Apple CEO Tim Cook visited China for the second time this year. According to a report from Commercial Times, his visit may be aimed at boosting Apple’s business in the region, particularly given that Apple Intelligence currently does not support the China version of the new iPhone 16.

A report from South China Morning Post noted that Chinese Android smartphone vendors are already incorporating new AI features into their devices. On the other hand, Apple’s major rival in smartphones, Samsung, has also found an ally in the local market, as the report pointed out that earlier this year, Baidu’s AI model would be integrated into Samsung’s latest flagship smartphone series, the Galaxy S24.

The report also mentioned that during an earnings call in August, Cook stated that he was advocating the launch of Apple Intelligence in China, aiming to provide AI services to all Apple users.

According to Commercial Times, citing Cook’s official account on the social media platform Weibo, during his trip, Cook met with Chinese university students to discuss how Apple products can support sustainable farming practices.

Notably, according to a report from Reuters, Cook also met with Jin Zhuanglong, China’s Minister of Industry and Information Technology, on Wednesday in Beijing.

The report from Commercial Times also noted that this is Cook’s second visit to China this year. During his trip in March, he reaffirmed the company’s long-term commitment to the Chinese market. On that visit, Cook visited Apple’s new store in Shanghai, met with China’s Minister of Commerce, Wang Wentao, and connected with several major Chinese suppliers.

Read more

• [News] Insiders Reportedly Claim Apple to be Two Years behind in AI Development
• [News] A Comparison between Apple iPhone 16 and Huawei Mate XT

(Photo credit: Tim Cook’s Weibo)

Texas Instruments (TI), a leading player in the analog IC market, reported stronger-than-expected quarterly earnings, though its outlook for the current quarter fell short, reflecting ongoing pressures in the industrial semiconductor sector.

According to Reuters and MarketWatch, TI announced its Q3 results after the market closed on the 22nd. Revenue declined 8% year-over-year but increased 9% from the previous quarter, reaching $4.15 billion. Diluted earnings per share (EPS) came in at $1.47, down from $1.85 a year earlier. Analysts surveyed by FactSet had projected Q3 revenue of $4.12 billion and EPS of $1.38.

TI CEO Haviv Ilan stated in the press release that Revenue decreased 8% from the same quarter a year ago and increased 9% sequentially. Industrial continued to decline sequentially, while all other end markets grew.

According to Bloomberg, CEO Haviv Ilan stated that customers are clearing excess inventory, and the timing is now favorable for an order rebound after eight consecutive quarters of declining revenue.

Looking ahead to Q4 (October-December), TI expects revenue to range between $3.7 billion and $4 billion, with a midpoint of $3.85 billion, and diluted EPS between $1.07 and $1.29, with a midpoint of $1.18. FactSet consensus forecast Q4 revenue of $4.06 billion and EPS of $1.34.

According to a report by Money DJ, Texas Instruments is seen as a bellwether for the semiconductor industry due to its early earnings reports. Additionally, TI is the largest manufacturer of foundational chips for various electronic devices. Although its executives are generally reluctant to provide long-term industry forecasts, investors often use TI’s financial guidance to assess overall industry demand. The company’s largest revenue sources are industrial equipment and automotive manufacturers, which together contribute over 70% of its total revenue.

(Photo credit: TI)

Following the investigation launched by the U.S. Commerce Department on whether TSMC has manufactured smartphone or AI chips for Huawei, the foundry giant seems to have identified the underlying issue. According to a report by Reuters, TSMC announced on Tuesday that it has notified Washington about a possible effort by Huawei to bypass U.S. export restrictions.

It is worth noting that TSMC had reportedly informed the U.S. Commerce Department after receiving an order for a chip similar to Huawei’s Ascend 910B, a processor designed for training large language models, Financial Times reveals. How the chip ended up in Huawei’s possession remains unclear.

Before U.S. sanctions were enforced, TSMC had produced an earlier version of the 910B chip, Financial Times notes.

Citing a source close to TSMC, the report by Financial Times suggests that after receiving a questionable order, TSMC engaged in discussions with both the customer involved and the U.S. Commerce Department. The department’s investigation into the matter would be “related to” TSMC, but the company itself would not be the target of any probe.

Another insider cited by the Financial Times’ report shares the same view, indicating that there had been “conversations” between the Commerce Department and TSMC regarding a possible attempt to circumvent export controls. However, there was no implication of any willful violations of compliance on TSMC’s part.

TSMC stated that at this time, the company is not aware of it being under any investigation, noting that it has not provided chips to Huawei since mid-September 2020, Reuters indicates.

Last week, a report by The Information revealed that the U.S. Commerce Department has been examining whether TSMC has been engaged in the production of AI chips designed by Huawei, which have gained popularity among Chinese customers as an alternative to NVIDIA’s chips, as they are barred from purchasing due to U.S. export regulations.

Additionally, the inquiry is said to be exploring whether TSMC manufactured smartphone chips for Huawei’s devices as well.

Read more

• [News] U.S. Reportedly Investigates TSMC on whether It Manufactured AI or Smartphone Chips for Huawei
• News] Huawei Reportedly Begins Sampling of Ascend 910C to Rival NVIDIA

(Photo credit: Huawei)

China has been in the spotlight lately with its breakthroughs in semiconductors. Following the buzz that SMIC is said to produce 5nm chips for Huawei this year, Xiaomi is rumored to have taped out its first 3nm SoC. China’s efforts can also been seen by the surge of semiconductor patent applications, with the country’s filing in 2023-24 soaring by 42%, according to a report by The Register.

