According to Yahoo’s report, recent developments in China’s automotive industry, particularly the electric vehicle sector, have been a mixed bag. While some companies have reported impressive export performance and surging delivery volumes, the overall market has faced challenges due to weak consumer demand and intense price wars.

Even NIO, which had previously pledged to enhance efficiency without layoffs, recently announced a workforce reduction of approximately 10%, affecting around 3,000 employees. This unexpected move has sent shockwaves through the industry and suggests that a layoff storm may be approaching the Chinese automotive sector.

Amidst numerous recent developments in the Chinese auto market, the most widely discussed topic is the announcement by NIO’s Chairman, William Li, regarding a workforce reduction of approximately 10%, with specific adjustments to be completed by November.

NIO, known as a market favorite and listed in both the U.S. and Hong Kong, has been considered one of the leading players in China’s new force of automotive companies. However, it now finds itself in the challenging position of staff downsizing, signaling a potentially tough year-end for China’s automotive industry.

While NIO, XPeng, and Li Auto, often hailed as representatives of the new forces in China’s automobile industry, had been at the forefront, NIO’s performance in 2023 seems to be lagging behind its peers.

In contrast to Li Auto, which has seen ten consecutive months of rising sales figures this year, and XPeng, which achieved a 292% year-on-year increase in October and set its record for single-month deliveries, NIO’s performance has been more volatile. Since reaching a peak delivery volume of 20,462 vehicles in July, NIO has struggled to maintain a consistent delivery rate of 20,000 vehicles per month.

Additionally, NIO’s losses have continued to grow quarter by quarter, with the company posting over ¥20 billion in net losses over the past year. In the same period, Li Auto recorded nearly ¥2 billion in profits, while XPeng faced losses of nearly ¥10 billion. Consequently, NIO holds the distinction of being the leader in losses among the new energy vehicle manufacturers. NIO’s layoffs serve as a cautionary signal, highlighting the pressing need to cut costs and enhance efficiency.

Amid China’s economic slowdown and intensified market competition, NIO’s challenges represent just a microcosm of the broader Chinese automotive industry. It’s not just NIO; in 2023, several automotive companies have already begun layoffs or faced closures. Examples include Levdeo, which filed for bankruptcy; WM Motor, which already closed its doors; and Enovate, which announced a suspension of operations.

Furthermore, the chill in the market is also affecting automotive supply chain companies. An industry insider candidly revealed that except for BYD and Li Auto, most car manufacturers are in the process of downsizing, indicating that the Chinese automotive industry is currently experiencing a major shake-up and a fierce battle for survival.

(Photo credit: Pixabay)

In TrendForce’s latest solar energy pricing, it is revealed that upstream polysilicon and wafer transactions have reached a standstill, while downstream cell and module prices continue to decline.

• Polysilicon

Polysilicon prices continue to decline throughout the week. The mainstream concluded price for mono recharge polysilicon is RMB 70/KG, while mono dense polysilicon is priced at RMB 68/KG and N-type polysilicon is currently priced at RMB 75/KG.

In terms of trading, this week has shown a slight improvement compared to the stagnation of the previous week. Some small orders have been placed, but the majority of companies are still in the negotiation process. Additionally, there are ongoing discussions about transaction prices for polysilicon and crystal pulling.

Examining the price trends, there’s a notable divergence between leading manufacturers and second-tier manufacturers, with the current prices approaching the cost threshold for the latter and older capacity.

When we analyze the supply and demand dynamics, it becomes evident that as polysilicon prices continue to decline, downstream manufacturers are considering production cuts, and new production capacity might face the challenge of running at a loss right after starting operations.

Moreover, considering the projected oversupply in the future and the potential for prices to hit rock bottom, some manufacturers have realized that the profits from new production capacity may differ significantly from their expectations, prompting them to adjust their production schedules.

However, in the short term, polysilicon output is showing a month-on-month growth trend this quarter. As downstream demand decreases, polysilicon prices will likely continue to face pressure. Overall, this week has seen a decline in quoted polysilicon prices, and the price gap between N-type and P-type polysilicon continues to narrow.

