Polysilicon:

Polysilicon prices have remained stable throughout the week. The mainstream concluded price for mono recharge polysilicon is RMB 83/KG, while mono dense polysilicon is priced at RMB 81/KG and N-type polysilicon is currently priced at RMB 93/KG.

On the supply side, some of the production capacity that was impacted by the accident has been restored, and the growth rate of new capacity has accelerated. As a result, this month’s actual output has seen a significant increase, marking the first time the growth rate has hit double digits. This has led to a substantial shift in the supply and demand dynamics of polysilicon.

On the demand side, specialized crystal pulling manufacturers have reduced their activation rates, exerting pressure on upstream polysilicon manufacturers. These crystal pulling manufacturers are currently focusing on depleting their accumulated polysilicon inventory.

Consequently, the forecast of a decline in polysilicon prices in the upstream segment is on the verge of becoming a reality, and crystal pulling manufacturers, in general, are delaying their procurement demands. Furthermore, the marginal increase in polysilicon is expected by the end of this month, while crystal pulling manufacturers still have sufficient inventory to consume throughout the month.

Meanwhile, the market prices of downstream cells and modules continue to remain below their production costs, and the negative signs of declining polysilicon prices are increasingly apparent. This week, the turnover of polysilicon has been slow, with prices holding steady. However, certain events, such as some second-tier polysilicon enterprises reducing their prices for N-type polysilicon, indicate that a downward trend in polysilicon prices is looming.

Wafer:

The prices of wafer have still reduced throughout the week. The mainstream concluded price for M10 wafer is RMB 2.78/Pc, while G12 wafer is priced at RMB 3.80/Pc.
On the supply side, currently, the inventory of wafer enterprises stands in the range of 2.4-2.6 billion pieces. Their production schedules and inventory for this month significantly surpass downstream demand. Consequently, wafer manufacturers face immense pressure to deplete their inventory. Specialized wafer manufacturers are clearly indicating their intention to reduce production, with some of them having already commenced this step to manage their inventory.

On the demand side, there hasn’t been a notable increase in cell procurement demand. Nevertheless, owing to diminishing profits and mounting inventory pressure, some professional cell manufacturers are contemplating reducing their production. This week, wafer prices have uniformly dropped, maintaining a price gap of approximately 0.1 yuan per watt between leading and smaller manufacturers. With dwindling downstream purchasing demand and limited cost support from the upstream segment, it’s anticipated that wafer prices will persistently decline, making it challenging to arrest this downward trend.

Cell:

Cell prices have still declined slightly this week. The mainstream concluded price for M10 cell is RMB 0.60/W, while G12 cell is priced at RMB 0.66/W. The price of M10 mono TOPCon cell is RMB 0.65/W.

On the supply side, cell manufacturers did not plan to reduce their production before the long weekend, leading to an increase in overall inventory. Currently, cell market prices are hovering close to production costs. Some specialized cell manufacturers are now contemplating reducing production and focusing on depleting their existing inventory.

On the demand side, the operational rates of specialized module manufacturers have not improved, and cell prices have not reached their lowest point. Downstream consumers have adopted a bearish stance, and their purchasing strategies involve buying products with increasing prices rather than those with declining prices. Consequently, they are postponing their purchasing demands. Assessing specific cell models, the inventory of P-type modules in the downstream segment is high, and the demand for domestic centralized projects remains stagnant. As a result, there is insufficient momentum for module manufacturers to improve their production scheduling, and the demand for P-type cells is weak.

When it comes to N-type cells, there is a substantial difference in demand between high-efficiency and low-efficiency cells. The supply of low to medium efficiency cells has increased significantly, but the market’s receptiveness to them is low. Consequently, their inventory is growing, whereas the demand for high-efficiency N-type cells remains positive. However, in the latter half of the year, most orders are for P-type cells, which creates increased shipment pressure even for high-efficiency N-type cells.

This week, cell prices have been erratic, but overall, they are declining. There is currently no support from the cost side, and with weak customer demand, there is still room for further reductions in cell prices.

Modules:

Module prices have declined slightly throughout the week. The mainstream concluded price for 182mm facial mono PERC module is RMB 1.20/W, 210mm facial mono PERC module is priced at RMB 1.21/W, 182mm bifacial glass PERC module at RMB 1.21/W, and 210mm bifacial glass PERC module at RMB 1.22/W.

