In the industry buzz, it’s reported that TSMC expects a significant upswing in the proportion of AI orders within its 2024 revenue, driven by the increased demand for wafer starts from its six key AI customer groups in the coming year.

These six major AI customer groups encompass NVIDIA, AMD, Tesla, Apple, Intel, and international giants with in-house AI chip development, entrusting TSMC for production. The orders in this domain continue to heat up, not only benefiting TSMC but also signaling a robust year ahead for AI server manufacturer like Quanta and Wistron.

TSMC traditionally refrains from commenting on specific customer details and remained silent on market speculations on the October 10th. Meanwhile, AI server manufacturers, including Quanta and Wistron, hold a positive outlook for the upcoming year, with expectations of a continued upward trend in AI-related business operations.

As the demand for AI wafer starts from key customers intensifies, market experts are keenly watching TSMC’s investor conference on the October 19th. There is anticipation regarding whether TSMC will revise its previous July forecast by further increasing the Compound Annual Growth Rate (CAGR) of AI-related product revenue for the next five years.

TSMC categorizes server AI processors as those handling training and inference functions, including CPUs, GPUs, and AI accelerators. This category accounts for approximately 6% of TSMC’s total revenue. During TSMC’s July investor conference, it was projected that the demand for AI-related products would see a nearly 50% Compound Annual Growth Rate (CAGR) increase over the next five years, pushing its revenue share into the low teens range.

(Photo credit: TSMC)

A global supplier in materials, networking, and lasers, Coherent announced that DENSO  Corporation and Mitsubishi Electric Corporation have agreed to invest an aggregate $1 billion in its silicon carbide business (the “Business”). The transaction results from the strategic review process announced in May 2023 for the Business.

Under the terms of the transaction, DENSO and Mitsubishi Electric will each invest $500 million in exchange for a 12.5% non-controlling ownership interest in the Business, with Coherent owning the remaining 75%. Prior to the completion of the transaction, Coherent will separate and contribute the Business to a subsidiary. Coherent will control and operate the Business, which will continue to be led by Sohail Khan, Coherent’s Executive Vice President, New Ventures & Wide-Bandgap Electronics Technologies.

In connection with the transaction, the Business will enter into long-term supply arrangements with DENSO and Mitsubishi Electric that support their demand for 150 mm and 200 mm silicon carbide (“SiC”) substrates and epitaxial wafers.

“We are excited to expand our strategic relationships with DENSO and Mitsubishi Electric to capitalize on the significant demand for silicon carbide,” said Dr. Vincent D. Mattera, Jr., Chair and CEO, Coherent. “After a thorough review of strategic alternatives for our Silicon Carbide business, we determined that the creation of a separate subsidiary and the strategic investments from DENSO and Mitsubishi Electric, two leaders in SiC power devices and modules, is the best path forward to maximize shareholder value and position the Business for long-term growth. The investments from our strategic partners will be used to accelerate our capacity expansion plans and help sustain our leadership position, while ensuring the development of a robust and scalable supply for the rapidly growing market for SiC-based power electronics, largely driven by the explosive growth of the global electric vehicle market.”

“We are very pleased to establish a strategic relationship with Coherent, which has a world-class track record in SiC wafer manufacturing. Through this investment, we will secure a stable procurement of SiC wafers, which are critical for BEVs, and contribute to the realization of a carbon-neutral society by promoting the widespread adoption of BEVs,” said Shinnosuke Hayashi, President & COO, Representative Member of the Board at DENSO.

Dr. Masayoshi Takemi, Executive Officer, Group President, Semiconductor & Device of Mitsubishi Electric, said: “Demand for SiC power semiconductors is expected to grow exponentially as the global market for electric vehicles increases in line with the transition to a decarbonized world. To capitalize on this trend, we have decided to expand our SiC power semiconductor production capacity, including by constructing a 200 mm wafer plant in the Shisui area of Kumamoto Prefecture. We are delighted to strengthen our partnership with Coherent by investing in this new SiC company, which will provide us with a stable supply of high-quality SiC substrates essential for our increased supply capacity.”

Explore More

• Why Are Japanese Companies Targeting Coherent in the SiC Field?
• Under the Hood: How is SiC Reshaping the Automotive Supply Chain?
• The M&A battle for SiC: Who’s the Top Acquirers?

(Photo credit: Coherent)

According to Jiwei, Huawei has been actively amassing an inventory of essential components, with the objective of doubling its smartphone shipments next year, targeting a range of 60 to 70 million units.