• Wafer

The prices of wafer have still reduced throughout the week. The mainstream concluded price for M10 wafer is RMB 2.30/Pc, while G12 wafer is priced at RMB 3.30/Pc. The current cell prices are causing significant losses in the cell business, leading to a substantial reduction in activation rates.

The overall market turnover is currently sluggish. Additionally, the quoted prices only reflect the trend of declining wafer prices and may not accurately represent the actual transaction prices for spot goods.

On the supply side, wafer prices have continued to decline over the past two weeks. If the prices of different types of wafers keep dropping, manufacturers may find themselves in a situation where their costs exceed their selling prices.

Consequently, wafer production schedules have seen a significant reduction, forcing some second and third-tier manufacturers to maintain OEM business for meager profits. The current wafer inventory level has decreased to 1.9-2.1 billion pieces, and there are indications that prices are reaching a bottom in the market.

On the demand side, downstream cell manufacturers are gradually reducing their production schedules, and inventory issues have not been effectively resolved. As a result, cell manufacturers are becoming more cautious when it comes to purchasing wafers. This week, wafer prices have continued to decline, but the rate of decline will narrow with cost support.

However, considering the price pressure imposed by downstream consumers, their high inventory levels, and other factors, wafer prices have yet to stabilize and are likely to continue falling in the future.

• Cell

Cell prices have still declined this week. The mainstream concluded price for M10 cell is RMB 0.48/W, while G12 cell is priced at RMB 0.52/W. The price of M10 mono TOPCon cell is RMB 0.49/W.

On the supply side, current cell inventory has remained high for more than seven days. Consequently, facing pressure from both the elevated inventory levels and downstream module manufacturers, cell prices have experienced a decline.

The current price of M10 P-type cells stands at 0.48 yuan per watt, which is approaching the production cost of leading integrated manufacturers. The reduction in cell production is the current scenario.

However, the shipment pressures haven’t been alleviated, and the price gap between N-type and P-type cells has narrowed, putting both types at risk of operating at a loss due to costs exceeding their prices. On the demand side, the domestic peak season for centralized cell procurement has concluded, and there has been no significant uptick in demand in overseas markets or the distributed PV sector.

As a result, the demand for cells has weakened. With module prices also under pressure, module manufacturers are inclined to push down cell prices. Although there has been some improvement in the rate of decline for cells this week, the accumulation of cell inventory, falling upstream material prices, and sluggish downstream demand continue to exert constant pressure on cell prices.

• Module

Module prices have gone down slightly throughout the week. The mainstream concluded price for 182mm facial mono PERC module is RMB 1.08/W, 210mm facial mono PERC module is priced at RMB 1.11/W, 182mm bifacial glass PERC module at RMB 1.09/W, and 210mm bifacial glass PERC module at RMB 1.12/W.

On the supply side, module prices are persistently decreasing and have come close to the cost price of integrated manufacturers. Specialized module manufacturers, in response to module prices falling below their cost, have had to reduce their production rates to avoid losses. This is evident from the reduced demand for various auxiliary materials associated with module production.

On the demand side, the primary driver of demand continues to be large domestic projects, whereas overseas demand has not shown any significant increase. The overseas market is still working through its high inventory. In domestic bidding projects, there’s a noticeable shift toward an increased proportion of N-type modules, indicating a faster transition in demand toward N-type technologies.

In the third round of centralized procurement for PV modules by Huadian Group, the quoted price stands at 0.9933 yuan per watt. In the same month, the bidding price for modules in the centralized procurement tender by CHN Energy is 0.945 yuan per watt, marking a record low within a single month.

This price trend underscores the inevitable intense competition within the module sector, as excess production capacity is evident throughout the entire industry chain. This week, module prices have continued their descent. In summary, it’s probable that module prices will remain volatile in the future, especially considering that bidding prices for modules are swiftly approaching the 1 yuan mark.

Read more

• PV Industry Supply Chain Price Update

The research institution TrendForce held its AnnualForecast 2024 Seminar on November 3, where they delved into discussions about global wafer foundry trends, the applications of AI, the dynamics of AI servers, and the demand for High Bandwidth Memory (HBM).

