The sweeping AI wave not only keeps AI chips in the market spotlight but also ushers in a new round of opportunities for the memory market. Recently, Citibank announced that SSD will replace HDD in the AI field, citing SSD’s faster speed, which are more suitable for AI training. It is reported that data centers of top US tech companies are shifting from HDD to enterprise SSD.

From consumer electronics to enterprise markets, and now in the era of AI, the battle between SSD and HDD is underway once again .

• Can SSD Fully Replace HDD?

Industry sources point out that SSD surpass HDD by nearly 10 times in terms of access speed, while HDD boasts the advantage of lower cost.

According to a previous report from Nikkei Asia, in recent years, as NAND Flash prices declined in a downward cycle, the cost gap between SSD and HDD has begun to narrow, enabling SSD to gradually replace HDD in some fields. For instance, in consumer PC storage devices below 2TB, HDD have been phased out and replaced by SSD.

This seems to indicate that SSD has significantly outpaced HDD, but it is still difficult to say that SSD will completely replace HDD. After all, compared to consumer products, data centers have higher performance requirements for SSD. Furthermore, from a cost perspective, enterprises face significant pressure if they want to fully substitute SSD for HDD.

The current AI boom has provided opportunities for the development of both HDD and SSD, with a surge in demand for high-capacity products leading to price increases.

Industry sources reveal that HDD manufacturers reduced supply due to poor market conditions last year. With the arrival of the AI wave, supply of HDD outbalanced demand in 2H23, driving prices higher. From 3Q23 to 1Q24, HDD prices have increased by 10-20% overall. The latest reports show that Western Digital has recently notified customers of continuous price increases for HDD products. Industry sources expect HDD market prices to continue to rise in 2Q24, with increases ranging from 5% to 10%.

Likewise, SSD market is also facing supply shortages, especially in the enterprise SSD segment. TrendForce predicts a strong increase of about 13-18% in NAND Flash contract prices in 2Q24, with enterprise SSD contract prices expected to increase by 20-25% QoQ, representing the highest among all product lines.

At present, SSD and HDD are expected to coexist and progress together. However, looking ahead to the future, some memory manufacturers hope that SSD can continue to advance and even replace HDD.

In 2023, Shawn Rosemarin, Vice President of Research and Development Department of Pure Storage, stated that HDD would be completely phased out within 5 years. HDD consume too much power; 3% of global electricity used for data centers, and one-third of this power consumption comes from storage systems, the majority of which are mechanical hard drives. The cost difference in operating such large-scale deployments is striking. If the storage device is shifted to SSD, power consumption will be reduced by 80-90%.

However, HDD manufacturers have countered this statement. Rainer Kaese, Senior Manager of HDD Business Development Department at Toshiba, believes that HDD will continue to exist for some time. In the long run, they will continue to be cheaper than SSD, and data center engineers will develop more efficient HDD to meet stricter power consumption requirements.

The debate between these two sides reveals the respective strengths and weaknesses of SSD and HDD. As manufacturers continue to enhance performance, reduce costs, and lower power consumption, the competition between SSD and HDD is expected to continue in the future.

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• [News] Western Digital Customer Letter Confirms HDD Supply Shortage! NAND Flash and Hard Drive Prices Continue to Rise
• [News] SSD Prices Keep Rising

(Photo credit: Western Digital)

In a bid to reduce dependence on China, Apple significantly expanded its production volume in India, doubling iPhone production last year. Foxconn, which holds the largest share in iPhone assembly, accounted for a substantial 67% of this increased production.

Bloomberg reported on April 10th that Apple’s iPhone production value in India reached USD 14 billion over the last fiscal year, doubling from the previous year’s USD 7 billion. Sources cited by the same report have revealed that approximately 1 in 7 iPhones, or up to 14% of total production, are now manufactured in India. This expansion in Indian production signals Apple’s accelerated efforts to reduce reliance on China amid heightened geopolitical tensions.

Per the sources cited by the same report, nearly 67% of iPhones produced in India last year were assembled by Taiwan’s Foxconn, while Pegatron accounted for about 17%. The remaining share was manufactured at a plant in Karnataka state by Wistron, which sold the facility to Tata Group in 2023.

As per a Reuters report on April 8, contract manufacturer Pegatron was said to be in talks to sell its sole iPhone assembly plant located in Chennai to Tata Group, and discussions were in advanced stages. However, regarding this matter, Pegatron claimed that this report was speculative and lacked evidence, declining to comment further.

Chennai, the capital of Tamil Nadu in India, stands as the largest industrial and commercial hub in South India. Pegatron’s sole factory in India is located here, employing approximately 10,000 workers and producing around 5 million iPhones annually.

Among the four iPhone 15 series models, only certain models like iPhone15 and iPhone15 plus are produced by Tata Group in India.

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• [News] Rumors of Selling Indian iPhone Assembly Plant? Pegatron Denies Media Speculation
• [News] Tata Reportedly Partners with Pegatron for iPhone Assembly in India

(Photo credit: Foxconn)

Meta Platform, parent company of Facebook, has announced its latest generation AI chip of its Training and Inference Accelerator (MTIA) on April 10th, fabricated using TSMC’s 5nm process. According to a report from Commercial Times, this move is expected to reduce Meta’s reliance on NVIDIA’s chips and enhance computational power for AI services.

