Following the announcement of a price increase by the U.S. memory giant Western Digital Corporation (WDC), hard drive manufacturer Seagate Technology has also announced that it will raise prices in response. Seagate stated that they will immediately increase prices for new orders and demand exceeding previous commitments.

Due to the demand for high-capacity HDD products driven by AI, coupled with reduced production by hard drive manufacturers, the overall HDD supply is unable to meet demand, leading to soaring prices. According to a formal letter from Seagate to its customers, demand recovery continues across several segments of their business, and the reduced manufacturing capacity is limiting their ability to meet all of their customers’ demand and is resulting in longer lead times. Additionally, ongoing global inflationary pressures continue to impact costs.

As a result, Seagate Technology will implement price increases for new orders and demand exceeding previous commitments, and they anticipate ongoing supply constraints, indicating that prices will continue to rise in the coming quarters.

As per industry sources cited by TechNews, there is an expectation of ongoing supply shortages for high-capacity HDD products this quarter and potentially throughout the entire year. The same source also indicates that, HDD prices are expected to continue rising in the second quarter of this year, with increases estimated at 5% to 10%.

Previously, on April 8th, WDC notified customers of ongoing price increases for NAND Flash and hard drive products, confirming the supply shortage of HDDs.

In the notification, it was indicated that they are seeing higher than expected demand across their entire flash and hard drive portfolio resulting in supply constraints. In addition, supply chain challenges for the overall electronics industry are further impacting supply availability. Given these circumstances, they will continue to implement price increases on flash and hard drive products this quarter, with some changes taking effect immediately.

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• [News] SSD vs. HDD: Battle Gets Underway Again
• [News] Western Digital Customer Letter Confirms HDD Supply Shortage! NAND Flash and Hard Drive Prices Continue to Rise

(Photo credit: Seagate)

U.S. Commerce Secretary Gina Raimondo recently stated that chips used by the Chinese company Huawei in their earlier Mate 60 Pro smartphone are not as advanced as those produced in the United States.

According to a report from Reuters, Huawei has been under trade restrictions since 2019, surprised the global industry and the U.S. government in August 2023 by unveiling a new smartphone featuring advanced chips. Despite Washington’s ongoing efforts to weaken China’s capabilities in advanced semiconductor research and production, the Huawei Mate 60 Pro is still regarded as a symbol of technological breakthrough in China.

Following the release of the chips used in the Mate 60 Pro, many believed that Gina Raimondo’s efforts to restrict Chinese semiconductors were futile. However, Gina Raimondo recently refuted this viewpoint. She pointed out that the new chips introduced by Huawei are not as capable and lag behind U.S. chips by several years in performance, indicating that U.S. export controls on China are effective.

The same report indicates that Washington has been striving for years to weaken China’s capabilities in advanced chip production and the manufacture of equipment required for these chips. The concern is that these chips could be used to enhance China’s military capabilities, with Huawei being a key player.

Therefore, after Huawei was placed on the U.S. government’s Entity List for export control in 2019, related U.S. suppliers struggled to obtain licenses to ship goods to Huawei. Notably, the sources cited in the report cited by Reuters on March 12th once stated that Intel’s competitor, AMD, had applied for a similar license to sell comparable chips in early 2021 but did not receive approval from the US Department of Commerce.

Nevertheless, Intel has been granted licenses worth billions of dollars to continue selling products to Huawei. Additionally, Huawei has also launched its first artificial intelligence notebook featuring Intel chips this month, leading to further controversies. Moreover, as per reports from The Register, Intel is reportedly preparing to follow in NVIDIA’s footsteps by developing “special edition” versions of its AI acceleration chips, Gaudi 3, for the Chinese market.

When asked if the White House’s stance on business with China is tough enough, Gina Raimondo emphasized the need for accountability from companies and everyone alike. She acknowledged that it wasn’t popular with suppliers when she told them they couldn’t sell semiconductor products to China, but ultimately she made that decision.

The emergence of the new generation of Huawei smartphones has also prompted the US administration to conduct dismantling reviews and gain insights into the technology details behind the chips, which are the most advanced semiconductors produced by China to date. However, few details about the related review have been disclosed.

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• [News] Following in NVIDIA’s Footsteps? Intel Reportedly Plans to Launch Chinese Version of AI Chips
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(Photo credit: iStock)

According to a report by the South China Morning Post on April 18th, encouraged by official support and continuous industry investment in expansion, China’s total chip production in the first quarter of 2024 reportedly surged by 40% to reach 98.1 billion units. This further highlights China’s shift towards ramping up mature processes in semiconductor development, especially amidst the export restrictions. Additionally, chip production capacity is rapidly expanding.

Recent data released by China’s National Bureau of Statistics shows that chip production grew by 28.4% in March alone, reaching a record high of 36.2 billion units.

Reportedly, the substantial growth in chip production in China is partly attributed to strong demand from downstream industries such as new energy vehicles. Data shows that in the full year of 2023, China’s production of new energy vehicles reached 9.587 million units, a year-on-year increase of 35.8%. In the first quarter of this year, the production of new energy vehicles increased by 29.2% to 2.08 million units. Additionally, in the first quarter of this year, China’s smartphone production increased by 16.7%.