Joanne Chiao, analyst from TrendForce, observed that while AI servers have experienced robust growth over the past two years, AI chips account for just 4% of wafer consumption, limiting their impact on the overall wafer industry. Nevertheless, both advanced and mature processes offer business opportunities. The former benefits from the desire of companies like CSPs to develop customized chips, leading them to seek the assistance of design service providers; while the latter can consider venturing into sector such as power management ICs and I/O solutions.

Persisting US export restrictions continue to affect China’s foundries, causing delays in their expansion plans. Furthermore, the regionalisation of wafer foundry services is exacerbating issues related to uneven resource distribution.

Due to lackluster end-market demand and fierce market competition, the capacity utilization rate of 8-inch wafer foundries continue to decline until the first quarter of the upcoming year. Inventory adjustments are underway in the fields of industrial control and automotive electronics. Chinese foundries are more willing to offer competitive prices, and outperforming their counterparts in Taiwan and Korea in terms of order performance.

In the realm of 12-inch wafer foundry services, success relies on technological leadership and exclusivity. Competition isn’t as intense as it is with 8-inch wafers. This resurgence is driven by inventory replenishment, the demand for iPhone 15, select Android smartphone brands, and the need for AI chips. A moderate recovery is expected in the latter part of this year.

TrendForce indicates that, with the expansion of processes beyond 28nm, mature process capacity is expected to occupy less than 70% of the capacity of the top ten foundries by 2027. Under the pressure to transition towards mature processes, China is anticipated to account for 33% of mature process capacity by 2027, with the possibility of further increases.

It’s noteworthy that Japan is actively promoting the revival of its semiconductor industry and, through incentives for foreign companies establishing fabs, may secure 3% of advanced process capacity.

TrendForce’s analyst, Frank Kung, predicts that the shipment of Nvidia’s high-end GPU processors will exceed 1.5 million units this year, with a YoY growth rate of over 70%, expected to reach 90% by 2024. Starting from the latter half of this year, Nvidia’s high-end GPU market will transition primarily to H100. As for AMD, its high-end AI solutions are mainly targeted at CSPs and supercomputers. The AI server market, equipped with MI300, is expected to experience significant expansion in the latter half of this year.

In the 2023-2024 period, major CSPs are poised to become the primary drivers of AI server demand, with Microsoft, Google, and AWS ranking among the top three. Additionally, the robust demand for cloud-based AI training is expected to propel the growth of advanced AI chips, which may, in turn, stimulate growth in power management or high-speed transmission-related ICs in the future.

Lastly, concerning HBM, TrendForce’s senior research vice president, Avril Wu, mentioned that as Nvidia’s H100 gradually gains momentum, HBM3 is set to become the industry standard in the latter half of this year. With the launch of B100 next year, HBM3e is poised to replace HBM3 as the mainstream memory in the latter half of the following year. Overall, HBM plays a pivotal role in DRAM revenue, with expectations of an increase from 9% in 2023 to 18% in 2024, potentially leading to higher DRAM prices in the coming year.
(Image: TechNews)

According to UDN’s report, the Taiwanese government has introduced the “Taiwan Chip-Driven Industrial Innovation Program,” an investment of NT$300 billion with an annual average of NT$30 billion.  On October 2, Executive Yuan Commissioner Tsung Tsong Wu and Chairperson of the National Science Council revealed that this program welcomes foreign participation but will consider prerequisites such as competition with local talent.

When asked about what attracts international startups to Taiwan, Tsung Tsong Wu emphasized that while the $30 billion investment over a decade is significant, Taiwan’s strength lies in its complete industry ecosystem, covering everything from IC design and manufacturing to packaging and testing.

The government and private sector collaborate to achieve the best results, making international startups and chip designers eager to come to Taiwan. The aim is to turn Taiwan into the global destination for related industries’ dreams.

