South Korean President Yoon Suk Yeol concluded his visit to the Netherlands, announcing the establishment of a “Semiconductor Alliance” between South Korea and the Netherlands. The alliance involves collaboration between Dutch semiconductor equipment giant ASML and South Korean companies Samsung and SK Hynix. This marks South Korea’s first alliance announcement with a specific country.

According to the Korea Times and South Korean President Office’s press release on December 13th, President Yoon Suk Yeol’s held a dialogue with Dutch Prime Minister Mark Rutte during the state visit to the Netherlands. They issued a joint statement formalizing the “Semiconductor Alliance” and establishing bilateral mechanisms for economic, security, and industrial consultations.

On December 12th, President Yoon Suk Yeol led a delegation to ASML’s headquarters in the Netherlands, including representatives from South Korean semiconductor giants Samsung and SK Hynix, as reported by the Korea Times. During the visit, Samsung and ASML signed an MOU, jointly investing approximately KRW 1 trillion (about USD 7.6 billion) to establish a research fab in South Korea.

Bloomberg also reports that the new fab will expand ASML’s market in South Korea, where it already operates four fabs, servicing clients including Samsung. ASML’s exclusive EUV technology is crucial amid the US-China tech trade tensions, making regional diversification increasingly important for the company.

ASML is a leading global player of semiconductor EUV lithography systems, which is crucial for processing semiconductor manufacturing’s most vital steps. EUV equipment are a pivotal part of chip manufacturing, and ASML can produce only around 60 EUV devices annually. Currently, 70% of ASML’s EUV equipment are purchased by market leader TSMC.

Previous reports from South Korean media highlighted Samsung’s substantial EUV equipment purchases from ASML, totaling 50 units. Samsung is the world’s first company to produce 3nm chips, commencing production of the first-generation 3nm chips in the latter half of 2022. It aims to start mass production of the second-generation 3nm chips in the first half of the next year and targets producing 2nm chips by 2025 and 1.4nm chips by 2027.

(Image: 대한민국 대통령실)

According to a news report from Financial Times, Apple has reportedly informed its supply chain, including battery suppliers such as China’s Desay Corporation and Taiwan’s Simplo Technology, of its inclination to shift the battery supply for the iPhone 16 to India. Apple is encouraging suppliers to relocate existing production capacity to India to expand production scale in the region.

TrendForce believes that, given the critical nature of battery components in terms of user safety, any error in battery assembly is unacceptable. As Apple’s certainty about production yields in India remains unclear, this move carries certain risks.

Apple Expedites iPhone Assembly Business Transfer to India to Mitigate Geopolitical Risks

As the world’s most valuable company, Apple’s supply chain strategy has always been a key factor in its success. Amidst geopolitical tensions between the U.S. and China, Apple faces significant pressure from both the investment community and U.S. policymakers to diversify its supply chain, prompting an acceleration in the transfer of iPhone assembly operations.

In recent years, Apple has been shifting part of its iPhone assembly business from China to India to mitigate production risks.

The choice of India as a manufacturing destination is influenced not only by its large and untapped population but also by proactive subsidy policies implemented by the Indian government, aiming to position India as an attractive manufacturing and export hub for multinational companies.

Additionally, the growth potential of the iPhone in the Indian market adds to the appeal of relocating iPhone production to India. 

Increased Risks as Battery Component Production Shifts to India amid Uncertain Yield Rates

Analyzing the manufacturing distribution for Apple’s iPhone 15 series in 2023 reveals Foxconn’s predominant role, with only specific Plus models being produced by India’s Tata Group.

This strategic move, based on TrendForce’s insight, is inferred to be influenced by the Plus models’ lower sales performance in previous generations and their specific product positioning. Apple seems cautious about shifting production to India entirely until the production standards of Indian manufacturing facilities are confirmed, especially for models with comparatively lower demand.

In the ever-evolving landscape of smartphone components, such as core processors and camera modules, upgrades occur almost annually. However, the upgrade pace for smartphone batteries has been notably slower.

This delay is attributed to the critical importance of safety in battery components. Given the potential risks to user safety, even a minor error in battery components could lead to significant harm to a smartphone brand.

