Apple’s upcoming iPad Pro, featuring an OLED screen for the first time, is scheduled to be released in March or April. However, recent market reports suggest a potential 30% reduction in the estimated order volume, indicating Apple’s cautious outlook on the new product. It’s anticipated that suppliers in the supply chain such as LG Display (LGD), TSMC, Foxconn, and Novatek will also be affected.

Aju Korea Daily, citing industry sources, reported that Apple has reduced the OLED screen orders for its new iPad Pro. The initial order of 10 million units has been adjusted to a range of 7 million to 8 million units. LGD is expected to be the most impacted, with the supply scale decreasing from 6 million units to a minimum of 3 million units, while Samsung maintains a supply of 4 million units.

Industry speculation suggests that the reduction in the initial order may be due to a cautious outlook on the demand in the early stages of the product launch. The pricing of the new iPad Pro has not been determined, but it is likely to be higher than the current iPad with an LCD screen.

Historically, all iPad models from Apple have utilized LCD panels. However, this year’s release of the 11-inch and 12.9-inch iPad Pro models marks the first time Apple is incorporating OLED panels.

On another note, in addition to applying OLED screens to the iPad Pro this year, Apple reportedly plans to use them in future laptop products such as the MacBook. Therefore, the performance of the OLED iPad in terms of sales will serve as a significant market indicator for Apple’s future ventures into OLED technology.

Additionally, the adoption of OLED screens will result in an increase in the price of the iPad Pro. The loyalty of iPad consumers has traditionally been lower than that of iPhone users, posing a challenge for Apple in achieving strong performance this year.

The estimated order volume reduction is expected to have an impact on the iPad Pro supply chain, affecting key manufacturers such as TSMC, Foxconn, and Novatek.

According to sources cited by the Economic Daily News, TSMC is the exclusive supplier of Apple’s chips, while Foxconn is the main assembly plant for the iPad Pro. Novatek is a supplier of OLED screen driver ICs for the Korean market. However, the mentioned companies have refrained from commenting on specific clients and products.

TSMC has been the primary manufacturer of main chips for various Apple devices. Last year, there were reports in the market that Apple secured TSMC’s 3-nanometer production capacity for at least a year.

Despite current market uncertainties, TSMC estimates that the semiconductor market will see a growth of over 10% this year, with the foundry industry expected to grow by 20%. TSMC’s financial performance is projected to outpace industry standards, demonstrating quarterly growth.

Novatek previously indicated that there might be competition in the OLED driver IC sector this year. Nevertheless, the company plans to continue its strategic focus on advanced products such as applications for foldable devices, OLED touch, and integrated touch and display driver ICs (TDDI).

As for Foxconn, the company is gradually entering the traditional off-season. Seasonal performance is expected to be similar to the past three years. In the first quarter of 2023, higher shipment volume resulting from the resumption of normal production in Chinese factories post-pandemic is anticipated to lead to a year-on-year decline in performance for the first quarter of this year.

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• [News] Leak Reveals LGD as the Largest Supplier of Apple’s OLED iPad Pro Screen
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(Photo credit: Apple)

In 2023, the downturn in terminal consumption has spread to various aspects of the semiconductor industry. While the industry generally adopted a cautious stance, some specific segments defied the trend and showed counter-cyclical growth. This attracted numerous companies to strategically position themselves, leading to a flurry of activity in various semiconductor industry projects.

In terms of project deployment, according to TrendForce’s statistics, there were over 350 new developments in China’s semiconductor industry in 2023. These projects span across areas such as third-generation semiconductors, memory, automotive chips, advanced packaging, sensors, RF chips, silicon wafers, semiconductor equipment, and more.

Flourishing Semiconductor Industry with Over 350 Projects Accelerated

Looking at the overall picture, among the disclosed investment amounts for over 350 projects, the highest investment goes to the second phase of Hua Hong Semiconductor (Wuxi) with a sum of USD 6.7 billion (approximately RMB 48.007 billion).

Following closely is Nexchip Semiconductor Corporation’s 12-inch wafer manufacturing project with an investment of RMB 21 billion (approximately USD 2.9 billion). Anhui Yangtze Advanced Semiconductor’s Third-generation Semiconductor Power Device Production Project exceeds RMB 20 billion (approximately USD 2.8 billion).

Among the 350+ projects, there are over 100 signed projects, over 90 projects have commenced, over 50 operational projects, and more than 50 projects nearing completion.

