As the leading global supplier of NAND memory, Samsung is embarking on an ambitious journey to enhance its V-NAND technology, also known as 3D NAND. Early in this week, Samsung has officially declared its commitment to commence mass production of the 9th generation V-NAND memory, featuring an astonishing 300+ layers, by 2024. This achievement will establish a new industry record for the highest number of active layers, solidifying Samsung’s industry leadership.

In a blog post on Samsung Electronics, Jung-Bae Lee, President and Head of Samsung Electronics’ Memory Business, stated, “The ninth-generation V-NAND is well under way for mass production early next year with the industry’s highest layer count based on a double-stack structure.”

Samsung was diligently working on the 9th generation V-NAND back in August this year, preserving the double-stacked technology they first introduced in 2020. Not only is Samsung confirming the trajectory of their next-gen non-volatile memory technology, but it also surpasses competitors by boasting more active layers. It’s been disclosed that SK Hynix’s upcoming 3D NAND will have 321 active layers, Samsung is set to surpass this number.

Jung-Bae Lee further elaborated, “Samsung is also working on the next generation of value-creating technologies, including a new structure that maximizes V-NAND’s input/output (I/O) speed.”

While precise performance details of Samsung’s 9th generation V-NAND remain undisclosed, it will power their upcoming SSDs. In the near future, it is anticipated that Samsung will introduce retail SSDs with the PCIe Gen5 interface, in line with the Samsung 990 Pro series.

Regarding long-term technological advancement, Samsung is committed to minimizing interference between units, reducing device dimensions, and maximizing the count of vertical layers. These innovative strides are clearing the path for Samsung to achieve the industry’s most compact unit size. These endeavors will propel Samsung toward their ambitious goal of developing over 1,000 layers of 3D NAND and distinctive memory solutions, ensuring the continued relevance of their products for data centers, personal computers, and a wide range of applications.

(Image: Samsung)

Read more:

• Memory Spot Price Updates: DRAM and NAND Flash Prices Soaring at Relatively High Levels
• NAND Flash Spot Prices Surge, DRAM Demand Stalls, Spot Prices Remain Volatile in Late September

The world’s largest automaker, Toyota (TM-US), announced on Thursday, the 19th, that its North American division has reached an agreement with Tesla (TSLA-US). Starting in 2025, Toyota’s electric vehicles will adopt Tesla’s North American Charging Standard (NACS).

Prior to Toyota’s announcement, companies like Ford, General Motors, and BMW had already joined the Tesla NACS alliance, providing customers with access to Tesla’s extensive Supercharger network.

In 2025, Toyota will integrate the NACS interface into specific Toyota and Lexus BEVs, including a new three-row electric SUV produced at Toyota’s Kentucky plant.

Vehicle owners can connect to Tesla’s widespread North American charging infrastructure, comprising over 84,000 charging stations, including Level 2 and DC fast chargers, using Toyota and Lexus apps.

Owners or lessees of Toyota and Lexus vehicles using the Combined Charging System (CCS) specification will have the option to purchase NACS charging connectors starting in 2025.

Notably, we have anticipated that by 2026, the global tally of public charging stations will soar to 16 million, marking an impressive threefold increase from 2023 figures. As this unfolds, the global ownership of NEVs—which includes both PHEVs and BEVs—will surge to 96 million.

Amid increased U.S. restrictions on China’s semiconductor industry, Chinese chip equipment manufacturers are witnessing a notable uptick in domestic orders. Over the first eight months of this year, Chinese chip equipment managed to capture nearly half of all orders. This serves as a compelling sign that the fears expressed by companies such as NVIDIA, AMD, and Intel about losing ground to domestic rivals in the Chinese market are materializing.

On October 17th, the Biden administration tightened chip export rules, barring American companies, including NVIDIA, from selling AI chips to China. At the same time, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) placed 13 Chinese GPU firms on its Entity List, further unsettling global semiconductor and AI supply chains. Ironically, these moves could expedite China’s domestic AI chip industry’s advancement amid the pressure.