Considering this, the manufacturing distribution for Apple’s iPhone 15 series suggests that Apple might not be entirely confident in the production yield rates in India.

If the decision to shift the production of batteries, which requires a special emphasis on safety, to India is solely driven by the need to mitigate geopolitical uncertainties, it indeed poses a certain level of risk for Apple.

Read more

• [Insights] Tata’s Challenge in Securing Large iPhobe Orders After Officially Acquiring Wistron’s India Factory

Rumors suggest TSMC will set up a new fab that deploys 2nm and more advances processes in the Central Taiwan Science Park (CTSP) Phase 2, Taichung City, Taiwan. The city mayor Shiow-Yen Lu has confirmed TSMC’s entry into Phase 2, designating all allocated land exclusively for TSMC 2nd Fab in CTSP. According to the local government, the new fab is expected to house “processes advances than 2nm,” expressing the hope that TSMC will bring its latest technology to Taichung City.

The latest news about TSMC’s new plant has emerged. CNA reported that during the regular session of the Taichung City Council on December 12th, the mayor responded to councilors regarding the progress of Taichung’s efforts to attract TSMC’s new plant. Mayor stated that the city government has secured the deal, confirming that TSMC will establish itself in the CTSP Phase 2.

Mayor Lu explained that due to the immense scale of TSMC’s Taichung 2nd Fab, the Ministry of Economic Affairs in Taiwan is assisting as well. While CTSP Phase 1 accommodates numerous companies, almost all the land in Phase 2 is allocated for TSMC’s Taichung 2nd Fab.

In response, TSMC expressed gratitude for the support from the Taichung city government and pledged to continue cooperating with the relevant procedures. Regarding whether Phase 2 of CTSP will adopt technology for 2nm and more advances process, TSMC did not provide further clarification.

TSMC has also responded to earlier reports about Samsung offering discounts so as to be more effective in competing with TSMC for 2nm orders. During a joint interview before the Taiwan Executive Yuan’s Science & Technology Meeting on December 13th, TSMC Chairman Mark Liu stated that TSMC’s customers prioritize technological quality. As for the outlook for the coming year, Liu expressed hope for a very healthy year.

▲ TSMC’s Current Layout of Global Production Capacity
Edited by TrendForce, November, 2023

(Image: TSMC)

Explore more

• [News] Samsung’s Discount Strategy Challenges TSMC as the Battle for 2nm Orders Heats Up
• [News] The Alliance among Apple, TSMC, and Amkor May Pose Challenges to Samsung’s Advanced Packaging Strategy

According to a news report from Economy Daily News, Taiwanese IC design company MediaTek is benefiting from a rebound of the smartphone market, with shipments of its Dimensity series 5G smartphone chips gaining momentum. Simultaneously, there is positive news of a potential surge in the demand for WiFi products next year.

MediaTek has secured major contracts for WiFi 7 with leading global tablet brands, Intel’s laptop platforms, and various prominent smartphone manufacturers, breaking Broadcom’s long-standing dominance in the WiFi chip market.

Industry sources suggest that MediaTek is expected to further expand its reach next year by securing orders from Chinese smartphone brands, Intel’s laptop platforms, and the primary WiFi 7 chip orders from the leading global tablet brand from the US.

With shipment momentum entering a quarterly ascending stage, MediaTek is poised to break the past trend of Broadcom’s long-term dominance in the WiFi chip market. Additionally, MediaTek is gaining ground on its competitor Qualcomm, positioning itself as one of the top three global suppliers in the WiFi chip market.

MediaTek has refrained from commenting on customer specifics and order status. However, market expectations are high for a significant boom in WiFi 7 opportunities next year, and MediaTek is anticipated to benefit from this surge.

According to industry analysis, WiFi 7 boasts faster transmission speeds and additional frequency bands. Its theoretical speed is 4.8 times faster than the preceding WiFi 6 standard and 13 times faster than WiFi 5. The industry widely anticipates WiFi 7 to become the mainstream network transmission standard next year.

In the current PC market scenario, major PC suppliers such as Intel and AMD are almost certain to extensively support WiFi 7 next year. In the smartphone market, there are reports that Apple and Samsung are expected to incorporate WiFi 7 specifications in their new models next year, further propelling the explosion of WiFi 7 opportunities in the coming year.

