Chul Joo Hwang, Chairman of South Korean semiconductor equipment company Jusung Engineering, recently stated that future semiconductors will stack transistors together, as the expansion of DRAM and logic chips has reached its limit. Stacking transistors like NAND is necessary to overcome these challenges.

According to a report from South Korean media outlet The Elec, Hwang believes this means developing more atomic layer deposition (ALD) technology to reduce the use of extreme ultraviolet (EUV) lithography steps in the production process of advanced chips.

ALD technology is a thin film process that allows materials to grow layer by layer, offering high uniformity, precise thickness control, and excellent step coverage, overcoming challenges faced by traditional process technologies.

Reportedly, stacking transistors can reduce the need for further scaling of transistors. As evidence, deep ultraviolet (DUV) equipment is expected to be used in 3D DRAM production.

Hwang believes that as stacking becomes increasingly important, the demand for ALD equipment will also rise. Additionally, the production of III-V semiconductors and IGZO semiconductors requires ALD equipment.

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(Photo credit: Jusung Engineering)

X-Epic, a prominent Chinese electronic design automation (EDA) start-up, is said to be reducing its workforce by up to 50%, according to a report by South China Morning Post. As chip design is an indispensable part to semiconductor manufacturing, the incident raises concerns about China’s push for technological self-reliance.

X-Epic, founded in 2020 by Wang Libin, a former engineer at US EDA leader Cadence Design Systems, has been established with the goal of creating indigenous EDA tools to challenge the dominance of US rivals. The field is traditionally governed by US giants including Cadence, Synopsys, and Mentor Graphics (now owned by Siemens).

Based on the definition by Cadence, EDA encompasses software, hardware, and essential services used in the design of chips and semiconductor devices. Historically, hardware architects sketched chip designs by hand and used isolated tools. However, alongside the rapid growth of AI, EDA has become indispensable as chip designs get complicated. The tool provides a simulated environment where circuits and designs are conceived and analyzed before being realized in the physical world.

According to the report, as of March, 2023, X-Epic employed approximately 400 people across offices in Nanjing, Beijing, Shanghai, Chengdu, and Shenzhen. However, the company began laying off up to half its employees recently across various departments, including its key research and development division.

The report further analyzes that in In August 2022, Washington first restricted China’s access to the EDA technology by prohibiting the export of gate all-around (GAA) capable EDA software, which creates challenges for Chinese chipmakers in adopting advanced processes such as the 3nm node and in developing high-performance computing or AI chips.

Citing data from the China Semiconductor Industry Association, the report notes that the value of China’s EDA market is projected to reach 18.5 billion yuan (USD 2.55 billion) next year, up from 9.3 billion yuan in 2020. As the market seems to be booming, X-Epic’s reported layoff highlights the challenges China’s EDA companies are facing.

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• New US EDA Software Ban May Affect China’s Advanced IC Design, Says TrendForce

(Photo credit: X-Epic)

The Japanese Ministry of Economy, Trade, and Industry’s 2024 White Paper on International Economy and Trade reveals that in its examination of imported goods sources, over half of the import value for 1,406 product categories (accounting for over 30% of the total) comes from China. This figure is 1.5 times higher than that of the United States, which relies on China for only 567 product categories. Thus, Japanese media Nikkei’s report has highlighted that this data underscores Japan’s significant dependence on China within its supply chain.

According to Nikkei, Japan’s trade statistics for 2022 covered approximately 4,300 types of goods. The report indicates that nearly 40% of these products are highly dependent on a single import source, with China being the predominant supplier.

Specific data further hints that Japan’s highly dependent imports from China include laptops, air conditioners, organic chemicals, and rare-earth metals. Additionally, over 90% of Japan’s imported household appliances originate from China. Moreover, China serves as Japan’s primary supplier of phosphorus, a key raw material for fertilizer production.

The data also indicates that Japan imports 252 and 151 types of goods that are “highly dependent” on the United States and South Korea, respectively, ranking these countries second and third in terms of Japan’s import dependency. In contrast, other G7 members exhibit lower levels of dependency on single import sources compared to Japan.

Per Nikkei’s report, essential minerals, semiconductors, and fertilizers have been designated as critical goods by the Japanese government. The data in the latest White Paper indicates that Japan’s supply chain is significantly dependent on China, highlighting the importance of diversifying procurement sources and conducting risk assessments. Japan has already started implementing measures to reduce reliance on China in cooperation with the United States and Europe.