Huatai Securities’ analysis reveals that Chinese chip foundries have been winning an increasing number of bids for machinery equipment this year. In the first eight months of this year, they secured 47.25% of these bids, with the percentage soaring to 62% in August. In comparison, during March and April, the rate was only 36.3%. This trend reflects a turning point for China’s chip equipment industry and showcases its rapid transition towards self-sufficiency.

As per Reuters, insiders disclosed that prior to the U.S. export bans, China’s advanced chip foundries rarely utilized domestic equipment, reserving it for expanding production. Yet, in reaction to the ongoing restrictions, they’ve proactively started testing homegrown equipment on all foreign devices and plan to fully replace foreign gear with domestic alternatives. This transition has greatly boosted local firms such as AMEC and NAURA.

Analysts observe that China’s local equipment makers have notably enhanced their production capacity, especially in wet etching and cleaning, positioning them for global competition with U.S. counterparts. What’s more, the quality of Chinese-made equipment has surpassed expectations, often advancing by up to two years. The substantial revenue growth in the sector attests to China’s remarkable progress in the semiconductor equipment industry.

Nonetheless, photolithography equipment remains a field where China’s domestic equipment struggles to break through due to its demanding requirements for optical and process precision. China has faced challenges in procuring extreme ultraviolet (EUV) lithography machines crucial for manufacturing cutting-edge chips. The situation is further complicated by the joint efforts of the United States, the Netherlands, Japan, and other allies to restrict the export of advanced deep ultraviolet (DUV) lithography machines to China.
(Image: AMEC)

Infineon, Hyundai, and Kia announced on October 18 that they have signed a multi-year agreement for the supply of SiC (Silicon Carbide) and Si (Silicon) power semiconductor modules and chips.

Under this agreement, Infineon will supply SiC and Si power components to Hyundai and Kia until 2030, and in return, Hyundai and Kia will support Infineon’s production capacity and reserves.

The demand for SiC power devices has surged with the growing popularity of new energy vehicles, and as a prominent industry leader, Infineon has embarked on numerous collaborations this year.

• Infineon and Resonac

In January, Infineon declared a new multi-year supply and cooperation agreement with Resonac Co., Ltd. (formerly Showa Denko K.K.). According to this agreement, Resonac will provide Infineon with SiC materials for producing SiC semiconductor components, including 6-inch and 8-inch wafers. Initially focused on 6-inch wafers, Resonac will later supply 8-inch SiC wafers to support Infineon’s transition to 8-inch wafers. As part of the agreement, Infineon will also provide Resonac with SiC material technology-related intellectual property.

• Infineon and TanKeBlue, SICC

In May, Infineon signed long-term agreements with TanKeBlue and SICC to ensure a more competitive and substantial supply of silicon carbide materials. These two suppliers will primarily provide Infineon with 6-inch silicon carbide substrates and offer 8-inch silicon carbide materials, aiding Infineon in transitioning to 8-inch SiC wafers. The agreements also encompass silicon carbide ingots, as Infineon had previously invested nearly 1 billion RMB in acquiring a laser-based wafer technology enterprise, aiming to enhance the utilization of silicon carbide substrates and device cost competitiveness.

Notably, both TanKeBlue and SICC will account for a double-digit percentage of Infineon’s long-term demand volume.

• Infineon and Foxconn

In the same month, according to the Foxconn’s official website, Infineon and Foxconn have signed a memorandum of cooperation to establish a long-term partnership in the field of electric vehicles. Under this agreement, the two companies will focus on the adoption of silicon carbide technology in high-power applications for electric vehicles, such as traction inverters, on-board chargers, and DC converters. They also plan to jointly establish a system application center in Taiwan to expand their collaboration further.

• Infineon and Schweizer Electronic

Additionally, Infineon is collaborating with Schweizer Electronic to develop an innovative solution aimed at directly embedding Infineon’s 1200V CoolSiC™ chips into PCB boards. This move seeks to significantly enhance the driving range of electric vehicles while reducing the overall system cost.