Citing the data from IP firm Mathys & Squire, the report notes that there is a 22% global increase in semiconductor patent applications, rising from 66,416 in 2022-23 to 80,892 in 2023-24.

It is worth noting that China’s semiconductor sector is rapidly advancing in response to U.S. export controls, while its semiconductor patent applications during 2023-24 showed the strongest growth among all regions, rising from 32,840 to 46,591 with a 42% year-over-year increase, according to The Register.

However, China’s surge in patent applications is not solely influenced by geopolitical factors. AI accelerators and high-performance chips have become highly sought after amid the AI boom, leading chipmakers around the world, including those in China, to rush to file patents for the next breakthrough in AI hardware, the report states.

An expert from Mathys & Squire cited by the report states that as the U.S.-China chip war intensifies, export restrictions are prompting China to increase its investment in domestic semiconductor research and development, and this is now evident in their rising patent applications.

On the other hand, the U.S. is also making great strides in semiconductors. The data from IP firm Mathys & Squire reveals that the hometown of chip giants Intel, Qualcomm and NVIDIA experienced a 9 percent increase in patent filings, reaching 21,269 in 2023-24.

With government policies channeling funds into domestic chip production—TSMC’s Arizona plant being a notable example—the U.S. is eager to strengthen its supply chain while intensifying its research and development initiatives, which is in line with the trend, the report suggests.

Nevertheless, China is still years behind the most cutting-edge chip technologies, the report points out. For instance, the report notes that the CPU released by Chinese chip firm Loongson last week, 3B6600, though claiming to rival 7nm x86 processors, would be similar to match the performance of AMD and Intel’s products from five years ago.

Read more

• [News] Xiaomi Rumored to Have Taped out its First 3nm Chipset, Which Might be Launched Next Year
• [News] SMIC Reportedly to Manufacture 5nm Chips for Huawei Without EUV Machinery

Industry reports indicate that since the beginning of this year, the price of mainstream 6-inch SiC substrates has been consistently declining, with a drop of nearly 30%.

As of mid-2024, industry insiders in China reveal that the price of 6-inch SiC substrates has fallen below USD 500, approaching the production cost of Chinese manufacturers. By the fourth quarter of this year, prices have further dropped to USD 450 or even USD 400, creating financial pressure for most manufacturers.

There are currently three main concerns regarding the changes in silicon carbide prices within the industry:

1. In 2024, the global production capacity for SiC crystal growth and substrate materials will see a significant increase. Some industry insiders are concerned that this may lead to a short-term oversupply in the market.

2. The growth of electric vehicles (EVs), the largest target application for SiC materials, has shown signs of slowing down over the past two years, raising doubts about the long-term sustainability of the EV market and whether there are new growth drivers to support continued breakthroughs in third-generation semiconductors.

3. The price war that has erupted in the silicon carbide (SiC) market since the beginning of this year has impacted SiC pricing, making corporate transition and growth key considerations for the present.

This article will explore the concerns mentioned above by examining perspectives from various industry stakeholders and provide insights to address these issues.

SiC Industry Faces New Wave of Mergers

Regarding production capacity, incomplete statistics from DRAMeXchange show that in 2024, a total of 14 new 8-inch silicon carbide plants will be constructed globally (12 under construction, 2 about to start). In the short term, only Wolfspeed’s Mohawk Valley plant will be able to provide 8-inch SiC wafers, with other manufacturers expected to gradually supply 8-inch SiC wafers starting next year.

In China, over 50 SiC-related expansion projects were initiated in 2023, with a total investment exceeding 90 billion RMB. In 2024, more than 100 companies in China are expected to enter the SiC sector, and over 50 SiC projects are making significant progress.

Regarding the sustainability of capacity expansion, some industry insiders have expressed concerns. While investments in the silicon carbide industry are enormous and some suppliers are actively expanding, the key question is whether they can continue to operate under lower pricing conditions, as oversupply remains uncertain.

In this environment, the SiC substrate industry is expected to undergo a wave of mergers and acquisitions, further reshaping the SiC industry’s landscape.

AI Data Centers: A New Growth Driver for Third-Gen Semiconductors

Although the electric vehicle market appears to have weakened recently, many major SiC manufacturers and automakers have indicated that SiC-powered electric vehicle models continue to grow, and 8-inch silicon carbide may present new opportunities. As of now, 800V models account for about 8.7% of China’s new energy passenger car market, with 800V silicon carbide penetration rates increasing to 72%.

In discussions about new growth drivers for third-generation semiconductors, the global wave of artificial intelligence (AI) and the growing demand for computing power in data centers are seen as key factors in unlocking the potential of third-generation semiconductors.

Price Wars Signal Turning Point for SiC Commercial Applications

Regarding price competition, some industry insiders suggest that while price wars may pressure profit margins for some manufacturers, in the long term, this could drive the entire industry towards more efficient and cost-effective solutions. This would also help SiC technology penetrate further into electric vehicles, photovoltaics, and industrial sectors.

In China’s market, the rapid decline in prices is directly related to an increasing number of local manufacturers gaining electric vehicle certification and expanding their production capabilities. Industry experts predict that as 8-inch SiC production capacity gradually ramps up, the cost of individual SiC devices or unit current density will further decrease, potentially marking a turning point for large-scale commercial applications of SiC.

(Photo Credit: Wolfspeed)