Republican presidential candidate Donald Trump’s recent remarks on Taiwan “taking about 100% of our chip business” and thus should pay the U.S. for defense have raised concerns in the semiconductor industry. According to a report by Economic Daily, citing a Taiwanese scholar’s observation, as Trump’s odds of winning increase, related chip subsidies may face a higher chance of being adjusted.

In an interview with Bloomberg, Trump mentioned that Taiwan did take 100% of the country’s chip business, and thus should pay for defense, while the U.S. is “no different than an insurance company.”

Bilateral Trade Agreements, Such as US-Taiwan 21st Century Trade Initiative, May be Impacted

Regarding his comments, the report cited the observation by Liu Da-nian, Director of the Regional Development Study Center at the Chung-Hua Institution for Economic Research. The scholar noted that the notion that Taiwan is taking away American chip business is a preconceived misconception, as Taiwan’s chip manufacturing relies on its own R&D achievements, with little government subsidies. Instead of taking the development of Taiwanese industry into consideration, Trump only focused on the outcome, which is very unfair.

Liu said that since Trump opposes any bilateral trade agreements, if he is re-elected, the ongoing US-Taiwan 21st Century Trade Initiative negotiations could be affected, which covering topics including agriculture, labor and digital trade.

Liu analyzed that Trump, with his America-centric approach, would likely push for more of the supply chain to be based in the U.S. Additionally, he would tend to increase investment controls on China and impose heavier tariffs.

Furthermore, he stated that as Trump has threatened to impose a 10% tariff on all imports to the US if elected, Taiwan would not be exempt from this neither. He warned that such actions could disrupt global trade order, and the whole world be concerned about how to deal with Trump during his potential second term.

TSMC Unlikely to Suffer as the CHIPS Act Has Been Approved by Congress

It is also worth noting that in April, Taiwanese foundry giant TSMC is confirmed to receive a USD 6.6 billion subsidy from the U.S. government, under the framework of the CHIPS Act. The company plans to build its third fab in Arizona afterwards, with total investment rising to USD 65 billion.

Regarding the development afterwards, Liu stated that although Trump believes the US CHIPS Act is a misguided policy, the act was passed by the US Congress, making it difficult to overturn and it is already being implemented.

On July 17^th, GlobalWafers joins TSMC as the second Taiwanese semiconductor company to receive subsidies from the CHIPs Act. It is set to receive USD 400m in direct funding to support the opening of two new US-based manufacturing sites for semiconductor wafer production.

Read more

• [News] US Reportedly Targeting China’s Mature Semiconductor Processes Next
• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab

(Photo credit: the White House)

According to a report from TechNews citing industry sources, the US is considering expanding sanctions, with the next focus on China’s mature semiconductor processes. In addition to imposing tariffs, the determination of the chip’s origin will be strictly enforced. The standard, which previously considered the final packaging point, will now trace back to the front-end manufacturing and photomask origin.

Reportedly, it is believed that the US will significantly escalate the trade war after the presidential election, intensifying export restrictions on China. Currently, new tariffs of over 10% are being imposed on products from countries other than the US, and there are plans to impose tariffs of 60% or higher on Chinese goods.

It is noteworthy that the US government previously announced the imposition or increase of tariffs on Chinese electric vehicles, semiconductors, lithium batteries, and other products, with the semiconductor tariff rate set to rise from 25% to 50% by 2025.

The sources cited by the report believe that tariffs do indeed reduce imports and encourage the production of industries such as semiconductors, computer equipment, and steel in US factories. However, the cost is very high, potentially offsetting any overall benefits. Research indicates that tariffs lead to higher prices for US consumers and factories that rely on foreign inputs, and reduce exports of certain US goods that face retaliatory measures.

Meanwhile, for the future direction of the US, it can be inferred that chips manufactured in Taiwan and South Korea may also face tariffs.