• Infineon and Infypower

In September, Infineon announced a partnership with Shenzhen Infypower (INFY) to provide the industry-leading 1200V CoolSiC™ MOSFET power semiconductor devices, boosting the efficiency of electric vehicle charging stations.

In line with their goal of capturing a 30% share of the global SiC market by 2030, Infineon revealed plans to invest up to 5 billion euros over the next five years to construct the world’s largest 8-inch SiC power semiconductor facility in Malaysia.

(Photo credit: Infineon)

Question 6. Brett Lin from Bank of America

Operator: Next one to ask questions, Brett Lin from Bank of America.

Brett: Thank you for taking my question. So first of all, congrats on the strong result and then also the impressive gross margin. So I have two questions. One is on the end device AI, HAI and the other is on the CPO.

Brett: So appreciate the management’s constructive comments on growth outlook on the HAI. So besides the, well, interesting engagement with the clients, what are the implications for the wafer consumptions for the firm?

Brett: And also on the computing power and energy consumption angle on the end device with additional AI functions, should we expect it to re-accelerate the node migration for the end devices? That’s my first question. Thank you.

Host: Okay, so Brad’s first question is about edge and end device AI. He wants to know what is the implications for wafer consumption?

Host: And then with the increasing need for energy efficiency and power, he is wondering, does this re-accelerate or increase the node for, I guess, his words is node migration or adoption of leading edge technologies?

C.C.: Well, the edge device start to, that’s including smartphone and PCs, start to incorporate the AI functionality inside. We observe some of the neural engines has been added increasingly.

C.C.: So the die size will increase, even the unit did not increase dramatically, but the die size, it’s in mid-teens, no, not, I mean, mixed single-digit is the die size increase so far. And I expect that this kind of trend will continue.

C.C.: And so more and more application on the AI side will be incorporated into those kind of edge device. And that will need a very power-efficient chips to put it into the edge device, especially when it is a mobile.

C.C.: So I do expect, from my own perspective, I do expect that my customer will move into the leading edge node more and more quickly to compete in the market.

Brett: Okay. Thank you very much, C.C.. So, well, so a bit of a follow-up is that, well, now it accounts for some, well, mixed single-digit of the die size incremental for a chip. So does that, or are we seeing that to enlarge to something like mid-teens or, well, even bigger in the, well, mid to long-term?

Host: So Brett’s quick follow-up is if the AI portion is kind of mid-single-digit now, how should we expect? Can we expect mid-teens or what type of percentage in a few years’ time?

C.C.: Well, I will answer the question. Actually, we see the increase on the die size, but we cannot nail down the, we say the mid-single-digit, but I expect it to start to increase. And whether that will increase our forecast and our growth or something, it’s still too early to say to, at this moment.

Brett: Yeah, but we’re still quantifying the impact from these development. So we’re maintaining the previous statement that we expect it to grow to about, in five years, about mid-single-digit. I’m sorry, mid-teens of our revenue.

Host: Yeah, I think, Brett, probably just very simply, as we said, edge AI, we do see some activity. It will drive silicon content, but this will occur over time, okay? And we don’t have any quantitative number to share. All right?

Brett: Got it, thank you.

Host: Okay, what is your second question?

Brett: Okay, so the second question is on CPO. So basically, we have learned that TSMC is doing quite well and also leading the industry in CPO or so-called silicon photonics and has introduced a platform to clients with the technologies.

Brett: So may we learn that opportunities and implications of the new technology for the industry and for our firm? And also, shall we expect the platform to offer additional competitive advantage for TSMC in the mid to long run? Thank you.

Host: Brett, your second question is on silicon photonics. Is that correct?

Brett: Yes.

Host: So he wants to know our positioning or progress on silicon photonics. How important is this? And will this be a competitive advantage for TSMC going forward in the future?

C.C.: Okay, let me answer that question.Silicon photonics actually is growing its importance because of just a larger amount of data need to be collected, processed, and transferred in an energy-efficient manner. Silicon photonics tends to be the best to fit that role.