The National Science Council presented the “Taiwan Chip-Driven Industrial Innovation Program” to the Executive Yuan on October 2. Tsung Tsong Wu explained that out of next year’s $12 billion technology budget, approximately $4 billion will be allocated to generating AI-driven innovations across all industries, attracting international investments, and supporting startups. Additionally, around $8 billion will be dedicated to strengthening talent development and advancing towards cutting-edge processes.

While the initial investment for the first year of the “Taiwan Chip-Driven Industrial Innovation Program” is $1.2 billion, critics have raised concerns about its insufficiency. The National Science Council clarified that although the initial investment is relatively low, the budget allocated will increase from 2025 onwards, adapting to the evolving economic landscape.

Tsung Tsong Wu emphasized that the program encompasses both advanced and mature processes. While Taiwan is perceived to have an advantage in advanced processes, many mature processes, such as 3DIC, are vital for future industry innovations.

(Photo Credit: TSMC)

According to TechNews’ report, Gitae Jeong, Vice President of Samsung Electronics, recently revealed in an interview that the company is set to introduce the SF1.4 (1.4nm) process, expected to enter mass production in 2027.

This announcement intensifies the competition in advanced semiconductor manufacturing, particularly in the development of 2.5D/3D integrated heterogeneous structure packaging among the three major semiconductor foundry giants.

• TSMC: N3P Process Superior to Intel 18A, N2 to Lead Industry’s Advanced Processes

Previously, the semiconductor industry reported challenges with both TSMC and Samsung achieving yields above 60% for their 3nm processes due to undisclosed issues. TSMC’s yield was reported to be only 55%, below the normal yield rate.

However, TSMC’s President, C.C. Wei, expressed optimism, stating that current N3 demand is better than three months ago, contributing to a healthy growth outlook for TSMC in 2024.

Wei also anticipates that TSMC’s 3nm process will contribute a mid-single-digit percentage (4%-6%) to the company’s annual wafer revenue in 2023.

Regarding competition with rival Intel’s 18A process, Wei believes that TSMC’s N3P process offers better performance, power, and area (PPA), alongside improved cost efficiency and technical maturity. Furthermore, TSMC’s upcoming N2 process is expected to be the industry’s most advanced when introduced.

• Intel: Striving for the Fourth Customer for 18A Process Outsourcing Orders

Intel’s CEO, Pat Gelsinger, has revealed that the 18A process has secured orders from three customers and aims to acquire a fourth customer by the end of the year. The advanced 18A process is scheduled to begin production at the end of 2024, with one customer already having made an advance payment. External expectations suggest that the customer could possibly be NVIDIA or Qualcomm.

Intel has stated that Intel 4 and Intel 3 processes are similar, as are Intel 20A and Intel 18A processes. Consequently, Intel’s primary focus will be on offering Intel 3 and Intel 18A to semiconductor foundry customers. Meanwhile, Intel 4 and Intel 20A processes are more likely to be used internally. However, Intel is open to accommodating customer requests if they express interest in adopting these later processes.

• Samsung: Commencing Mass Production of SF2 in 2025, Prioritizing Internal Use

Due to challenges with the three-nanometer (3nm) manufacturing process, there have been reports that Samsung plans to shift directly to the more advanced two-nanometer (2nm) process.

According to Samsung’s Foundry Forum (SFF) plan, they will begin mass production of the 2nm process (SF2) in 2025 for mobile applications, expand to high-performance computing (HPC) applications in 2026, and further extend to the automotive sector and the expected 1.4nm process by 2027.

Similar to Intel, Samsung intends to prioritize the production of its own products using the 2nm process. The 2nm process products will initially be utilized for Samsung’s in-house products rather than external customer products.

• Summary

While TSMC’s N3 series currently enjoys broad support, including N3E, N3X, and N3P process series, the move to 2nm introduces new variables as it adopts a completely new GAAFET architecture. Regardless, whether it’s TSMC’s N2, Intel’s 18A, or Samsung’s SF2, each of them possesses its competitive strengths. The industry is also eagerly anticipating the future developments in advanced semiconductor processes.

Read more

• [News] Progress and Adoption of Advanced Processes by Samsung, Intel, and TSMC