Samsung’s foundry business faces ongoing losses and strategic uncertainty. A report from Business Korea reveals that Samsung Securities, a subsidiary of the group, issued a report in July titled “Geopolitical Shifts and Industry,” recommending that Samsung spin off its foundry division and list it in the U.S.

In the second half of this year, Samsung ramped up production of its Gate-All-Around (GAA) 3nm second-generation process, but unstable yields have failed to attract clients.

According to TrendForce, TSMC held 62.3% of the global foundry market in Q2, while Samsung captured just 11.5%. Major tech players like Nvidia and Apple have partnered with TSMC, leaving Samsung struggling to secure similarly high-profile contracts.

Business Korea reports that Samsung will hold its Foundry Forum online on October 24, highlighting the challenges its foundry division is facing. Around mid-October, the company is also expected to announce its third-quarter results, with analysts cited by Business Korea predicting a 500 billion won ($385 million) loss in the non-memory segment, which includes the foundry and system LSI businesses.

Adding to the woes, the Exynos 2500 chip, produced with the GAA 3nm process, is yielding poorly, casting doubt on its inclusion in next year’s Galaxy S25. Delays in the 2nm process further complicate Samsung’s roadmap.

Rumors are circulating about a potential reallocation of foundry personnel to the memory division. Externally, there are calls for Samsung to spin off the foundry business. Samsung Securities advocates for strategic shifts, suggesting further U.S. expansion and the potential spinoff and U.S. listing of the foundry division.

In fact, the suggestion for Samsung to spin off its foundry business has been driven by Intel’s recent decisions. On September 16th, Intel announced that it would transform its foundry division into a wholly-owned subsidiary with its own board of directors.

Meanwhile, Intel also signed a multi-billion-dollar, multi-year deal with Amazon to manufacture chips for Amazon Web Services’ (AWS) AI data centers.

(Photo credit: Samsung)

Polysilicon

Transaction Overview: The recent round of deals has mostly been completed. After polysilicon manufacturers firmly maintained their prices, transaction volumes shrank. The ingot manufacturers, facing difficulties in passing costs downstream, are resistant to price hikes on the raw material side. While leading manufacturers generally agree on price increases for N-type silicon rods, weak demand raises uncertainty over whether these price hikes can be sustained.

Supply and Demand: In Q4, uncertainty in the polysilicon supply increases. Whether the current trend of reduced production will continue depends on whether polysilicon manufacturers maintain their scheduled maintenance and production cuts. If new capacity of leading manufacturers comes online on schedule, the downward trend in polysilicon supply may be reversed. On the demand side, challenges like inventory clearance and financial losses create significant obstacles for ingot manufacturers to increase their procurement. In the short term, the support for polysilicon appears pessimistic.

Price Trends: The price of polysilicon has stabilized after a period of rebound, with leading manufacturers setting N-type silicon rod prices around 41 CNY/kg. However, second- and third-tier manufacturers have weaker pricing power and are generally maintaining stable prices. Considering the current industrial silicon costs, leading manufacturers’ prices are now close to covering their cash costs, with profit margins on the verge of turning positive.

Wafers

Supply and Demand: The supply and demand for different wafer sizes may diverge in Q4. The capacity for 210R wafers is showing a clear upward trend, and procurement demand for this size is expected to increase accordingly. Coupled with inventory adjustments, the supply-demand relationship for 210R is improving. For 182mm wafers, however, the inventory remains a key obstacle to supply-demand balance, with the N-type M10 price hovering around 1.08-1.10 CNY/piece. Some second- and third-tier manufacturers, eager to recover their cash flow, have offered prices below 1.08 CNY/piece for more shipments.

Price Trends: Prices for all wafer types have remained stable this week. Looking ahead, wafer supply is expected to continue shrinking, and production cuts are anticipated to intensify during the National Day holiday. Therefore, the supply-demand balance for 210R wafers may be the first to stabilize.

Cells

Supply and Demand: Ahead of the holiday, demand from the module side may weaken, forcing solar cell manufacturers to lower their productions. For second- and third-tier solar cell manufacturers, shrinking orders and ongoing losses increase the risk of being phased out from the market. Demand for 210mm cells is growing, and its supply-demand is not yet surplus. Some cell manufacturers are accelerating production cuts and technical upgrades in hopes of capturing a premium from short-term supply-demand balance.

Price Trends: Some cell sizes saw price reductions this week. The N-type M10 price has been adjusted to a mainstream transaction range of 0.270 CNY/W, while the N-type G12R has remained stable at around 0.280 CNY/W.

Modules

Supply and Demand: As the holiday approaches, module manufacturers are expected to lower productions due to weak demand. Module manufacturers are cautious with their production plans to avoid inventory buildup. Recently, price competition has resurfaced, and with limited demand, module manufacturers have been cutting prices to secure more orders.

Price Trends: Module prices have been reduced across the board this week. Bifacial M10-TOPCon modules from leading manufacturers have been reduced to the 0.68-0.73 CNY/W range, while some smaller manufacturers, seeking to more shipments, have dropped prices to around 0.65 CNY/W. For bifacial G12-HJT modules, leading manufacturers’ prices are concentrated in the 0.75-0.83 CNY/W range, with a slight reduction in prices of BC products.

Amid market rumors that the Beijing authority has been advising local companies not to use NVIDIA’s H20, which is tailored for the Chinese market, tech conglomerate Huawei is said to initiate sampling of its latest AI accelerator, Ascend 910C, to Chinese customers, according to reports by the South China Morning Post and Tom’s Hardware.

