According to a report by Taiwanese media Money DJ, after establishing a stable position as a major supplier for NVIDIA GPU baseboard, Wistron has secured orders for AMD MI300 baseboards. Reliable sources indicate that Wistron has expanded its involvement beyond AMD baseboards and entered the module assembling segment.

In addition to NVIDIA and AMD, Wistron has also entered the Intel AI chip module and baseboard supply chain, encompassing orders from the three major AI chip manufacturers.

The NVIDIA AI server supply chain includes GPU modules, GPU baseboards, motherboards, server systems, complete server cabinets, and more. Wistron holds a significant share in GPU baseboard supply and is also involved in server system assembly.

Currently, NVIDIA commands a 70% market share in AI chips, but various chip manufacturers are eager to compete. Both AMD and Intel have introduced corresponding solutions. While Wistron was previously rumored to have entered AMD baseboard supply, it has also ventured into AMD GPU module assembling, serving as the sole source, according to reliable sources.

Regarding the news of Wistron’s involvement in AMD and Intel chip manufacturing, the company has chosen not to respond to market rumors.

(Photo credit: Google)

According to a report by Taiwan’s Commercial Times, TSMC is facing a tight supply of advanced packaging capacity, with its Taichung factory ramping up equipment support at a rapid pace. Industry insiders have disclosed that TSMC’s annual production capacity for the backend CoWoS (Chip-on-Wafer-on-Substrate) advanced packaging is only 150,000 to 300,000 units, falling short of customer demand by over 20%.

To address this shortfall, TSMC officially inaugurated its advanced packaging and testing Plant 6 in Zhunan in June. TSMC’s management has also committed to steadily increasing CoWoS production capacity each quarter, and third-party testing facilities are being actively engaged to bridge the gap.

It is worth noting that TSMC’s Longtan factory has traditionally been a key hub for CoWoS and InFO (Integrated Fan-Out) packaging, with a primary focus on InFO production at approximately 100,000 units per month and a smaller portion allocated to CoWoS. Although some of the InFO capacity has been relocated to the Southern Taiwan Science Park, Longtan’s physical space constraints continue to make Zhunan the primary location for CoWoS expansion. TSMC’s Taichung AP5 factory, on the other hand, is prioritizing WoS (Wafer-on-Substrate) expansion, with CoW (Chip-on-Wafer) expansion slated to commence next year. Many equipment suppliers have reportedly received urgent orders related to these expansion efforts.

Analysts estimate that this year’s overall CoWoS production will reach 110,000 units, doubling to 250,000 units next year. However, analysts caution that while TSMC currently dominates the CoWoS production landscape, other players are gradually entering the field. Therefore, it is crucial to monitor whether an oversupply situation may emerge in the mid-term next year.

(Photo credit: TSMC)

In response to persistent softening in demand, Samsung has taken a decisive step: a sweeping 50% production cut from September, with the focus mainly on processes under 128 layers. According to TrendForce‘s research, other suppliers are also expected to follow suit and increase their production cutbacks in the fourth quarter to accelerate inventory reduction. With this maneuver in play, Q4 NAND Flash average prices are projected to either hold firm or witness a mild surge, possibly in the ballpark of 0~5%.

Aligning with TrendForce’s early-year forecasts, NAND Flash prices are poised to rally ahead of DRAM. With mounting losses for NAND Flash vendors and sales prices nearing production costs, suppliers are opting to amplify production cuts to help stabilize and potentially increase prices. Notably, NAND Flash Wafer contract prices kickstarted their revival in August. Given expanding production curtailments, there’s optimism around the resurgence of customer stockpiling, further amplifying price dynamics in September. Yet, for this positive price trajectory to sail smoothly into 2024, a sustained curtailing in production and a robust rebound in enterprise SSD purchase orders are pivotal.

A silver lining for suppliers: Deficit anticipated to shrink, with module makers reaping benefits

While NAND Flash enjoys a nimbleness in pricing over its counterpart, DRAM, 2023 has yet to witness any notable demand upticks. The overshadowing influence of AI servers, especially edging out general-purpose servers, has made the NAND Flash market forecast underwhelming this year. This narrative unfolds with a continuing dip in Q3 average prices and suppliers grappling with widening deficits.

Diving into supplier inventory levels, TrendForce casts its gaze on Samsung. If the hope is for end-users to ramp up stockpiling to slash inventory by year-end, it might be wishful thinking. Instead, the real game-changer is stringent production control. Samsung’s aggressive production cuts are likely to set off a ripple effect: a potential price uplift for their primary products. This ripple is anticipated to propel the overall bit shipment volume of NAND Flash in Q4, gradually narrowing the deficit gap for suppliers. Simultaneously, this shift will likely improve the profit outlook for module makers.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

On August 29, 2023, Huawei quietly launched its new smartphone, the Huawei Mate 60 Pro, on its official website without the usual fanfare associated with new product releases. Unlike previous events or those held by other brands, Huawei chose to communicate with consumers solely through a letter. What intrigued the market most was the specification of the new device’s System-on-Chip (SoC). Initially, Huawei did not provide any official information about it. However, the release of this new smartphone demonstrates China’s determination to achieve semiconductor self-sufficiency.

Key Insights from TrendForce:

• Overcoming U.S. Sanctions, Huawei Makes a Comeback

In the past, Huawei secured its position as the second-largest player in the global smartphone market by leveraging the differentiating advantage of its in-house developed Kirin SoC chips. However, since May 2019, Huawei has been affected by U.S. sanctions. In September 2020, TSMC, which previously manufactured chips for Huawei, announced the cessation of production. With no supply from TSMC, Huawei’s inventory of 5G chips was depleted by the third quarter of 2022.