C.C.: And TSMC has been working on silicon photonics for years.

C.C.: And most importantly, we’re collaborating with multiple leading customers to support their innovations in this field. It takes a lot of time to develop the technology and to build the capacity.

C.C.: And when we increase the volume production, we believe that TSMC’s silicon photonics will be the best technology and when customers roll out all their innovations. But as I said, it’s gradually increasing in their activity and gradually increasing their demand as of today.

Brett: Got it, thank you very much.

Host: All right, thank you. Operator, can we move on to the next caller, please?

Question 7. Sunny Lin from UBS

Operator: Next one, we have Sunny Lin from UBS.

Sunny: Good afternoon. Thank you very much for taking my questions. So, my first question is on advanced packaging. Incrementally, we are hearing more customers’ interest in the adoption to achieve better heterogeneous integrations. But I want to get your thoughts on what could be the potential impact of customers relying a bit more on packaging to improve the system performance and perhaps less on the process migrations given cost considerations. Meanwhile, SOIC has been introduced for quite a while, whereas the customer adoption still seems to be limited at this point. So, when should we expect a more meaningful pickup of SOIC and what could be the major catalyst? Thank you.

Host: Okay. So, Sunny, sorry, I may have missed a little bit of the first part, but I think her question is on overall advanced packaging, looking at this trend and the move to more, of course, heterogeneous integration. What are the cost implications and how does advanced packaging work and go together with the process technology standpoint? And then also a question about the update or progress of SOIC. Is that correct, Sunny?

Sunny: Well, so maybe if I may clarify a bit, so for the first part, I wonder if customers may consider relying a bit more on packaging, whereas slowing down a bit on the process migration because of the increasing cost.

Host: Okay, so she’s asking will customers, because of the increasing cost of the process technologies, will customers rely more on advanced packaging as a result?

C.C.: Let me answer that. It’s not because of the increasing of the costing in the more advanced node. It’s actually, they try to, our customers try to maximize the system performance. That’s all. That’s the major portion. That includes the kind of a speed improvement or the power consumption decrease, all those kinds of thing, put it all together. And maybe cost is also part of the consideration, which we notice about. And so more and more customers are moving into the very advanced technology node, and they start to adopt the chiplet approaches. And so, you know, no matter what, TSMC provides the industry-leading solution in both very leading technology and also very advanced packaging technology. And to work with our customers for their product, they have a best system performance.

C.C.: And the other one is, you are asking about the SOIC, when it will become a high volume and more substantial revenue for TSMC. It’s coming, it’s coming. Actually, the customer is already ready to announce their new product, which are widely adopted. And I expect, you know, starting from now and next year, the SOIC will generate revenue and become one of the faster-growing advanced packaging solution in the next few years.

Sunny: Got it, thank you very much. If I may, a quick follow-up. Three months ago, you had a target to double your co-op capacities. And just now you mentioned AI demand continues to surprise on the upside. I do wonder if there’s any update on your co-op capacity expansion?

Host: Okay, so I will take this as your second question, Sunny. But as she’s asking about co-op expansion, we had said that we will double the capacity three months ago. Can we provide an update on the overall co-op capacity and I guess capex and capacity go hand in hand? What is our plan?

C.C.: Well, Sunny, you know, the last time we say that we will double our co-op capacity, we are working very hard to increase the capacity more than double, but today is limited by my supplier’s capability or their capacity.

C.C.: So we still maintain that we will double our co-op capacity by the end of 2024. But the total output actually is more than double from 2023 to 2024 because of a very high demand from our customer. So as you can, this kind of a trend, we will continue to increase our co-op capacity to support our customer, even into 2025.

Host: Okay, Sunny, does that answer your question?

Sunny: Okay, thank you.

Host: Operator, can we move on to the next caller, please?

Question 8. Madi Husseini from FIG

Operator: Next one, please. Welcome, Madi Husseini from FIG.