According to the South China Morning Post, large Chinese server companies and internet firms have received the samples of the Ascend 910C, which is regarded as an upgraded version of the Ascend 910B.

Sources cited by a previous report of the Wall Street Journal noted that TikTok’s parent company ByteDance, search giant Baidu, and state-owned telecom operator China Mobile are in preliminary talks with Huawei to secure the Ascend 910C chip.

Citing remarks from Eric Xu, Huawei’s Rotating Chairman, the South China Morning Post indicates that as the AI chips embargo launched by the U.S. is unlikely to be lifted soon, the scenario gives Huawei an opportunity to step in.

Huawei’s Ascend 910B, which the company claims to rival NVIDIA’s A100, has been popular among multiple industries across the country for AI model training. According to the report by the South China Morning Post, the tech giant’s Ascend solutions were used to train roughly half of more than 70 of China’s top large language models as of last year.

According to the report, NVIDIA is projected to ship over 1 million H20 GPUs to China this year, generating around USD 12 billion in revenue. Initially, demand for the H20 was sluggish, but sales have steadily gained momentum in recent months.

In terms of the upcoming Ascend 910C, Tom’s Hardware notes that it may reportedly sell for roughly USD 2 billion together this year, as the launch time would probably fall in the fourth quarter.

However, it is worth noting that Huawei also stands to gain by locking Chinese companies into its Ascend 910C hardware-software ecosystem, the South China Morning Post suggests. Citing a server company employee, the report states that if a firm buys Huawei’s AI chips, it may also need to purchase other offerings, like network and storage solutions, which might cause some hesitation.

Read more

• [News] Huawei Rumored to Launch New High-End AI Chip, Potentially Rivaling NVIDIA’s H100
• [News] U.S. Reportedly Enhancing Chip Export Restrictions to China, while NVIDIA’s H20 Might Get Banned

(Photo credit: Huawei)

Japanese government-backed foundry Rapidus aims to begin mass production of 2nm chips by 2027. According to a MoneyDJ report, existing shareholders like Sony and NAND Flash giant Kioxia are reportedly considering additional investments to support the company’s funding needs.

The Japan Times cited sources confirming that Sony and other current investors will provide further financial backing for Rapidus, which is focused on domestic production of next-generation semiconductors. These investments will be coordinated with financial institutions and the central government to help the Tokyo-based firm secure the necessary capital to start production by 2027.

Rapidus is aiming to raise ¥100 billion from the private sector and asked shareholders to confirm additional contributions, with a response deadline set for Friday.

Investors in Rapidus include Sony Group, NEC, NTT, Kioxia, MUFG Bank, Toyota, SoftBank, and Denso, with combined investments totaling ¥7.3 billion. Sony, NEC, NTT, and MUFG Bank are expected to participate in the additional funding round.

In the financial sector, Sumitomo Mitsui Banking, Mizuho Bank, and the Development Bank of Japan are also considering becoming new shareholders, with combined investments from these three lenders and MUFG Bank expected to reach ¥25 billion. The additional funding from both financial and non-financial companies is likely to begin as early as 2025.

In August, 2023, PSMC announced its partnership with Japan’s SBI to construct a chipmaking plant in Japan. However, the plan has been halted last Friday, with reports indicating that PSMC’s deteriorating financial performance may be the reason. However, the Taiwan chipmaker refuted the speculation, claiming the termination of the fab is not related to its financial status, according to a report by CNA.

PSMC (Powerchip Semiconductor Manufacturing Corp) explained that its collaboration with SBI follows the Fab IP model, in which the former provides consulting for the factory establishment, personnel training, and technology transfer, charging service fees and royalties to its Japanese partner, the report noted. Therefore, Powerchip has no plans to invest in or lead the operations of the new factory.

Citing the remarks by PSMC, the report notes that the company’s board has confirmed the halt of the collaboration plan, and has sent personnel to the Ministry of Economy, Trade and Industry (METI) in Japan to explain the situation, while notifying SBI Holdings in the meantime.

According to a previous report by Nikkei, PSMC informed SBI Holdings last Friday that it was not willing to assume the risks linked to the project. As a result, the two companies will dissolve their partnership aimed at constructing the facility in Miyagi Prefecture in northeastern Japan. However, SBI stated that it plans to carry out the project by finding new partners.

The factory is originally expected to begin mass production by 2027, focusing on automotive semiconductors, with the total planned investment amounting to ¥800 billion, according to Nikkei.

Nikkei notes that PSMC has been struggling with mature nodes due to the oversupply from Chinese firms, resulting in operating losses for five consecutive quarters from April to June 2024.

It is interesting to note that this decision comes after PSMC’s announcement on Thursday that it will provide technology for a chip plant to be built in India by Tata Group, one of the country’s largest conglomerates.

The company announced on the 26th that it has signed a definitive agreement with Tata Electronics in New Delhi to collaborate on building India’s first 12-inch wafer fab in Dholera, Gujarat. PSMC will transfer mature process technologies and train local employees as part of the partnership.

According to PSMC, the USD 11 billion facility, with a monthly capacity of 50,000 wafers, is expected to create over 20,000 high-tech jobs in the region.

Read more

• [News] PSMC’s Frank Huang Explores Global Expansion through Fab IP, Diverging from TSMC’s Path
• [News] PSMC and Tata Electronics Finalize Partnership on 12-Inch Wafer Fab

(Photo credit: PSMC)