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• [News] Semiconductor Equipment Sales Soared in Chinese and Japanese Markets
• [News] New Regulations Reportedly Introduced by Japan Regarding Semiconductor Exports

(Photo credit: Lenovo)

The semiconductor industry, driven by AI, is entering a new upward cycle. According to a forecast report from SEMI, after the trough in 2023, the total sales of equipment in 2024 will hit a new high, with growth momentum continuing into 2025. Among this trend, per a report from Commercial Times, major companies including TSMC, Intel, Samsung, SK hynix, and Micron are all actively preparing, with plans to continue increasing capital expenditure next year in preparation for the AI era.

TSMC and Intel are the most proactive foundries. Intel plans to increase its capital expenditure by 2% in 2024, reaching USD 26.2 billion; TSMC’s capital expenditure for this year is expected to be between USD 28 billion and USD 32 billion.

The same report further cited sources, indicating that TSMC’s capital expenditure this year will reach the upper end of the estimated range. Next year, the upper limit is expected to increase by another USD 5 billion to USD 37 billion, potentially reaching the second-highest level in its history.

It’s reported that customer demand for TSMC’s 2nm process capacity has exceeded expectations. In addition to Apple securing the first batch of TSMC’s 2nm capacity, non-Apple customers are also actively planning for advanced processes. TSMC continues to advance its goal of mass production of the 2nm process by next year.

Another source cited by Commercial Times reveals that TSMC accelerated equipment orders in the second quarter and further increased momentum in the third quarter, primarily to ensure the smooth launch of the 2nm process by mid-next year.

In the HBM sector, Samsung and SK hynix are reportedly raising funds to prepare for significant production expansion in 2025.  A report from Korean media outlet Korea Economic Daily (KED) indicated that Samsung Electronics and SK hynix are considering applying for loans from the Korea Development Bank, with planned loan amounts of KRW 5 trillion (roughly USD 3.6 billion) and KRW 3 trillion (roughly USD 2.2 billion), respectively.

Micron’s capital expenditure plan for the 2024 fiscal year is about USD 8 billion. In the fourth quarter of the 2024 fiscal year, Micron will spend approximately USD 3 billion on fab construction and new wafer fab equipment (WFE). For the 2025 fiscal year, Micron plans to significantly increase its capital expenditure, targeting 30% of its revenue, or about USD 12 billion. Earlier, Micron’s Chief Operating Officer, Manish Bhatia, stated that the scale of the HBM business is expected to expand to several billion dollars in the 2025 fiscal year.

Read more

• [News] TSMC’s Capital Expenditure to Surge Next Year, Driven by Rising 2nm Demand
• [News] Micron Slightly Raises Capital Expenditure for 2024, HBM Expected to Further Drive Revenue Growth in 2025
  

(Photo credit: Micron)

Amid the rising memory market prices and the continuously improving supply-demand balance, original manufacturers (OEMs) have seen their business performance steadily climb, generally achieving a turnaround from losses to profits.

Meanwhile, memory module manufacturers have also enjoyed rapid growth in their performance. With strong support from AI, memory manufacturers are optimistic about future market conditions, with some even stating that 2025 will be a significant upward cycle year for the memory industry.

• OEM and Module Manufacturers Recorded Strong Financial Results

Recently, two OEMs, Micron and Winbond, have disclosed their latest financial data.

Micron’s financial report for the period from March to May 2024 shows that the company’s revenue for the quarter was USD 6.811 billion, an 81.5% increase YoY. Non-GAAP operating income was USD 941 million, and net income was USD 702 million, a 47% increase QoQ. Specifically, Micron’s DRAM revenue was approximately USD 4.7 billion, a 13% increase QoQ, while its NAND business revenue was approximately USD 2.1 billion, a 32% increase QoQ.

The average selling prices (ASP) for both DRAM and NAND increased by more than 20% QoQ. Micron stated that its revenue, gross margin, and earnings per share for the quarter exceeded the upper limit of its guidance range. Looking ahead to next quarter, Micron expects its revenue to reach USD 7.4-7.8 billion.

Winbond’s self-clearing revenue report for June 2024 shows that consolidated revenue for June was TWD 7.378 billion, a 5.56% increase YoY; the cumulative consolidated revenue for January to June was TWD 41.605 billion, a 14.53% increase YoY.

