As the United States intensifies its chip embargo against China, the Chinese Academy of Engineering (CAE) has released an annual report for technological development. This report serves as a strategic guide to navigate the embargo and promote autonomous technological growth comprehensively.
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TrendForce research indicates that in 1H23, the utilization rate of 8-inch production capacity primarily benefited from sporadic inventory restocking orders for Driver ICs in the second quarter. Additionally, wafer foundries initiated pricing strategies to encourage clients into early orders, offering solid backup. However, in 2H23, persistent macroeconomic and inventory challenges led to the evaporation of an anticipated demand surge.

Meanwhile, stockpiles in automotive and industrial control segments grew after meeting initial shortages, tempering demand. Under fierce price competition from PMIC leader Texas Instruments (TI), inventory reductions for Fabless and other IDMs were drastically inhibited. With IDMs ushering in output from their new plants and pulling back outsourced orders, this compounded reductions to wafer foundries. This dynamic saw 8-inch production capacity utilization dipping to 50–60% in the second half of the year. Both Tier 1 and Tier 2/3 8-inch wafer foundries saw a more lackluster capacity utilization performance compared to the first half of the year.

Heading into 2024, with the prevailing economic turbulence, the overall semiconductor foundry capacity utilization rate will face challenges in recovery. The 8-inch capacity utilization for 1Q24 is poised to mirror—or potentially dip below—4Q23 figures, revealing a glaring lack of recovery indicators.

However, starting from 2Q24, TrendForce posits that while clarity on end sales remains murky due to overarching economic risks, inventory levels are expected to wane, returning to a healthier equilibrium. The ensuing periodic restocking and the added momentum from orders shifted to Taiwanese foundries (owing to decoupling from China), should keep the 8-inch utilization rate from diving further. The average annual utilization rate for 8-inch wafers in 2024 is pegged around 60–70%. A swift return to yesteryear’s peak capacity seems difficult for now.

Taiwanese and Korean semiconductor foundries face the brunt of order curtailments

A closer look reveals Chinese foundries, such as SMIC and HuaHong Group (primarily HHGrace for 8-inch), exhibiting marginally superior 8-inch utilization rates than their Taiwanese and Korean peers. The proactive pricing approaches of Chinese foundries and China’s push for domestic IC substitution and production are key drivers. However, despite price reduction across foundries in 2H23, a predominantly conservative market outlook from clients, combined with the absence of urgent orders, meant these reductions rendered limited assistance to the 8-inch wafer utilization rate in the latter half of the year.

Panning to 2024, SMIC and HHGrace are forecast to outpace their Taiwanese and Korean counterparts in an 8-inch utilization rate resurgence. HHGrance could even see a stellar rebound, reaching 80–90%. On the Taiwanese front, TSMC grapples with PMIC order pullbacks, predicting an expected drop in 8-inch utilization to below 60% from 4Q23 to 1Q24. UMC and PSMC, in the same span, are gearing up to maintain levels above 50%.

Furthermore, even traditionally resilient Japanese and European IDMs commenced their inventory recalibration in 3Q23, potentially further stalling the recovery timeline for the 8-inch capacity utilization rate. TrendForce insights suggest that, with mounting inventory pressures, Infineon is curtailing orders to external foundries such as UMC and Vanguard. This strategy will likely suppress Vanguard’s 8-inch utilization rate into 1Q24, casting a gloomier shadow than earlier projections.

Korean heavyweight, Samsung, has prioritized its 8-inch production for large-sized Driver ICs, CIS, and smartphone PMICs. However, the persistent softness in consumer demand has prompted their clientele toward a more guarded-order strategy. Furthermore, Chinese CIS patrons, aligning with local manufacturing inclinations, are transitioning toward native foundries. Consequently, Samsung’s 8-inch utilization rate has languished in 2H23, with expectations set at approximately 50% throughout 2024.

DRAM Spot Market:

As China’s National Day holiday approaches, the frequency of buyers making transactions has dropped. However, transaction prices remain fairly high, and there are no clear signs indicating that prices in the spot market will buckle in the near term. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.33% from US$1.500 last week to US$1.505 this week.