Unable to acquire high-end chips, Huawei’s market share in the smartphone industry saw a significant decline. The company could only source 4G chips not subject to U.S. sanctions from Qualcomm or UNISOC. It was believed that U.S. sanctions would severely impact Huawei’s smartphone supply chain and push the company into a dire situation. However, upon analyzing Huawei’s latest release, it is evident that the new smartphone not only features an in-house developed SoC chip by Huawei’s semiconductor subsidiary HiSilicon but also incorporates components and designs from various Chinese manufacturers.

• China’s Semiconductor Self-Sufficiency Continues to Strengthen, Minimal Impact on Taiwanese Supply Chain Expected

China’s pursuit of semiconductor self-sufficiency has become an inevitable outcome of industry development. Although Huawei has not provided detailed specifications for the SoC chip in the Mate 60 Pro, it is speculated that this chip likely uses SMIC’s N+2 process. Due to sanctions, SMIC has been unable to obtain essential EUV equipment. Furthermore, based on the chip’s performance benchmarking, it is comparable to Qualcomm’s flagship Snapdragon 888 chip released in 2021. This suggests that the SoC’s process technology likely falls in the range of 7-14nm, which still lags behind current advanced processes. Nevertheless, this achievement underscores China’s commitment to semiconductor self-sufficiency.

As China gains the ability to independently develop and produce chips, the question arises of whether other Chinese smartphone brands, apart from Huawei, will begin their own chip development efforts. Will this development impact Taiwanese IC design house and foundries that previously held related orders? MediaTek, for instance, primarily supplies chips to brands such as OPPO and vivo. Given that Huawei competes strongly with OPPO and vivo in the smartphone market, it is unlikely that these two brands will entrust their smartphone core SoCs to Huawei’s HiSilicon. Additionally, developing proprietary chips comes with significant costs. Therefore, under these circumstances, it is expected that OPPO and vivo will maintain their partnerships with MediaTek. MediaTek’s chip designs can also utilize TSMC’s advanced processes, giving OPPO and vivo a key competitive advantage against Huawei. Consequently, it is inferred that as long as there is a significant gap between the processes and yields of SMIC and TSMC, Taiwanese foundries will not be significantly affected.

(Photo credit: Huawei)

According to the news from ChinaTimes, the semiconductor market is experiencing a slowdown, with Taiwan’s three major mature process wafer foundries UMC, VIS, and PSMC all reporting reduced revenues in August. VIS and UMC both posted lower revenues compared to the previous month, while PSMC managed a slight 1.2% monthly increase in August. However, this increase still falls within this year’s relatively low range. Industry experts anticipate that the semiconductor industry will maintain a subdued market outlook in the latter half of this year, with a potential recovery likely delayed until the first half of the next year.

The semiconductor industry began its correction in the second half of last year. Initially, there was optimism for inventory adjustments to conclude within four quarters by the end of this year’s second quarter, anticipating a demand rebound in the latter half of the year. However, since the second quarter, semiconductor manufacturers have grown pessimistic due to slower downstream inventory depletion and weak end-user demand. This is reflected in third-quarter revenues for mature process wafer foundries, which are expected to remain flat or slightly decline based on August revenues. A robust recovery in the fourth quarter is unlikely, suggesting that industry-wide recovery is likely postponed until the first half of next year.

UMC saw consecutive monthly revenue growth from February to July. However, following five consecutive increases, the company experienced a slight decrease in revenue in August. TSMC previously stated in a conference that the current market recovery falls short of expectations, with an unclear outlook for wafer demand. It anticipates a 3~4% quarter-on-quarter decrease in wafer shipments in the third quarter, which aligns with the market’s expectations for a slight decline in August revenue.

UMC forecasts a 3~4% quarter-on-quarter decrease in wafer shipments in the third quarter, a 2% quarter-on-quarter increase in the average wafer price in USD, a low single-digit percentage decrease in the average gross margin, and an approximate 65% capacity utilization rate. Overall, industry insiders expect TSMC to face slight downward pressure on third-quarter revenue.

VIS reported July revenue reaching NT$3.596 billion, marking a new high for the first seven months of the year. However, its August revenue showed a decline, with a 2.23% month-on-month decrease to NT$3.516 billion. This is significantly different from the typical revenue growth momentum observed during the third-quarter peak season in previous years. Cumulative revenue for the first eight months of this year also decreased by 34.54% compared to the same period last year.

VIS anticipates a 4~6% quarter-on-quarter increase in wafer shipments in the third quarter, with a capacity utilization rate similar to that of the second quarter, around 60%. The average selling price (ASP) is expected to remain stable. However, due to increased production costs and depreciation expenses, the gross margin is estimated to decline to 25~27% in the third quarter, putting more pressure on profitability compared to revenue.

As for PSMC, although its August revenue saw a slight 1.2% month-on-month increase, the company has maintained around NTD 3.4 billion in monthly revenue from June to August, which is considered a low level compared to the second quarter when monthly revenue was approximately NTD 3.8 billion. The third quarter is expected to continue to exert downward pressure on revenue compared to the previous quarter. The company has also previously stated that it does not rule out the possibility of a quarterly loss in its core business during the third quarter.

(Source: https://www.chinatimes.com/newspapers/20230911000124-260202?chdtv)