As AI giant NVIDIA is said to delay its upcoming Blackwell series chips for months, which are now expected to hit the market around early 2025, the related semiconductor supply chain is experiencing a reshuffle. According to a report by the Korea Economic Daily, Samsung Electronics, which is eager to expand its market share for HBM3 and HBM3e, is likely to emerge as a major beneficiary in addition to AMD.

In March, NVIDIA introduced the Blackwell series, claiming it could enable customers to build and operate real-time generative AI on trillion-parameter large language models at up to 25 times less cost and energy consumption compared to its predecessor.

However, according to The Information, last week, NVIDIA informed major customers, including Google and Microsoft, that the shipments of its Blackwell AI accelerator would be delayed by at least three months due to design flaws.

Blackwell Delayed Potentially due to Design Flaws and TSMC’s Capacity Constraints

Tech media Overclocking points out that the defect is related to the part connecting the two GPUs, and creates problems for NVIDIA’s dual GPU versions, including the B200 and the GB200.

The delay has prompted tech companies to look for alternatives from NVIDIA’s competitors, such as AMD, according to the Korea Economic Daily. Microsoft and Google have already been working on next-generation products with AMD. For instance, Microsoft has purchased the MI300X, an AI accelerator from the US fabless semiconductor designer, the report says.

Samsung to Benefit thanks to the Collaboration with AMD

Samsung, as its HBM3 received AMD MI300 series certification in 1Q24, and is likely to provide HBM3e chips to AMD afterwards, is expected to benefit. Citing a semiconductor industry source, the Korea Economic Daily notes that as it is very risky for a single company to dominate the AI chip supply chain, the situation will create opportunities for Samsung and AMD.

It is also worth noting that Samsung’s HBM3 has passed NVIDIA’s qualification earlier, and would be used in the AI giant’s H20, which has been developed for the Chinese market in compliance with U.S. export controls.

According to TrendForce’s forecast in mid-July, the shipment share of AI servers equipped with self-developed ASIC chips in 2024 is expected to exceed 25%, while NVIDIA owning the lion’s share of 63.6%. AMD’s market share, on the other hand, is projected to reach 8.1% in 2024.

Read more

• [News] Foxconn Remains Unfazed Despite NVIDIA’s GB200 Delay, with Customers Aim to Secure Their Orders
• [News] Samsung’s 8-layer HBM3e to Start Mass Production in Q3, Driving HBM Sales to Soar 3-5 Times in 2H24

(Photo credit: NVIDIA)

According to a report from Economic Daily News, Innolux President James Yang announced on August 5 that the company is advancing its semiconductor fan-out panel-level packaging (FOPLP) with three key processes, targeting to enter mass production as soon as year-end.

The chip-first process technology, set to be the first to reach mass production by the end of this year, is expected to significantly contribute to revenue by the first quarter of next year.

Additionally, the RDL-first process, which target mid-to-high-end products, is anticipated to enter mass production within one to two years. The most technically challenging Through-Glass Via (TGV) process, being developed in collaboration with partners, will require another two to three years before it can be mass-produced.

At yesterday’s earnings call, there was significant interest in whether Innolux’s 4th Plant in Tainan (5.5-generation LCD panel plant) would be sold to Micron or TSMC.

Innolux Chairman Jim Hung stated that, in addition to quantifying the value of the sale, it is also important to consider the qualitative aspect, such as the potential new business opportunities that the deal could bring for both parties.

He further pointed out that while 5.5-generation plants are not the most competitive in the panel industry, they could still be valuable to other manufacturers. The sale of this asset is expected to contribute to Innolux’s non-operating income.

Regarding the recent focus on FOPLP (Fan-Out Panel-Level Packaging) mass production progress, Jim Hung emphasized that Innolux’s technology is already prepared.

James Yang explained that Innolux’s panel-level fan-out packaging technology will initially be applied to mid-to-low-end products, with plans to later expand into mid-to-high-end products.

He added that by entering the FOPLP field, Innolux aims for this technology to become a part of the AI PC industry, viewing the asset disposal as an opportunity to develop new business models and collaborations.

Previously reported by Economic Daily News, Innolux has been promoting the transformation of its fully depreciated old plants. The 3.5-generation line at the Tainan facility has been repurposed for advanced packaging with FOPLP, and the 4-generation line has been converted to produce X-ray sensors (through Raystar Optronics), both of which are related to semiconductor products.

Read more

• [News] Innolux Confirms Sale of Tainan Plant 4, with Micron & TSMC Reportedly in the Bidding Stage
• [News] Venturing into AI, Innolux Reportedly Partners with Memory Giants, While Its 4th Plant in Tainan to Focus on Packaging Applications

(Photo credit: Innolux)

According to a report from Commercial Times, despite ongoing turbulence in the semiconductor industry, including Intel’s capital expenditure cuts and reported bottlenecks in NVIDIA’s B-series GPU, TSMC’s leading position in the industry may remain unshaken.

The sources cited in the report note that the issues with the B-series GPU, stemming from mask replacements to enhance chip stability, have been quickly resolved by the foundry.

The sources cited in the report believe that NVIDIA’s Blackwell started production at the end of the second quarter. To improve stability, NVIDIA replaced some masks, causing about a two-week production delay. The redesign has been completed, and large-scale production will proceed in the fourth quarter.

The same source do not believe it will affect TSMC’s CoWoS revenue, as the idle two-week capacity will be filled by the equally strong demand for H100.