On the supply side, the shipment volumes of module manufacturers have exhibited significant divergence. The market price for modules has dropped even below the production costs for specialized module manufacturers, prompting them to drastically reduce their production. Despite weak current demand, top-tier leading manufacturers are maintaining high operational rates and are even undercutting prices to secure more orders, squeezing the market share of smaller manufacturers.

On the demand side, overseas inventory levels are elevated, and as module prices continue to decrease, customers are closely monitoring market dynamics. Furthermore, there are rumors that the European Union may impose trade barriers to support local photovoltaic manufacturers. This has instilled panic among module manufacturers, who are likely to reduce module prices to clear their inventory.

Stimulated by the commencement of ground projects, domestic demand for modules has improved. However, industry chain prices are still on a downward trajectory, and domestic customers are increasingly concerned about further price declines. Given that current module inventory can still meet short-term delivery demands, the demand for modules from domestic manufacturers is not expected to surge in the short run. This week, module prices declined, with G12 P-type modules dropping by 1.63% and M10 P-type cells falling by 0.83%. However, the downward trend persists, and there is still room for further price declines.

As reported by The Wall Street Journal today, Taiwan Semiconductor Manufacturing Company (TSMC) is poised to secure an additional one-year exemption from the United States. TSMC’s semiconductor facility in Nanjing, China, is expected to continue operations in the “foreseeable future” as long as significant technical upgrades are not undertaken.

U.S.’s Attitude towards Semiconductor Giants in Asia

The U.S. imposed a ban on chip exports to China in October of the previous year, restricting semiconductor equipment manufacturers using U.S. technology from exporting to China without obtaining a license.

On October 9th, the South Korean government revealed that both Samsung and SK Hynix have earned recognition as “Validated End-Users (VEUs)” by the U.S., granting them the ability to import specific U.S. chip manufacturing equipment into their existing Chinese facilities without further U.S. approval.

The status of TSMC’s designation as a “Certified End-User” remains undisclosed,  and the Taiwanese government has not made any public statements on this issue at this time.

South Korea’s Future Challenges after Secured U.S. Exemption

Over the preceding year, the South Korean government and related companies have been actively engaged in mediation with the U.S. government and will persist in their efforts during the extended one-year exemption. “In reality, we cannot evade political risks and geopolitical uncertainties,” stated Choi Sang-mook, Chief Secretary for Economic Affairs in the South Korean President’s Office.

Through back to September 22th, the U.S. Department of Commerce released the final regulations for the “Chip Act.” The rules indicate that subsidized chip manufacturers will enter into binding agreements with the U.S. Department of Commerce, limiting expansion and collaborative scientific research activities in countries including China. The restrictions for advanced processes and mature processes are set at 5% and 10%, respectively. This implies a severely restricted scope for expansion, and the future prospects for Samsung and SK Hynix’s continued growth in China remain uncertain.

Nevertheless, the U.S. decision to grant Samsung and SK Hynix an indefinite exemption bodes well for the semiconductor industry in China, the United States, South Korea, and the global semiconductor supply chain. As per Samsung’s statement, most of the uncertainties associated with its semiconductor production in China have been resolved. Meanwhile, SK Hynix underscores that this development bolsters the stability of the global semiconductor supply chain.

(Image: TSMC)

In the ongoing global race for advanced semiconductor technology, TSMC, the leader in semiconductor manufacturing services, continues its strides towards 2nm project. The Hsinchu’s Baoshan plant is set to commence equipment installation in Q2 2024, with mass production scheduled for Q4 2025, starting with a monthly output of around 30,000 wafers. Meanwhile, TSMC fab in Kaohsiung is organizing for N2P mass production, featuring backside power supply tech, a year after N2’s debut.

According to a report by Taiwan’s Money DJ, as previously shared by TSMC, the N2 process introduces a backside power rail solution, ideal for high-performance computing (HPC) applications. The backside power rail promises a 10% to 12% speed boost and a 10% to 15% logic density improvement. The aim is to introduce backside power rail to customers in H2 2025, aligning with supply chain reports.

