According to a report by China’s Jiwei, Intel’s recent sale of a 10% stake in IMS to TSMC has not generated much buzz in the industry. Most industry insiders view this transaction positively, considering the importance of IMS and TSMC’s vertical integration.

However, why did TSMC decide to purchase a 10% stake in IMS now, when the two companies have been collaborating on research and development for a decade?

The Importance of IMS

When it comes to semiconductor equipment, Dutch lithography giant ASML is a well-known name. However, it’s worth noting that in the semiconductor manufacturing process, the multi-beam mask writer provided by IMS is also crucial. Established in Vienna in 1985, IMS primarily focuses on advanced process node photomask manufacturing.

The significance of photomasks is undeniable. As processes evolve, the demand for photomasks continues to rise. It’s understood that the 14nm process requires approximately 60 photomasks, while the 7nm process demands around 80 to even hundreds of them. Correspondingly, photomask prices have been steadily climbing. According to IBS data, photomask costs are approximately $5 million in the 16/14nm process, but in the 7nm process, they rapidly increase to $15 million.

Within the total cost of photomasks, which includes equipment like writers and inspection tools, raw materials like quartz and photoresist, as well as software like OPC and MDP, the writer’s contribution is significant.

Experts analyze that without IMS’ multi-beam mask writer, all EUV process technologies would come to a halt, rendering ASML’s EUV equipment less useful. Furthermore, as lithography technology advances towards High-NA EUV, its progress relies on sophisticated mask writing tools. With advanced processes continually pushing forward, IMS technology will play a crucial role.

Perhaps recognizing the importance of mask writers early on, Intel invested in IMS as early as 2009 and ultimately acquired it in 2015. After years of effort, IMS has secured a dominant position in the multi-beam mask writer market, with reported its employees and capacity quadrupling since the acquisition, bringing substantial profits to Intel.

Delving deeper, there is a longstanding connection between TSMC and IMS.

Since 2012, TSMC has been collaborating with IMS to develop multi-beam mask writers for advanced technology nodes. Kevin Zhang, Senior Vice President, Business Development and Overseas Operations Office at TSMC, stated that this investment will continue their long-term partnership to accelerate innovation and achieve deeper cross-industry collaboration.

Regarding TSMC’s investment in IMS, research institutions have pointed out that TSMC has always pursued a vertical integration strategy to master various aspects of technology and resources in the semiconductor manufacturing field. Particularly noteworthy is TSMC’s in-house mask manufacturing, where the precision and quality of masks are crucial for chip performance. IMS can be seen as a key supplier to TSMC, providing critical products.

Industry experts also point out that TSMC’s decision may help them gain an advantage in the 2nm competition. As the competition in the 2nm transitions from three competitors to four, involving TSMC, Samsung, Intel, and Japan’s Rapidus, 2025 is poised to be a pivotal year. In the era of 2nm, not only will the use of ASML’s next-generation High-NA EUV equipment be essential, but also harnessing the power of mask writers. TSMC’s investment in IMS could solidify their collaboration and help them pull ahead of other competitors.

(Photo credit: IMS)

DRAM Spot Market

In the spot market, prices have been rising noticeably in the recent period, and demand has also rebounded marginally. Also, because the supply of rebelled used chips has shrunk slightly, price hikes have been most significant for chips belonging to the bottom of the price range. On the other hand, spot buyers have become somewhat hesitant in the past two or so days because the price hikes are too rapid. They are now less willing to accept higher prices than before. Since the overall demand for DRAM products has yet to turn around, spot prices are expected to continue to fluctuate. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) rose by 0.13% from US$1.498 last week to US$1.500 this week.

NAND Flash Spot Market

A price increase is seen among finished products, including memory cards, USB flash drives, and eMMC, from the spot market recently due to the diminished supply of wafers, which resulted in a significant rebound in spot quotations for NAND Flash. With that being said, buyers are not all that willing to follow up with the corresponding prices that had a significant jump within a short period and have slightly stagnated in procurement. 512Gb TLC wafer spots have climbed at 3.96% this week, arriving at US$1.757.

Source to China Times, LCE prices in China have persistently declined, with the average price for battery-grade LCE on the 26th standing at CNY 178,500 per ton (CNY is used throughout, same as above), marking a decrease of CNY 2,000 compared to the previous day. Prices remain below the significant threshold of CNY 200,000 per ton, extending the weakness observed since September. The market suggested that the profit distribution pattern within the industry chain has shifted noticeably from upstream to downstream.

Based on TrendForce’s research, the sluggish demand in the consumer electronics segment in August forced battery cell suppliers to focus on liquidating existing inventories. TrendForce indicates that the ongoing drop in the prices of lithium salts and cobalt [II, III] oxide shows no signs of bottoming out. Manufacturers, therefore, seem hesitant to stock up, opting for a “business as usual” approach to production. A downward trajectory of LCO battery prices seems likely through September. 

Weak demand in both the power and energy storage sectors has put pressure on lithium salt prices, which spiraled down to an average of CNY 230,000/ton in August—a steep QoQ dive of 20%. TrendForce warns that prices may plunge to less than CNY 200,000/ton, making buyers increasingly skittish about making purchases. However, there’s a glimmer of hope: suppliers have initiated production cutbacks, providing a potential floor for lithium salt prices to rebound from as we approach September.

According to TMTPOST, as lithium salt is an upstream component of the lithium battery industry chain, fluctuations in its prices affect the profitability landscape of the entire chain. With the sharp decline in lithium salt prices, the profit margins of lithium salt producers have been notably compressed. Taking the industry leader, Tianqi Lithium, as an example, its revenue for 1H23 increased by 73.64% to CNY 24.823 billion, but its net profit decreased sharply by 37.52% to CNY 6.452 billion. The key driver behind this decline in performance is the fall in lithium prices, which resulted in an 8.9 percentage point year-on-year decrease in the company’s gross profit margin for lithium compounds and derivative products, dropping to 78.64%.