In recent years, with semiconductor plants emerging across various regions, China’s chip production capacity has been continuously expanding. The chip production volume in the first three months of this year is nearly double that of the same period in 2019.

The International Semiconductor Industry Association (SEMI) released a global fab forecast report at the end of last year, indicating that China’s share of global semiconductor capacity will continue to expand, attributed to local government funding injections and other incentive measures. Chinese chip manufacturers may add 18 new fabs in 2024, with wafer annual capacity rising from 7.6 million units in 2023 to 8.6 million units this year.

A report from the American think tank, the Center for Strategic and International Studies (CSIS), also noted that due to U.S. restrictions on advanced chip technology and equipment to China, new investment projects in China’s semiconductor production are focusing on mature process chips.

Data from TrendForce indicates that China’s fabs hits 77, mainly targeting on the mature process.

Researchers cited in the report suggest that the unintended consequence of U.S. export controls on advanced chip technology to China may result in a wave of state-supported investments, leading to overproduction and potentially allowing China to dominate global traditional chip production.

The same reports also indicate that despite China’s strong push for chip self-sufficiency, the country still heavily relies on chip imports. Data from the General Administration of Customs of China shows that in the first quarter of this year, chip imports to China increased by 12.7% year-on-year, reaching 121.5 billion units, while chip exports grew modestly by 3% to 62.4 billion units. Chips remained China’s largest imported commodity in 2023, surpassing crude oil.

However, it’s important to note that a significant portion of the chips imported into China are designed by Chinese chip design firms but manufactured by overseas foundries.

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• [Insights] China’s Position in EV Battery Market to be Shaken as the Mass Production Race of All-Solid-State Battery Industry Speeds up?

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According to a report from WeChat account “Chip_Inside,” Allen Wu (Wu Xiong’ang), the former CEO of Arm China, has returned to the chip industry and set his sights on the “archrival” of his former employer’s technology – RISC-V. Sources familiar with the matter indicated that many former Arm employees have joined his new company.

Industry sources cited in the same report revealed that a company named “Zhongzhi Chip (Shanghai) Technology Co., Ltd.” is actively recruiting RISC-V professionals, and it is being spearheaded behind the scenes by Wu.

Related information indicates, founded on September 11, 2023, the company is a technology innovation company focusing on RISC-V processor IP and computing platform solutions. With a global team led by world-class chip experts, the company possesses top-tier IP technology development and commercialization experiences.

The industry media has not yet obtained accurate information about whether this new company is planning for independent research and development or acting as the Chinese agent for Tenstorrent, the company where Jim Keller serves as CEO. However, given the recruitment information released by the company, the latter situation is more likely to happen, despite no confirmation.

Said to be backed by abundant resources and shareholders with strong competence, the company has partnered with several stellar global RISC-V chip companies in technology, and works closely with numerous domestic industry leaders, which enable it to rapidly achieve scale growth in revenue and market cap.

The company insists on being a neutral IP company to empower the development of domestic technology applications and will make unremitting efforts to become an international benchmark in the processor IP industry.

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• [Insights] China’s Position in EV Battery Market to be Shaken as the Mass Production Race of All-Solid-State Battery Industry Speeds up?

1. (Photo credit: d1net)

Following Apple’s cancellation of the Micro LED watch project, the associated supply chain has been further impacted. According to a report from TechNews citing MicroLED-Info, the latest one is KLA Corporation, which has announced a complete exit from the flat panel display (FPD) equipment business.

KLA recently announced its complete withdrawal from the FPD market. The company, which acquired Israeli automated optical inspection (AOI) system supplier Orbotech for USD 3.4 billion, had entered the Micro LED market opportunistically through this acquisition, as Orbotech is a developer of inspection equipment for the semiconductor and display industries.

Due to slowdowns in investment and demand in the consumer electronics market, Orbotech’s performance has been lackluster in recent quarters, with the entire division accounting for only about 3% of KLA’s revenue, totaling USD 283 million in 2023, a decline of 48%. As per the same report, it’s believed that KLA’s decision to shut down this division is linked to the cancellation of a major project with a key customer, likely Apple.

As FPD is one of Orbotech’s main divisions, with KLA announcing its withdrawal from the FPD market, more than 100 employees from this division will face layoffs. KLA stated that exiting the FPD equipment business will not impact the company’s revenue expectations for this quarter, which are projected to be USD 2.3 billion with a variance of plus or minus USD 12.5 million.

Apple’s decision in March to cancel the Micro LED watch project sent shockwaves through the display industry and Micro LED developers.

German LED giant Osram is still considering its next steps, with expected losses of USD 650-900 million; electronic assembly solutions provider Kulicke & Soffa also announced losses of USD 110-130 million due to the cancellation of its collaboration with Apple. Additionally, LG Display’s Micro LED development team within the Strategic Customer (SC) department has started downsizing.

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• [News] Why Apple “Unexpectedly Cancels” Micro LED Watch Project?
• [New] The Reality of Micro LED Unveiled – Infinite Opportunities, Yet Initial Capacity Demand Remains Low

(Photo credit: Apple)