Notably, Intel led the transition from planar transistors to FinFET, and now, with evolving technologies like MBCFET, BSPDN (Backside Power Delivery Network) based on Gate-All-Around (GAA) FET. Major players such as TSMC, Samsung, and Intel actively compete for leadership in the next-gen GAA technology, and have further presented promising and proactive technology roadmaps.

According to Samsung Semiconductor’s plans, they target to implement the 2nm process into mass production by 2025, with 1.4nm scheduled for 2027. Intel, adopting RibbonFET transistor architecture based on GAA technology, anticipates pilot production of the 20A version in H1 2024 and mass production of the 18A in 2025.

On October 11, Nanya Technology held an investor conference where CEO Li Pei-Ying noted that DDR5 prices have risen. Nanya Technology’s primary products, DDR3 and DDR4, have halted their decline, with recent negotiations indicating potential price increases and an expected improvement in ASP (average selling prices) in the fourth quarter. The bit growth rate is also expected to show a slight improvement, leading to an overall amelioration in the loss situation.

Li Pei-Ying stated that in terms of overall market supply, various DRAM manufacturers are increasing their supply of DDR5 and HBM products. This is beneficial for depleting DDR4 inventories, and the DRAM industry’s conservative approach to capital expenditure and wafer production capacity is expected to help restore a healthy supply-demand balance by 2024.

On the demand side, in the server sector, enterprise cloud applications are driving demand for AI computing and DDR5. Nanya Technology anticipates that the server market may gradually improve from the fourth quarter onwards. In the mobile sector, the continued development of AI applications in smartphones globally is expected to boost upgrade intentions, and there is an opportunity for a rebound in smartphone sales in the Chinese market from the fourth quarter.

In the PC sector, the launch of new products is expected to drive demand for DDR5 and LPDDR5, gradually replacing DDR4 and LPDDR4 as the mainstream options. In the consumer electronics sector, including televisions, IP cameras, networking, industrial control, and automotive applications, demand is maintaining steady growth.

(Photo credit: Nanya Technology)

TSMC is in the process of constructing a semiconductor factory in Kikuyo-cho, Kumamoto Prefecture, Kyushu, Japan (referred to as Plant 1). Production is expected to commence in December 2024. Besides this facility, TSMC has shown interest in establishing a second plant in Japan (referred to as Plant 2). According to Japanese reports, the government is considering providing TSMC with a substantial subsidy of up to 900 billion Japanese Yen for Plant 2.

On October 4, during the Public-Private Partnership Forum on Increasing Domestic Investment led by Japanese Prime Minister Fumio Kishida, plans were announced for economic measures to be finalized within October. The Ministry of Economy, Trade, and Industry of Japan (METI) will request a budget of 3.4 trillion Japanese Yen to establish three funds supporting semiconductor production and research and development. These funds are the ” Research and Development Project of the Enhanced Infrastructures for Post-5G Information and Communication Systems,” the “Specified Semiconductor Funding Program,” and the “Ensuring Stable Supply Support Fund.”

As reported by Asahi Shimbun, sources suggest that the METI deems it necessary to grant 900 billion Japanese Yen in subsidies for TSMC’s proposed Plant 2, nearly 600 billion Japanese Yen for the “Rapidus” national team aiming to produce next-gen semiconductor chips domestically, and 700 billion Japanese Yen for traditional chips like Sony CMOS image sensors.

The Japanese government will allocate the required funds for these economic measures in the 2023 fiscal year supplementary budget. If the METI’s budget request is approved, the budget for semiconductor-elated activities in the 2023 fiscal year supplementary budget (3.4 trillion Japanese Yen) will be 2.6 times higher than that in the 2022 fiscal year supplementary budget (1.3 trillion Japanese Yen).

The Kishida administration also announced plans to ease land restrictions for crucial manufacturing facilities such as semiconductor plants during the forum. As early as December, local governments will be able to issue development permits for agricultural land, forests, and other areas.

Before that, local governments could only grant permits for industries related to food logistics, data centers, and plant facilities. Now, this is being expanded to include vital strategic materials. Furthermore, changing the land category from agricultural land often required approvals from multiple government departments, a process that could take more than a year. In the future, these procedures are expected to be shortened to around four months.

(Image: Briáxis F. Mendes (孟必思), CC BY-SA 4.0, via Wikimedia Commons)