On the other hand, Intel’s CPUs are reportedly facing issues as well. As per the company’s statement, the 13th and 14th generation Intel Core desktop systems are experiencing instability due to a microcode algorithm resulting in incorrect voltage requests to the processor.

Although the company has provided a two-year warranty extension and real-time updates to fix the errors, concerns about design flaws and manufacturing process issues still exist.

In 2024, Intel’s new platforms, Arrow Lake and Lunar Lake, will have their CPU tiles produced using TSMC’s 3nm process, accelerating the production schedule. Lunar Lake and Arrow Lake are expected to ship officially by the end of the third and fourth quarters of this year, respectively.

With the support of the 3nm technology, these measures are expected to alleviate market concerns.

The sources cited by Commercial Times estimate that TSMC’s competitor Intel has begun to strictly cut costs, reducing capital expenditures by 20%. This could affect key capabilities in mass production and defect resolution in wafer manufacturing.

Therefore, sources cited by the report believe that TSMC’s leading position remains difficult to challenge in the short term.

Read more

• [News] TSMC Pushes for FOPLP Mass Production by 2027, Reportedly Eyeing on Innolux’s Plant
• [News] TSMC Reportedly Forms a Team on FOPLP Development, with Mini Line on the Road

(Photo credit: TSMC)

The Institute for Supply Management (ISM) released its July Services PMI report on August 6th, revealing that the Services PMI rose from 48.8 in the previous month to 51.6, surpassing market expectations of 51.0.

The expansion was driven by 10 industries, including leisure and hospitality, accommodation and food services, financial services, and healthcare.

Respondents indicated that sales figures and customer numbers were flat compared to the same period last year, with rising prices dampening consumer demand. On the other hand, eight sectors, including agriculture, real estate, retail, and information technology, experienced contraction. Respondents attributed this to the U.S. election, price pressures, and high interest rates impacting long-term purchasing decisions.

In the component indices, the Business Activity Index increased from 49.6 in the previous month to 54.5, with respondents generally seeing business activity as strong, though signs of future challenges remain.

The New Orders Index rose from 47.3 to 52.4, indicating improved demand. The Employment Index, closely watched by the market, rose from 46.1 to 51.1, marking its first expansion after five consecutive months of contraction. Respondents noted that companies are actively filling vacancies and training the workforce required for the future.

Overall, the performance of the services sector in July contrasts sharply with the stagnation in the manufacturing sector. On the other hand, similar to manufacturing, consumer spending remains constrained by price pressures, while the labor market continues to slow but has yet to show significant deterioration. According to data from Fed Watch, the market broadly expects the Federal Reserve to cut interest rates by 0.25% to 0.5% in September, with a total of three to four rate cuts anticipated throughout the year.

Read more at Datatrack

Automotive chip market, previously enjoying robust growth among the semiconductor sector, is now showing signs of slowing down.

According to a report from WeChat account DRAMeXchange, the major foundry UMC announced that it expects customer inventories in the communications, consumer electronics, and computer sectors to return to seasonal levels as usual in the second half of this year, and to reach healthy levels by the end of the year.

However, demand in the automotive end market remains weak, which may extend the period of inventory adjustment, with healthy levels anticipated only by the first quarter of next year.

Another foundry giant, TSMC, warned in its latest financial statement that the automotive market might decline this year in spite of a quarter-on-quarter increase of 5% in the revenue of its automotive electronics end market in 2Q24.

Meanwhile, the sluggish growth trend in the automotive chip market is also exemplified by the business performance of three leading automotive chip companies—Texas Instruments, STMicroelectronics, and NXP as they all saw declines in revenues.

Texas Instruments’ revenue for 2Q24 was USD 3.82 billion, down 16% YoY and the sales of its industrial and automotive business continue to decrease.

STMicroelectronics delivered revenue of USD 3.23 billion, down 25.3% YoY, with automotive business revenue falling short of expectation, offsetting growth in personal electronics sales.

NXP’s achieved revenue of USD 3.13 billion, down 5.2% YoY and its automotive business generated revenue of USD 1.728 billion, down 7.4% YoY, indicating the decline widened compared to the first quarter.

Despite the strong growth in the automotive chip market in 2023, the industry believes that as the overall automotive end market fails to advance as expected and there is an overcapacity in some automotive chip markets, automotive chip market growth will slow down in 2024, with the growth rate dropping to single digits in the coming years.

It’s learned that automotive semiconductor can be broadly categorized into microcontroller (MCU), computing chip (CPU, GPU, NPU, etc.), sensing chip (radar, image sensor, photoelectric sensor, etc.), memory chip (DRAM, NAND Flash, etc.), communication chip (CAN bus chip, connectivity chip, etc.), and power chip (IGBT, silicon carbide, etc.), among others.

In the view of the industry, current MCU and other chips are facing significant inventory pressure due to the declining automotive end market demand. However, power chip and autonomous driving chip continue to see strong demand driven by the wave of automotive electrification and intelligence.

Therefore, while the automotive semiconductor market may slow down in the short term, the automotive chip market still possesses growth potential in the long run with the continuous adoption of silicon carbide and autonomous driving chips in the increasingly popular EV and smart vehicle markets.

Read more

• [News] UMC Optimistic About Second Half Business Outlook, While AI Could Capture 10-20% Market Share
• [News] EU Reportedly Delays Decision on Imposing Tariffs on Chinese Electric Cars

(Photo credit: Pixabay)