In its shift towards AI services, Meta requires greater computational capabilities. Thus, last year, Meta introduced its AI models to compete with OpenAI’s ChatGPT. The latest AI chip, Artemis, is an upgraded version of MTIA introduced last year, assisting platforms like Facebook and Instagram with content ranking and recommendations.

Meta’s new generation AI chip will be produced by TSMC using the 5nm process. Meta reveals that Artemis offers triple the performance of the first-generation MTIA.

In October last year, Meta announced plans to invest USD 35 billion to establish infrastructure supporting AI, including data centers and hardware. CEO Mark Zuckerberg told investors, “In terms of investment priorities, AI will be our biggest investment area in 2024 for both engineering and compute resources.”

Meta’s proprietary AI chips are deployed in data centers to power AI applications. Meta has several ongoing projects aimed at expanding MTIA’s application scope, including supporting generative AI workloads.

The trend of tech giants developing their own AI chips is evident, with Meta joining competitors like Amazon, Microsoft, and Google in internal AI chip development to reduce reliance on NVIDIA. Google recently unveiled its latest data center AI chip, TPU v5p, on the 9th. Meanwhile, Intel is targeting NVIDIA’s H100 with its new AI chip, Gaudi 3.

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• [News] NVIDIA’s H100 AI Chip No Longer Out of Reach, Inventory Pressure Reportedly Forces Customers to Resell

(Photo credit: Meta)

According to a report by Nikkei News, Japan’s official support for the semiconductor industry expenditure, relative to its gross domestic product (GDP), is significantly higher than that of the United States and other major Western countries.

Figures submitted by a subcommittee under Japan’s Ministry of Finance’s Fiscal System Council show that Japan will invest JPY 3.9 trillion (approximately USD 25.7 billion) over the next three years, equivalent to 0.71% of its GDP. In comparison, the United States will invest more, with JPY 7.1 trillion over five years, but this represents only 0.21% of its GDP, less than one-third of Japan’s ratio.

Over the next five years, France’s expenditure amounts to JPY 700 billion, equivalent to 0.2% of its GDP. Germany’s expenditure stands at JPY 2.5 trillion, equivalent to 0.41% of its GDP.

On Monday, the U.S. Department of Commerce announced a direct subsidy of up to USD 6.6 billion to TSMC, aiming to attract more investments from TSMC within the United States. Meanwhile, in Japan, TSMC secured approximately JPY 1.2 trillion (USD 7.5 billion).

Nikkei notes that Japan’s JPY 3.9 trillion investment in the semiconductor industry involves supplementary budgets, leading to a sharp increase in spending. Thus, the Ministry of Finance is concerned about the lack of funding sources for official support of semiconductor manufacturing. According to Nikkei News, only over JPY 500 billion of Japan’s semiconductor industry expenditures have been covered by actual funds.

One funding source is GX bonds, which the government has started issuing for economic green transformation to achieve net-zero emissions by 2050. GX bonds are expected to raise approximately JPY 20 trillion over the next decade, to be repaid using carbon tax revenue.

TrendForce has previously reported that Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

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• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab
• [News] Subsidies to TSMC from Japan and China Increase Over Fivefold Annually

(Photo credit: TSMC)

At the time when Japan is strengthening the construction of its semiconductor supply chain, as per a report from the Japan Times, Japanese photoresist giant Shin-Etsu Chemical is rumored to build a chip material plant in Gunma Prefecture, Japan, which marks its first new domestic manufacturing base in Japan over the past 56 years.

It’s reported that Shin-Etsu Chemical plans to invest approximately JPY 83 billion (USD 547 million) in Isesaki City, northern Tokyo, Gunma Prefecture, Japan to construct a factory covering an area of around 150,000 square meters, which is scheduled to be completed in 2026.

This new base, to produce photoresist and other materials used in semiconductor lithography processes, will become the strategic center for Shin-Etsu Semiconductor Materials, exporting to South Korea, the United States, and other regions. The company also plans to conduct research and development there eventually.

Public data shows that Shin-Etsu Chemical holds about 20% of the global photoresist market, especially in advanced product field, where it aims to capture at least 40% market share. Currently, the company mainly produces photoresist in Taiwan and Niigata Prefecture, Japan.

Japan has long held a strong global market position in upstream semiconductor aterial markets, especially in areas such as silicon wafers and photoresist, where its market dominance remains unshaken.

Currently, many Japanese companies are expanding production and conducting research and development. Industry sources indicate that Mitsui Chemicals is expanding a factory in Yamaguchi Prefecture to produce films, which are used to protect photomasks from dust and damage during the lithography process.

Mitsui Chemicals will invest between JPY 5-9 billion and begin mass production in 2025 or 2026. Fuji Film has also started domestic production of CMP slurry for wafer polishing in Japan, and Nippon Sanso Holdings plans to start producing neon gas (Used in the chip manufacturing process) in Japan around 2026.

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• [Insights] Analysis of the Global Photoresist Market in 2023

(Photo credit: TSMC)