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1. China’s EDA Industry into Fast Development with Efforts of Downstream Industries, Capital and Policies Propel

Within the broader context of China’s push for semiconductor self-sufficiency in recent years, the domestic EDA (Electronic Design Automation) industry in China has undergone remarkable growth. This growth has been spurred by a collaborative effort involving the Chinese government (through policies and investment funds), the expansion of the IC design sector (the growth of IC design scale and investments upstream and downstream), and private offered funds.

EDA companies in China are in rapid growth, and finance companies reached its zenith in 2021, with funding amounts consistently setting new records year after year. In 2022, EDA financing amounted to approximately 8 billion RMB, with companies like Primarius Technologies, Empyrean Technology, and Semitronix making their debut on the stock market. Over the past three years, these companies have sustained a continuous uptrend in their revenues. All in all, with support from various quarters, China’s EDA industry is now on a fast track to development.

2. Point Tools Take Center Stage for Chinese EDA Companies

Nowadays, the supply of EDA tools is largely controlled by Synopsys, Cadence, and Siemens EDA, three major players with deep technical expertise across the entire spectrum of EDA tools. While Empyrean Technology, having entered the arena early, boasts a comprehensive suite of EDA tools for analog circuit design and FPD, the majority of other Chinese EDA firms are strategically focusing on specialized point tools in simulation and verification.

These companies win customer recognition and purchases before broadening their path to other tool categories. Another strategic avenue pursued by Chinese EDA companies is the exploration of innovative opportunities in emerging fields such as AI chips, setting them apart from their larger counterparts.

3. China’s EDA Industry Enters a Phase of Consolidation, Confronting Challenges of Inexperience and Political Risks

Over the past few years, the number of Chinese EDA companies and the scale of funding have surged dramatically. As they experience rapid growth, mergers and acquisitions (M&A) and investments have become indispensable means for Chinese EDA firms to fortify their positions. This trend is becoming increasingly conspicuous, with a total of 20 M&A and investment deals occurring within the Chinese EDA sectors over the past three years, comprising 2 in 2021, 15 in 2022, and 3 in the first half of 2023.

Primarius Technologies (with 9 deals), Empyrean Technology (with 3 deals), and Univesta (with 4 deals, one of which was unsuccessful) are among the firms with comparatively high M&A activity. Beyond M&A and investment, Chinese EDA companies are accelerating their collaborations to achieve complementary advantages, a trend that is expected to continue to gain momentum in the future.

China’s EDA companies do encounter certain challenges during the integration process: (1) They lack prior experience in M&A and must continually learn and experiment. (2) Given the global semiconductor industry’s shifting dynamics, they may encounter obstacles from local governments when pursuing overseas M&A and investments.

Despite facing economic challenges and the impact of high inflation, the flash memory market finds itself in a challenging period. Nevertheless, major DRAM manufacturers continue the pursuit of advanced technology.

For DRAM chips, advanced manufacturing processes mean improved energy efficiency, increased capacity, and an enhanced end-user experience. Currently, in the world of advanced DRAM processes, such as the 10nm class, has reached the fifth generation. Micron refers to it as 1β DRAM, while Samsung calls it 1b DRAM.

Since Micron commenced production of 1β DRAM last October, they have set their sights on producing 1γ DRAM by 2025. This will mark Micron’s first foray into extreme ultraviolet (EUV) lithography technology, and for now, EUV production is centered in their Taichung facility in Taiwan. Therefore, the 1γ process is expected to kick off production there, with potential expansion to their Japanese facilities in the future. Samsung, on the other hand, plans to enter the 1bnm process stage in 2023, achieving chip capacities ranging from 24Gb (3GB) to 32Gb (4GB) and native speeds of 6.4 to 7.2Gbps.

In the NAND Flash business, the technology has now exceeded the remarkable milestone of 200-layer stacking, with storage manufacturers relentlessly striving for even higher layer counts. On August 9th, SK Hynix showcased the world’s first 321-layer NAND Flash memory sample during the 2023 Flash Memory Summit. This innovation has increased efficiency by 59% compared to the previous 238-layer 512Gb NAND. SK Hynix plans to further refine the 321-layer NAND Flash and intends to commence production in the first half of 2025.

Furthermore, Micron has ambitious plans beyond 232 layers, with products like 2YY, 3XX, and 4XX on the horizon. Kioxia and Western Digital are also actively exploring 3D NAND technology with more than 300, 400, and 500 layers. Samsung is planning to introduce the ninth generation of 3D NAND in 2024, possibly featuring 280 layers, followed by the tenth generation in 2025-2026, potentially reaching 430 layers. Their ultimate goal is to achieve 1000-layer NAND Flash by 2030.

(Image: SK Hynix)