Madi: Yes, thanks for taking my question. I understand there are a number of new products that you’re ramping into a year end and into first half of 2024 for various markets. And I want to understand how the ramp of these new products are to impact the seasonality. Could we see a scenario where in the first half, the ramp of these new products, especially to be at the leading edge to somewhat upset the seasonal factors? And any thoughts there? And I’ll have a follow up.

Host: All right, Madi. Well, Madi’s first question is, in terms of new products, which of course, customer products, we don’t comment on, but he said we’re ramping products into the second half. And so how will this ramp of new products go into as we go into first half 2024? And can this offset or mitigate some of the seasonality?

Madi: Yeah, let me rephrase that. Contribution of customers’ new products, and how would that impact, or how could that upset seasonal factors?

Wendell: Yeah, Madi, I don’t think we can comment on specific customer products, but I can tell you that we’re not seeing any dramatic change in the seasonality as of now.

Madi: Okay, because I was looking at your year calendar 23, and given your Q4 guide, you’re actually doing better than what you guided three months ago. Three months ago, you said revenues could be down 10% US dollar, and now it could actually be down by a single digit. Is that a combination of a stronger new product ramp and better pricing? Is that a fair assessment?

Host: Okay, so Madi is really looking at, he rightly notes that three months ago, we said this year will decline around 10% in US dollar term.Now with the fourth quarter implied guidance is slightly better. So he wants to know what is the implication or behind this.

C.C.: Well, let me give you one simple reason, because our ramp up of N3, because of the demand of N3 is strong. So ramp up quickly to meet customers’ demand, so the final result is better than we expected three months ago.

Host: Yeah, and we have also said that the strong ramp of N3 will continue in the next year, okay? That’s about all the seasonality we can give.

Madi: Gotcha, okay. And then perhaps if I were to ask a second question, I just want to better understand your view on your customers’ inventory correction. We’re reaching the bottom, where we don’t have any visibility on how quickly they’re going to refresh inventory. The slope of the recovery is still not clear. Did I understand you correctly?

Host: So, Madi’s second question you would like to clarify. So are we saying that customers’ inventory is reaching or approaching a bottom, but the slope of the inventory is not clear? Is that what we are saying?

C.C.: Okay, I’ll answer the question. Actually, you know, in these couple of months, we start to see the demand stabilized in the PC and smartphone end market. And in fact, we see some kind of urgent PO asked for more devices to be shifted to their place to meet the demand. That gave us a hint that their inventory control has already become more healthier than we thought. So in terms of uncertain macro, it probably will continue, but our expectation is very close to a healthy condition. So that’s why we say we can expect 2024 to be a healthy growth year for TSMC. Okay. Madi, did I answer your question?

Madi: Great, thank you.

Host:

Okay, in the interest of time, thank you, Madi. In the interest of time, we’ll take questions from the last two participants, please.

Question 9. Krish Sankar from TD Cohen.

Operator: Next one to ask a question is Krish Sankar from TD Cohen.

Krish: Yeah, hi, thanks for doing my question. I had two of them. First one is on gross margins. When do you expect N3 to reach corporate average gross margin? And as you look into next year, as more mature node capacity comes online across the industry, how do you think about mature node gross margins also? And I have a follow up after that.

Host: Okay, so Krish’s first question is on gross margin. When do we expect three nanometer or N3, I should say, to reach the corporate average gross margin? And how do we see the gross margin trend for the more mature nodes?

Wendell: Yeah, Krish, in the past, our leading nodes normally reach gross margins, corporate margin in about eight quarters. But as we progress with more and more leading nodes, it will become more and more challenging because of several reasons. Well, first of all, our corporate margin is higher than before. And secondly, the leading node is N3. The leading node, as I just said, is becoming more and more complex.

And also, in the past few years, the inflation pressure that was not expected also contribute the higher costs in the N3. So it’s gonna be pretty challenging for future leading nodes to reach corporate margin as in before, like before in the same timeframe. The mature nodes, I can tell you that our mature nodes are the gross margins are really congregated around the corporate average in a pretty narrow band because we focus on specialty technology. It’s not a commodity capacity. Yes.