In terms of memory module manufacturers, companies such as Adata, Phison, and Team Group all reported year-on-year revenue growth for June and the first half of the year. Adata’s revenue for June reached TWD 2.954 billion, a year-on-year increase of over 29.38%, with a cumulative consolidated revenue of TWD 20.91 billion for the first half of this year, up by 48.56% YoY. Team Group’s revenue for June was TWD 2.796 billion, a 44.93% increase YoY, while Phison’s revenue was TWD 5.361 billion, a 55.93% increase YoY, both setting new monthly revenue records.

BIWIN and TWSC recently disclosed announcements expecting substantial year-on-year growth in net profit for the first half of 2024. BIWIN expects net profit after deducting non-recurring gains and losses to be CNY 275-325 million, a year-on-year increase of 191.12-207.69%. TWSC expects operating revenue to be CNY 2-2.3 billion, a year-on-year increase of 238.68-289.48%.

• Memory Companies Anticipate an Upward Trend in 2025

Both OEMs and module manufacturers hold positive attitudes towards the outlook for future memory market.

Micron, as one of the three major DRAM manufacturers, has seen its HBM business grow by leaps and bounds in recent years, greatly benefited from the AI wave. Therefore, Micron is steadfastly optimistic about the potentials of AI and HBM. Micron expects to generate several hundred million dollars in revenue from HBM in fiscal 2024, which is expected to reach several billion dollar in fiscal 2025. Additionally, Micron reiterated that HBM has been in tight supply, and its HBM memory chips have already sold out for 2024 to 2025.

Winbond Chairman Arthur Chiao noted that Winbond began to see a decline in memory sales since 2Q22 and signs of sales increase in 2Q24 after eight quarters. He expects sales volume to rise, followed by price increase. He positively predicts that the industry will enter an upward cycle over the next two years, and 2025 will experience remarkable growth. To sum up, he views the market outlook for next year as optimistic.

Adata Chairman Simon Chen emphasized that upstream manufacturers currently have a very positive and proactive attitude towards prices. The allocation of production capacity is prioritized for HBM with the highest gross margin, followed by general-purpose DDR5 and DDR4. Capital expenditures are also profit-oriented.

As a result, short-term spot price fluctuations do not affect the continuous and stable upward trend of DRAM and NAND Flash contract prices in the third quarter. Moreover, some DRAM spot prices have started to rebound recently. He is optimistic that after a short-term adjustment in the spot market, the company’s shipments will return to a growth trajectory as the coming of the traditional peak season in 2H24.

• NAND Flash Price Increase to Shrink in 3Q24

It’s worth noting that although memory manufacturers are generally optimistic about the future market, and the AI development has indeed boosted demand for products such as servers, HBM, and enterprise SSD, the downstream terminal application market has not yet fully recovered.

Meanwhile, the active moves in expanding production by original manufacturers may lead to changes in the future supply-demand balance. These factors suggest that the increase in some product contract prices in the future memory market may shrink.

TrendForce reports that a recovery in demand for general servers—coupled with an increased production share of HBM by DRAM suppliers—has led suppliers to maintain their stance on hiking prices. As a result, the ASP of DRAM in the third quarter is expected to continue rising, with an anticipated increase of 8–13%. The price of conventional DRAM is expected to rise by 5–10%, showing a slight contraction compared to the increase in the second quarter.

In terms of NAND Flash, TrendForce indicates that industry companies will continue to invest in server construction, and particularly, enterprise SSD will see order increase as a result of the expansion of AI adoption, while consumer electronics demand remains weak. In addition, original manufacturers tend to be active in expand production in 2H24. As a whole, the sufficiency ratio of NAND Flash supply will rise to 2.3% in the third quarter, and the blended NAND Flash price increase will converge to 5-10%.

Looking at the price trend of NAND Flash this year, the price of NAND Flash accelerated to rebound as original manufacturers remained conservative in production increases in 1H24, which enabled them to return to profitability.

However, as manufacturers significantly expand production in 2H24, and retail market demand has still not recovered yet, the decline in wafer spot prices has widened, with some wafer prices falling more than 20% below contract prices. This presents a challenge for the future increase in wafer contract prices.

Read more

• [News] Memory Utilization Rate Near Full Capacity, Surpassing Mature Nodes Foundries
• [News] Memory Market Recovery is Near, as Winbond Expects a Good Year in 2025

(Photo credit: Micron)