, reaching a monthly peak for this year at USD 55.8 billion. Concurrently, imports contracted by 11.6 % to USD 52.0 billion, resulting in a trade surplus of USD 3.8 billion.

Semiconductors, ending a 15-month decline, exhibited growth of 12.9 %, attributed to the escalating fixed prices of memory chips. Anticipated releases of new smartphone models and AI server products are expected to fuel demand, sustaining the positive trend in exports.

The export value of automobiles surged by 21.5 % to USD 6.5 billion, marking the 17th consecutive month of growth. This was fueled by robust demand for high value-added vehicles, such as SUVs and eco-friendly cars, particularly in the U.S. market. On the other hand, Electric Vehicles (EVs), constituting 23.8 % of the total automobile export value, experienced a remarkable 69.4 % increase, reaching USD 1.6 billion.

In terms of regional performance, exports to six out of Korea’s nine major destinations achieved growth, with notable increases in exports to the U.S., ASEAN, Japan, Latin America, India, and the EU.

Exports to China, despite a marginal decrease of 0.2 % to USD 11.4 billion, reached unprecedented highs, surpassing USD 10 billion for the fourth consecutive month. For the U.S., the exports recorded double-digit growth for the second consecutive month, reaching USD 11.0 billion, driven by strong demand for automobiles, machinery, semiconductors, wireless communication devices, home appliances, petrochemicals, and bio-related products.

In terms of Asia, ASEAN witnessed an 8.7 % increase in exports to USD 9.8 billion, achieving the second-highest November monthly exports of all time across various sectors. Exports to Japan increased by 11.5 % to USD 2.6 billion, driven by growth in petroleum products and bio health despite a decline in steel exports.

On November 30th, Apple revealed an extension of its partnership with Amkor in the advanced packaging sector within the United States. Apple proudly proclaimed its role as the inaugural and principal client for Amkor’s recently established facility in Peoria, Arizona. In this collaboration, Amkor will handle the packaging of Apple chips manufactured at the nearby TSMC’s wafer fab. Worth noting, Apple is also TSMC’s leading customer at the Arizona fab.

Jeff Williams, Apple’s CEO, emphasized Apple’s unwavering commitment to American manufacturing, stating that they will continue expanding investments in the U.S. Apple silicon’s groundbreaking performance capabilities have enabled users to accomplish unprecedented tasks. The announcement highlights the anticipation of Apple silicon being manufactured and packaged in Arizona.

According to the press release, Apple and Amkor have been collaborating for over a decade, packaging chips extensively used in all Apple products. Concerning the new factory, Amkor will invest approximately $2 billion, and upon completion, it will employ over 2,000 people.

Apple also underscores that the investment in advanced manufacturing is part of the company’s commitment in 2021 to invest USD 430 billion in the U.S. economy over five years. Currently, Apple is working towards achieving this goal through direct spending with American suppliers, data center investments, U.S. capital expenditures, and other domestic expenditures.

On the other hand, Amkor outlined plans to establish a state-of-the-art manufacturing campus featuring an expansive 500,000 square feet of cleanroom space. The primary objective of the initial phase is to initiate production within the next two to three years.

Amkor aims to provide cutting-edge technology catering to high-volume semiconductor advanced packaging and testing, specifically supporting crucial markets such as high-performance computing, automotive, and communications. The newly proposed production facility will be strategically located within a semiconductor hub, surrounded by front-end wafer fabs, IDM, and existing or expanding suppliers in the field, including TSMC, Intel, Applied Materials, ASML, and others.

“Amkor has been a strategic OSAT partner to TSMC for many years,” said Dr. C.C. Wei, CEO of TSMC. “TSMC applauds Amkor for investing in the future of the semiconductor industry with us in Arizona. We share Amkor’s excitement for its significant investment and the value this facility will bring to TSMC, our customers, and the ecosystem.”

Giel Rutten, CEO from Amkor, indicated the incorporation of this new U.S. facility with Amkor’s advanced facilities across Asia and Europe serves to strengthen global extension and fosters both global and regional supply chains. Amkor’s investment is positioned to bolster them in advanced packaging and testing, concurrently reaffirming the commitment to expanding chip manufacturing in the United States.

According from the financial reports, Amkor’s two largest clients are Apple and Qualcomm. Apple accounted for 20.6% and Qualcomm 10.1%. of Amkor’s USD 7.1 billion in revenue last year.
(Image: Amkor)

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