High Proportion of Upstream Projects, Concentrated Capacity in East China

From the perspective of the industry chain, last year’s semiconductor industry projects saw the highest proportion occupied by upstream semiconductor materials.

It involved companies such as Zhejiang Jingsheng Mechanical & Electrical Co., TankeBlue Semiconductor, SICC, Konfoong Materials International, Boncom Semi, Vital Micro-Electronics Technology (Jiangsu) Co., GRINM Semiconductor Materials, IV-Semitec, Zhonghuan Advanced Material & Technology, and SiFusion, among others. 

Following that is IC manufacturing, involving companies like Hua Hong Semiconductor, Nexchip Semiconductor Corporation, AscenPower, GTA Semiconductor, Jiejie Microelectronics, SMIC, CanSemi Tech, GalaxyCore, and Unicmicro (Guangzhou) Co., among others.

Companies involved in IC design include Huawei, Empyrean Technology, Loongson Technology, Corigine, 3Peak, HeYangTek, UNIM, Semitronix, Awinic, X-Chip, and Silergy Corp., among others. 

In the IC packaging and testing segment, companies like Huatian Technology, Nexperia, Forehope Electronic, Innosilicon, JCET Group, XinHenYuan Technology, ACCESS Semiconductor, and Leadyo IC Testing Co. are notable players.

From a regional perspective, the majority of semiconductor industry projects are located in the eastern regions of China, including Jiangsu, Zhejiang, Shanghai, Anhui, and Shandong. Jiangsu and Zhejiang have a relatively high proportion.

It is worth noting that a significant portion of semiconductor materials projects are concentrated in the eastern region. 

“Remarkable Advances in Specialized Sectors” – Third-Generation Semiconductors in the Spotlight

Amidst last year’s uncertain overall market conditions, notable growth in specific sectors has captured market attention. Chinese manufacturers strategically focused on various sectors last year, including semiconductor materials/equipment like photoresist, silicon-based products, quartz products, high-purity electronic specialty gasses, and ultra-pure chemicals. Additionally, areas such as silicon carbide, gallium nitride, sensors, automotive chips, and IGBT power devices were key areas of emphasis.

With the increasing trend toward electrification in the automotive sector and growing demand for efficient power systems in applications like new energy vehicles and industrial processes, the market’s appetite for advanced semiconductor materials is on the rise. 

In response, industries are transitioning to third-generation semiconductor materials represented by silicon carbide (SiC) and gallium nitride (GaN). Consequently, power devices like SiC and GaN are gaining substantial market popularity.

From an application perspective, GaN is not only expanding in consumer applications but is also making inroads into rapidly growing markets such as electric vehicles, computing (data centers, artificial intelligence, infrastructure), renewable energy, industrial power supplies, and fast-charging stations/adapters.

According to TrendForce, the global GaN power device market is expected to grow from USD 180 million in 2022 to USD 1.33 billion in 2026, with a compound annual growth rate (CAGR) of up to 65%. 

As for SiC, TrendForce anticipates the SiC power device market to reach USD 5.33 billion by 2026, with its mainstream applications still heavily reliant on electric vehicles and renewable energy.

According to previous TrendForce statistics, China has 44 foundries, and this number is expected to increase to 32 in the future, focusing on mature processes. The industry anticipates that there will be more fab capacity releases in the future, driving demand for upstream semiconductor materials and equipment.

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• [News] China’s ICs Imports Decrease in 2023, Chinese Manufacturers Focus on Mature Processes

Fueled by the advancement in TSMC’s N3 process technology, the average selling price (ASP) of TSMC’s 12-inch wafers increased to USD 6,611 in the fourth quarter of 2023, registering a year-on-year growth of 22% despite the subdued semiconductor market.

According to a report by TechNews, Bernstein Research has indicated that the current growth in most semiconductor industries stems from the increase in pricing rather than a rise in chip shipment volumes.

As per a report by Tom’s Hardware, the wafer shipment volume of TSMC serves as evidence in many aspects. In the fourth quarter of 2023, TSMC’s shipment of 12-inch wafers was 2.957 million units, lower than the 3.702 million units in the fourth quarter of 2022. This marks the first time since 2020 that TSMC’s 12-inch wafer shipments have fallen below 3 million units. However, the revenue showed only a marginal decline.

Despite a significant 20.1% decrease in the fourth-quarter shipment volume of TSMC’s 12-inch wafers compared to the previous year, the revenue for the quarter reached USD 19.62 billion, only a 1.5% decrease from USD 19.93 billion in the fourth quarter of 2022.