Krish: Okay. Yeah, that’s very helpful. Thank you for that. And then as a follow-up on Arizona, you mentioned that you’d hired about 1,100 local employees. I’m kind of curious, is that critical mass enough for you to start four nanometer production or do you have another target level of employees before they can actually start getting this production since you’re still maintaining the output to be in first half of 2025? Okay. Thank you.

Host: Thank you, Krish. So Krish’s second question is about our first fab in Arizona. He notes that we have said we hired 1,100 local employees. So his question is, is this enough critical mass or enough people basically to support the ramp of the first fab as we plan, as we said today, in first half 25?

C.C.: Of course. We continue to hire the local talents to join the TSMC 5 in Arizona. So when we start to have a volume production, we are confident that we will have enough resources to support our ramp up in Arizona.

Host: Okay. All right.

Krish: Thank you.

Host: Thank you, Krish. Operator, can we move on to the last participant, please?

Question 10. Charles Shi from NIEM

Operator: Yes, the last one to ask question, Charles Shi from NIM.

Charles: Hi, thank you for squeezing me in. First off, I really want to congratulate TSMC for delivering good results for Q3 and very good guidance for Q4. But I want to really call out the reported revenue for 5 nanometers in the third quarter looks like you are showing some really good counter cyclical strength and probably the record high. I want to understand the rebound in the 5 nanometer business in Q3. Is that going to be more in the following quarters and what’s behind that?

And the relative, let’s say, with the expectation like three to six months ago when you were reducing your 23 hour, is 5 nanometer doing better than expected? And how has the demand trended for the last two to five nanometer? Thank you.

Host: Okay, so Charles first question is about 5 nanometer. He’s asking in the very near term, he notes that he saw a very strong sequential revenue increase in the third quarter. So he’s wondering what is driving this? And then he’s asking about what is the outlook for the next three to six months for 5 nanometer specifically?

Wendell: Yeah, Charles, I can share with you the increase in revenue and five in the third quarter mainly comes from two platforms, HPC and smartphone. HPC also includes the AI related demand. Smartphones are basically customers, some customers product seasonalities. Now for looking wise, I’m not going to share with you, but we will tell you in January what actual the next quarter N5 revenue will be.

Host: The overall revenue.We don’t provide revenue by process node, okay. What’s your second question, Charles?

Charles: Yeah, thanks Jeff. The other question is about CapEx. It sounds like that you are expecting CapEx on absolute dollar may still grow going forward. I know that’s a long-term comment, but I looked at the near term, QSMC CapEx seems to be running at a 7 billion U.S. dollars per quarter in the second half 23, which kind of is at a 28 billion annualized around rate. But if we are expecting total CapEx for 24 to grow in a dollar term over 23, it seems like you are expecting a CapEx ramp in 2024. Maybe that’s your planning for some of the CapEx ramp in 24. Is that the right way to think about a CapEx is 7 billion pretty like a really bottom level run rate for QSMC CapEx at this point? Thank you.

Host: All right, so Charles’ second question is also on CapEx.Basically he’s saying, given the guidance, he’s looking at our CapEx is running at about a U.S. dollar 7 billion run rate. So he’s assuming, although we do not comment on 24, he’s assuming if next year’s CapEx dollar amount is going to increase, but if we’re running at 7 billion run rate, does that imply 28 billion? How should he reconcile this?

Wendell: Charles, every year the CapEx is invested based on the future opportunity to growth. We invested to capture those future opportunities. Too early to talk about 2024, really. We’ll share the guidance with you in January quarterly release.

Host: Okay. All right, thank you, Charles. Thank you, everyone. This concludes our Q&A session.

*The entire content of the Transcript was assisted by AI tools and edited by human correction for the purpose of industry information dissemination and reference only. It should not be used as an investment guideline, and official announcements should be the primary source for detailed information.

(Photo Credit: TSMC)