Investors pointed out that as upstream lithium prices decrease, the prices of lithium battery raw materials such as LFP will also correspondingly decrease, thereby reducing the cost of lithium batteries. For automakers, this translates into lower production costs and improved profit margins.

The decline in lithium raw material prices has led to improved profitability for battery manufacturers and automakers. Taking CATL as an example, the revenue growth rate of its power battery systems for 1H23 exceeded the cost growth rate, resulting in a gross profit margin of 20.35%, an increase of 5.31 percentage points year-on-year. (Image credit: Tianqi Lithium)

(Source: https://www.ctee.com.tw/news/20230927700163-439901)

Source to China Times, on the 25th of this month, Huawei introduced its top-tier flagship smartphone, the Mate 60 RS. The entire supply chain is buzzing with anticipation. However, major chipset manufacturers, MediaTek and Qualcomm, both stand ready for what lies ahead. The reason for their vigilance stems from their previous share of the pie, which was snatched away by Huawei. Now, there’s concern that those gains may slowly be taken back.

For MediaTek, although Huawei’s new phone is positioned as a high-end model, it doesn’t pose a direct threat to MediaTek’s focus on mid-range and low-end 5G chips. However, industry insiders believe that Huawei might not rule out the possibility of launching mid-range and low-end 5G phone chips in the future, deepening the HarmonyOS, which could further squeeze MediaTek’s market share.

Huawei has traditionally used its in-house HiSilicon-designed chips for its smartphones. However, due to US sanctions, Huawei’s market share plummeted, allowing other Chinese smartphone competitors to seize opportunities. MediaTek and Qualcomm benefited from this shift in orders.

Recently, Huawei has made a strong comeback. Following the low-key release of the Mate 60 Pro, it has now unveiled the flagship RS model. After 3 years of intensive efforts, Huawei has achieved comprehensive self-reliance in operating systems, software, databases, and other foundational software. It has also completed the development of domestic alternatives for 13,000 components, investing heavily in the semiconductor supply chain.

The most impacted player in this scenario is Qualcomm, which primarily targets the high-end market. There are even expectations that by 2024, Qualcomm will lose all Huawei smartphone orders. Although MediaTek’s mainstream models have not been directly affected, there’s a possibility that Huawei may strengthen its HarmonyOS ecosystem, gradually penetrating the mid-range and low-end segments. MediaTek needs to remain vigilant. Huawei’s Nova series, for instance, is aimed at mid-range models, and it may not rule out using its in-house Kirin 5G chips to gain a stronger foothold in the market.

The initial stock of the Mate 60 series reached 15 million units, and the shipment target for 2023 has been raised to 20 million units, including foldable phones like the Mate X3 and X5. Supply chain sources suggest that Huawei has internally raised its overall shipment target for 2023 to 40 million units, and the market anticipates even higher volumes of 50 million to 60 million units in 2024.

Industry insiders point out that due to strong demand for Huawei’s products and better-than-expected i15 orders, there are reports of inventory replenishment in the smartphone supply chain. However, in the future, both China and the United States will cultivate their respective supply chains, reducing the win-win situations. For instance, in the RF Front-end segment, Huawei has started to use domestic supplier Maxscend Technologies, which could squeeze market orders for US and Taiwanese suppliers. (Image credit: Huawei)

(Source: https://www.chinatimes.com/newspapers/20230927000252-260204?chdtv)

Source to Carfun, in the past two decades, Chinese electric vehicle (EV) manufacturer BYD has been relentlessly pursuing patents for EV technology, amassing a staggering 13,000 patent applications, a figure more than 15 times greater than Tesla’s modest 863 patents. The stark contrast primarily boils down to one critical component: batteries. BYD not only produces its own batteries but also conducts extensive research and development in this domain. This relentless patent activity is primarily aimed at safeguarding its battery technology.

Recently, a Japanese software company named Patent Result conducted a comprehensive study on EV patents and uncovered some intriguing findings. Between 2003 and 2022, BYD submitted over 13,000 patent applications, while Tesla, during the same period, only filed 863 patents. What’s even more striking is that more than half of BYD’s patent applications pertain to battery technology. This underscores BYD’s unique approach compared to other automakers since they internally develop their batteries. In contrast, most other manufacturers rely on third-party suppliers, making them more reliant on patents to protect their battery technology from imitation.

Batteries constitute a vital element of electric vehicles, and BYD’s approach differs significantly from its competitors. Developing in-house battery technology demands greater dedication and effort. However, other battery manufacturers might attempt to replicate their innovations by dissecting their battery packs. BYD’s blade battery, which uses lithium iron phosphate as the cathode material, has established itself as a leader in the development and production of this kind of battery. It offers superior safety and cost-effectiveness compared to nickel, cobalt, manganese (or aluminum) ternary lithium batteries. Nonetheless, filing patents comes with its own set of risks, as patent applications are made public, potentially enabling competitors to derive various technologies from them.

Take Tesla, for instance. Although Tesla has only submitted 863 patents over the past two decades, its research and development heavily rely on the utilization of publicly available information and software. Consequently, its patents largely relate to charging infrastructure and communication between electric vehicles and drivers. This highlights the divergent priorities in their EV development strategies. Tesla also employs advanced production techniques within its factories to reduce the risk of replication by other companies. The question that arises is whether BYD, with its extensive patent portfolio, can translate this into improved sales and challenge the dominant position of global EV leaders. The answer to this query may become apparent within the next 5 years, as the competition in the electric vehicle sector continues to intensify. (Image credit: BYD)

(Source: https://carfun.tw/ecar-news/14585/)