Due to the intensification of the US-China tech war, the US is considering expanding export restrictions, targeting the mature processes that China is starting to shift towards. There have been continuous reports of China expanding its mature processes, raising global concerns about overcapacity in mature processes. The US government may in the future use tariff barriers to prevent products containing chips made with Chinese mature processes from being sold overseas at low prices.

The sources cited by TechNews further report that the determination standard will change from the final packaging location to whether the origin of the chip and photomask is manufactured in China.

In addition, Bloomberg also reports that the US administration is considering using the “Foreign Direct Product Rule” (FDPR). Under this rule, if a product uses any US technology, the US can implement controls. The US government has also notified companies such as Tokyo Electron and ASML that if they continue to supply advanced chip technology to China, the US will consider imposing the strictest trade control measures.

Read more

• [News] Taiwanese Foundries and Networking Companies to Benefit amid Escalating US-China Tech War
• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls

(Photo credit: iStock)

Following the launch of Eight Measures for Deepening the Reform of the STAR Market to Serve Technological Innovation and New Qualitative Productivity (Hereinafter referred to as “The Eight Measures”) by China Securities Regulatory Commission (CSRC) in June, China’s semiconductor industry has embraced new opportunities for merger, acquisition and re-organization.

• Two M&A Deals Occurred in China’s Semiconductor Industry

On the heels of UNT and Novosense, two more mergers and acquisitions have recently took place in China’s semiconductor industry.

Semiconductor component manufacturer Fortune-Semi intends to acquire 100% equity of Yesemi Precision Semiconductor for no more than CNY 800 million, while power management chip and signal chain chip manufacturer Halo Micro plans to acquire a 30.91% stake in Korean chip design company Zinitix.

It’s learned that Yesemi Precision Semiconductor was founded in 2015 with a registered capital of CNY 143 million. It mainly focuses on customers of mainstream domestic 12-inch fabs, offering non-metallic component consumables based on silicon, silicon carbide, and quartz, metal component consumables based on aluminum and other metal materials, as well as services for the repair, recycling cleaning, and coating regeneration of core components from fabs.

Some of the company’s products have passed the advanced process certification of mainstream domestic 12-inch fab customers and have been produced at scale and delivered.

As per Halo Micro’s announcement, its wholly-owned subsidiary HMI plans to acquire a 30.91% stake in Zinitix for KRW 21.005 billion, becoming the largest shareholder of Zinitix and dominating its board seats.

Founded in 2000 and listed on the KOSDAQ in 2019, Zinitix is an integrated circuit design company providing touch controller chip, autofocus chip, haptic driver chip, DC/DC power management chip, touchpad module, and audio amplifier for applications such as smartphone, smartwatch, and tablet. Currently, Zinitix’s main products have entered the supply chain system of Samsung Electronics, becoming one of its suppliers for consumer electronics products like smartphones.

• China’s Semiconductor Industry Enters a Golden Period for Integration

On June 19, CSRC released the “Eight Measures”, proposing to provide stronger support for M&A, encourage STAR Market-listed companies to engage in M&A activities along the industrial chain, enhance the inclusiveness of M&A valuation, and support STAR Market-listed companies in acquiring high-quality but not yet profitable enterprises boasting cutting-edge technologies. This proposal have received vigorous responses from Chinese IC enterprises.

The “Eight Measures” policy and the active cooperation of IC companies have invigorated China’s semiconductor M&A market recently. Within less than a month, several M&A deals occurred. In addition to the aforementioned two transactions, wafer foundry UNT and chip design company Novosense also disclosed acquisition plans on June 21 and June 23, respectively.

UNT was the first company in the semiconductor field to take action following the release of the “Eight Measures.” The company plans to acquire the remaining 72.33% equity of UNT Yuezhou. As for Novosense, it announced to acquire 79.31% of Magntek’s shares for CNY 793 million. Based on Magntek’s book assets of CNY 148 million, the deal price represents a premium of around 6.78 times.

Industry sources cited by the report believe that the semiconductor industry is at the bottom of its cycle, making it a “golden period” for industry integration.