In the past, MediaTek made relatively slow progress in the WiFi market, but it accelerated its efforts upon entering the WiFi 6 era. With ambitions to outpace competitors in WiFi 7, MediaTek reportedly expanded its R&D team, deploying a thousand personnel to delve into the WiFi 7 market.

In early 2022, MediaTek took an early lead by launching its WiFi 7 product line, entering the ‘design-in’ phase with clients. In the second quarter of 2023, reports suggest MediaTek is gradually making inroads into the high-end router and enterprise-related applications. These recent developments indicate positive strides for the company.

Industry analysts have emphasized that WiFi has become an essential network feature in current terminal devices. However, due to the need for integration supporting multiple frequency band specifications in network chips like WiFi and Bluetooth, the crucial point in verifying product usability lies in complying with frequency bands specified by various countries.

Since different countries use different frequency bands, a significant amount of manpower is required in the testing and verification stages. The development challenges associated with these chips are second only to modem chips.

Even Apple has reportedly delayed its in-house WiFi chip development due to a shortage of manpower. Instead, Apple has shifted its focus to procuring WiFi chips from other IC design companies. This opens up opportunities for Broadcom, Qualcomm, and MediaTek to secure significant orders for WiFi chips in Apple devices like iPhones, iPads, and MacBooks.

Reportedly, an insider has indicated that MediaTek’s WiFi 7 chips will be produced using TSMC’s 6nm process. It is anticipated that the wafer input for these chips will ramp up in the first half of 2024 as MediaTek will be gearing up to seize new opportunities in the latter half of that year when consumer devices will have widely adopted WiFi 7.

(Photo credit: MediaTek)

China’s penetration rate of new energy vehicles (NEVs) exceeded 40% for the first time in November this year, reaching 40.4% in domestic retail sales, a 4 percentage point increase from the same period last year. Optimistic growth is anticipated by 2024, with wholesale sales of new energy passenger vehicles expected to reach 11 million units.

The China Passenger Car Association (CPCA) released the latest data, forecasting that the total sales of passenger vehicles in China in November 2023 will reach 25.5 million units. With a huge increase of the 3.2 million units exported in 2017, the overall sales of passenger vehicles are set to significantly surpass the wholesale volume of 24.5 million units in 2017, reaching a historic high.

It is evident that NEVs in China are seen as a catalyst for the next wave of economic momentum. According to a report by the BJNews, Cui Dongshu, the Secretary General of CPCA, stated that the Chinese domestic retail penetration rate of new energy passenger vehicles in November was 40.4%, a 4 percentage point increase from the 36% penetration rate of the same period last year.

This marks China’s first-ever monthly penetration rate of new energy passenger vehicles exceeding 40%. As a key driver of growth in the Chinese passenger vehicle market, the retail sales of NEVs in November increased by nearly 40%, reaching 841,000 units with an 8.9% MoM growth.

In the first 11 months of this year, China’s cumulative retail sales of new energy passenger vehicles reached 6.809 million units, a YoY increase of 35.2%. CPCA believes that the growth outlook for the new energy passenger vehicle market in 2024 is relatively optimistic, with wholesale sales expected to reach 11 million units, a net increase of 2.3 million units, a 22% YoY increase, and a penetration rate of 40%.

Chinese brands in the NEV sector are gradually expanding their market influence through multifaceted development in technology and sales strategies. According to CPCA statistics, in November, 18 companies saw wholesale sales exceed 10,000 units, accounting for 88.9% of the total new energy passenger vehicle volume. BYD continued to lead the rankings with a monthly sales volume of about 301,400 units, followed closely by Tesla China with 82,400 units. The export of Chinese brand new energy passenger vehicles also showed significant growth, with A0-class electric vehicles accounting for nearly 60% and becoming the absolute mainstay of exports.

(Image: BYD)

Explore more

• [Insights] GAC Honda Axes 900 Jobs in Response to Electric Vehicles Revolution
• [Insights] Analysis of EEA Architecture and ADAS Domain Controllers in EVs
• [Insights] Significant Impact of Chinese Export Restrictions, Material Alternatives Yet to Yield Immediate Results