NAND Flash Spot Market:

Participants of the spot market have slightly dropped in transaction frequency as the National Day Golden Week is just around the corner, with overall concluded prices maintained on an ascending trend, and a continuance of subsequent purchase willingness will depend on the market sentiment and the actual level of demand after the long holiday. 512Gb TLC wafer spots have climbed 3.47% this week, arriving at US$1.818.

Source to China Times, despite the intense price wars engulfing the Chinese automotive market, domestic electric vehicle leader BYD is continuing to gain ground. In the third quarter of this year, BYD’s production volumes surpassed Tesla’s, making it the global leader in electric vehicle production. In terms of sales, BYD sold a total of 431,600 pure electric vehicles in the first three quarters of the year, just slightly behind Tesla, bringing it closer to the top spot in global electric vehicle sales.

According to reports from Chinese media on the 3rd of this month, BYD recently released its latest production and sales data. In September of this year, BYD produced approximately 280,000 new energy vehicles, representing a 36.6% increase compared to the same period last year.

TrendForce’s recent research showed that BYD surpassed Ford to become the fourth-largest global car brand in terms of car sales for August. Despite the weakening demand in the domestic car market, BYD was not significantly affected as all of its offerings are new energy vehicles. BYD saw a 5% increase in car sales compared with July and was just 0.1 percentage point behind Honda in market share, which held the third position.

It’s important to note that the term “new energy vehicles” in China includes plug-in hybrid vehicles and fully battery-electric vehicles. Regarding pure electric vehicles, BYD produced around 144,000 units in September, marking a 71% year-on-year increase. In the third quarter, BYD produced approximately 440,000 pure electric vehicles, which is a 67% increase compared to the previous year, establishing it as the largest manufacturer and seller of pure electric vehicles in China.

In contrast, Tesla, which exclusively produces pure electric vehicles, manufactured approximately 430,500 units in the third quarter of this year, marking an 18% year-on-year increase. Data indicates that in terms of production for that quarter, BYD has secured the title of the world’s largest electric vehicle manufacturer.

In terms of sales, BYD achieved a new record with 822,100 units of new energy vehicles sold in the third quarter of this year.

Specifically, BYD sold around 431,600 pure electric vehicles, representing a 23% increase from the second quarter, with 151,200 units sold in September, marking a 59% year-on-year increase. Tesla delivered 435,100 units in the third quarter, a decrease of more than 31,000 units compared to the previous quarter, marking its first decline since the second quarter of last year.

This narrows the gap between Tesla and BYD to 3,456 units, the closest it has been in their ongoing competition. Analysts point out that over the past year, BYD has aggressively expanded into new overseas markets such as Southeast Asia, Japan, the Middle East, Europe, and Latin America, leading to a continuous increase in deliveries. In contrast, Tesla faced production line adjustments and factory shutdowns, resulting in its first-quarter decline in deliveries in over a year, further closing the sales gap.

In recent years, with the Chinese government’s support and encouragement of car purchases, China has become the world’s largest market for pure electric vehicles, accounting for about 33% of global sales, and the market demand remains strong. Given BYD’s competitive advantage in the Chinese market, surpassing Tesla in both production and sales is not an impossible feat.

On the other hand, Tesla, despite initiating a price war successfully earlier this year in China, sacrificed its previously leading profit margins and now faces fierce competition not only from BYD but also from other peers like NIO in an increasingly competitive market. Even in its home market in the United States, Tesla must contend with competition from established automakers such as Ford, General Motors, Hyundai, and Volkswagen.

(Source: https://www.ctee.com.tw/news/20231004700119-439901)

Advanced Semiconductor Engineering, Inc. (ASE) has unveiled its Integrated Design Ecosystem™ (IDE) – a collaborative design toolkit, meticulously tailored to enhance advanced package architecture on the VIPack™ platform. This innovation streamlines the transition from single-die SoC to multi-die disaggregated IP blocks, encompassing chiplets and memory integration through 2.5D or advanced fanout structures.

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