Read more

• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls
• [News] China Lists Semiconductor Self-Reliance Challenges, Excluding Lithography Equipment

(Photo credit: UNT)

As Samsung eagerly accelerates its pace on the HBM3e certification with NVIDIA, SK hynix, the current HBM market leader, is reportedly planning another move to strengthen its relationship with the AI giant. According to a report by Korean media Money Today, SK hynix is teaming up with Amkor Technology to target the silicon interposer market, eyeing to become a supplier for NVIDIA.

Citing sources from the semiconductor industry, the report notes that SK hynix has discussed with Amkor, the world’s second-largest OSAT (Outsourced Semiconductor Assembly and Test) company, about sending interposer samples. The process involves SK hynix sending its HBM and interposers to Amkor, which then combines them with GPUs from customers like NVIDIA to assemble AI accelerators.

A silicon interposer is a substrate on which GPUs and HBM are arranged and connected with the 2.5D/3D packaging. According to the report, drawing circuits on silicon to connect chips allows for more precise circuitry compared to using PCBs (Printed Circuit Boards) in traditional 2D packaging, which makes silicon interposers essential for packaging AI accelerators like NVIDIA’s A100 and H100.

Regarding the rumor, citing a SK hynix representative, the report states that the discussion is still in the early stages, while the company is conducting various reviews to provide interposers that meet customer demands.

It is worth noting that the entry barrier for silicon interposers seems to be high, as only a few semiconductor giants, including TSMC, UMC and Samsung, can supply silicon interposers with their own packaging technologies, such as TSMC’s CoWoS (Chip-on-Wafer-on-Substrate) technology and Samsung’s I-Cube.

As Samsung is currently providing NVIDIA with its silicon interposers and I-Cube packaging services, SK hynix tries to further expand its leadership in HBM by entering the silicon interposer sector, the report notes, which may also alleviate the supply shortage for HBM and interposers as NVIDIA’s AI accelerators are in high demand.

Read more

• [News] SK hynix, TSMC, and NVIDIA Reportedly Forge Alliance to Develop Next-Generation HBM
• [News] Samsung, SK Hynix and Micron Ramp Up HBM Production, Reportedly Doubling Output Next Year

(Photo credit: SK hynix)

Lithography machine giant ASML released its financial report for the second quarter of 2024, with net sales amounting to EUR 6.2 billion and net income reaching EUR 1.6 billion. The gross margin was 51.5%.

According to the previous financial forecast, net sales for the second quarter were expected to be between EUR 5.7 and 6.2 billion, with a gross margin of 50% to 51%, making the overall performance for the second quarter slightly better than expected.

Additionally, with the continued increase in demand for AI chips, the order intake for the second quarter was EUR 5.6 billion, significantly up from EUR 3.61 billion in the first quarter, returning to the levels of the fourth quarter of 2023. It is also worth noting that in the order intake for the second quarter, EUR 2.5 billion were EUV orders.

This performance was said to be due to the strong sales of immersion DUV systems. ASML President and CEO Christophe Fouquet noted ongoing improvements in overall semiconductor inventory and further increased utilization rates of lithography equipment by logic and memory chip customers. Despite market uncertainties, ASML anticipates continued industry recovery in the second half of the year.

Fouquet also projected third-quarter net sales for 2024 to range between EUR 6.7 and 7.3 billion, with a gross margin of 50% to 51%. Estimated R&D investments are around EUR 1.1 billion, and sales and general administrative expenses (SG&A) are expected to be approximately EUR 295 million.

ASML reportedly regards 2024 as a transitional year, maintaining unchanged full-year expectations and continuing to invest in capacity and technology enhancements. Additionally, strong developments in AI are driving much of the semiconductor industry’s recovery and growth, positioning it ahead of other markets.

Read more

• [News] ASML Projects Strong Demand Until 2026, New EUV Shipments Reportedly to TSMC
• [News] ASML Reports China Accounts for 49% of Q1 Total Sales and 20% of Backlog Orders

(Photo credit: ASML)