Meanwhile, the average price of TSMC’s processed 12-inch wafers in the fourth quarter of 2023 reached USD 6,611 per unit, surpassing the USD 5,384 per unit in the fourth quarter of 2022. This is attributed to the increased shipment volume of wafers at the N3 process to customers, including Apple.

The report further cites sources indicating that TSMC may charge up to USD 20,000 per wafer manufactured using its N3 process. Although this figure may not be entirely accurate as TSMC’s pricing depends on various factors, the key point is that TSMC’s fees for the N3 process are higher compared to the N4/N5 or N6/N7 process.

Therefore, it can be argued that TSMC’s increase in manufacturing prices for process nodes has played a significant role in driving almost all growth in the semiconductor industry in recent years.

In essence, as time progresses, new process nodes will become increasingly expensive. The total chip shipments from 2019 to 2023 have actually decreased, but the ASP has significantly increased.

In particular, TSMC’s wafer revenue for the fourth quarter of 2023 was notably influenced by its N3 process, contributing 15%, while the N5 and N7 process contributed 39% and 17%, respectively.

This breakdown signifies that the N3 process node generated USD 2.943 billion in revenue for TSMC, the N5 process contributed USD 6.867 billion, and the N7 process brought in USD 3.3354 billion.

Overall, TSMC’s advanced process (N7, N5, N3) accounted for 67% of its total wafer revenue. Among these, revenues from System-on-Chip (SoC) used in smartphones and high-performance computing applications each constituted 43%, automotive chip revenue made up 5%, and IoT chip revenue contributed 5%.

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• [News] TSMC’s N3P to Enter Mass Production in the Second Half of Next Year, Rumored Inclusion of Tesla in Customer List

(Photo credit: TSMC)

According to TrendForce’s latest report on memory spot price trends, the DRAM spot market is experiencing a clear upward trend driven by contract market demand. In contrast, the NAND Flash market appears relatively sluggish. Details are as follows:

DRAM Spot Market:

The significant rise in contract prices has also led to a corresponding increase in spot prices this week, and both DDR4 and DDR5 chips are experiencing a price rally. TrendForce has observed that spot buyers’ procurement quantities are not based on actual demand. Buyers are instead banking on future market conditions and raising their inventory levels. Hence, even though there are clear signs of quotes rising, transactions are still limited in terms of quantity. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.69% from US$1.883 last week to US$1.896 this week.

NAND Flash Spot Market:

The spot market of NAND Flash has been rather sluggish compared to that of DRAM. 3D wafers, having risen in prices for a long while, are relatively stagnated now, where the mainstream 512GB TLC is retained at approximately US$3.3. Prices for other finished products are also relatively flat, with sporadic demand for replenishment, and no further magnification has been seen from overall transactions. 512Gb TLC wafer spots have risen by 0.97% this week, arriving at US$3.219.

Sam Altman, the CEO of OpenAI, the developer of the ChatGPT, is reportedly expected to visit Korea on January 26th. Altman may hold meetings with top executives from Samsung Electronics and SK Group to strengthen their collaboration on High-Bandwidth Memory (HBM).

According to sources cited by The Korea Times, Sam Altman is making a slight adjustment for the potential meeting details with Samsung Electronics’ Chairman Lee Jae-yong and SK Group’s Chairman Chey Tae-won. 

OpenAI is set to engage in discussions with Samsung Electronics and SK Group to collaboratively develop artificial intelligence (AI) semiconductors, as part of OpenAI’s strategy to reduce heavy reliance on the AI chip leader NVIDIA.

Reportedly, Altman visited Korea in June of last year, and this upcoming visit is expected to last only about six hours. Most of the time is anticipated to be spent in closed-door meetings with leaders of Korean chip companies or other high-profile executives. 

Altman is keen on strengthening relationships with Korean startups and chip industry players, as it contributes to OpenAI’s development of large-scale language models, powering ChatGPT. OpenAI unveiled its latest model, GPT-4 Turbo, at the end of last year and is currently proceeding with planned upgrades to related services.

Regarding this matter, The Korea Times also cited a spokesman at SK Group, indicating that SK Group also did not confirm whether Chey and Altman will meet.

“Nothing specific has been confirmed over our top management’s schedule with Altman,” an official at SK Group said.

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• [News] Samsung and Naver Jointly Invest in New AI Chip, as Naver Reportedly Claiming an Eightfold Performance Boost Compared to NVIDIA H100

(Photo credit: OpenAI)