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/)

In recent developments, an industry source revealed that Coherent, a leading chip material supplier in the U.S. automotive industry, has piqued the interest of four major Japanese corporate groups with regards to its silicon carbide (SiC) business, with a transaction amount potentially reaching $5 billion.

The four Japanese companies involved are DENSO, Hitachi, Mitsubishi Electric, and Sumitomo Electric, and discussions have been underway regarding the acquisition of minority stakes in Coherent’s SiC business.

Coherent had previously stated its intention to invest $1 billion over the next decade to expand the production of SiC wafers. Compared to traditional silicon chips, SiC wafers contribute to improved electric vehicle range. If this investment materializes, it would significantly ease the financial burden on the company. However, no concrete agreements have been reached at this stage.

Data indicates that Coherent is one of the few companies globally with complete and vertically integrated SiC manufacturing capabilities. It can produce SiC wafers and epitaxy materials, extending all the way to power devices. Furthermore, Coherent’s SiC materials are known for their exceptional quality, making it nearly the only supplier capable of transitioning from the current standard wafer diameter of 150 millimeters to 200 millimeters successfully. The production of larger diameter wafers can substantially reduce device costs. Additionally, Coherent’s SiC power devices demonstrate excellent heat resistance and conductivity.

Competition and Collaboration in the Japanese SiC Industry

According to TrendForce’s latest analysis, as collaborations between companies like Infineon and ON Semiconductor with automotive and energy sector stakeholders become more apparent, the overall SiC power device market is projected to reach $2.28 billion in 2023, growing at an annual rate of 41.4%.

Meanwhile, buoyed by robust demand in downstream application markets, TrendForce anticipates that the SiC power device market could reach $5.33 billion by 2026, with its primary applications continuing to center around electric vehicles and renewable energy.

In recent years, the new energy vehicle industry has been thriving, and Si power devices have gradually fallen short of meeting the demands of new energy vehicles. SiC, as its alternative, has shown remarkable performance in applications, making it highly sought after in the market. The SiC power device market still has considerable room for growth, prompting both automotive and SiC companies to invest in SiC power device production or enhancements.

Japan, being a leader in semiconductor power device manufacturing and production, has numerous companies actively expanding to broaden their market reach.

On October 4th last year, Nikkan reported that Hitachi Power Semiconductor Device would invest several billion yen, aiming to triple its SiC power semiconductor production capacity by fiscal year 2026.

On July 12th this year, ROHM announced its acquisition of the former Solar Frontier factory in Kunitomi, Miyazaki, to expand its SiC power semiconductor production capacity. The acquisition is set to conclude in October 2023 and is planned to become the company’s main factory, primarily producing SiC power semiconductors. It is expected to increase its silicon carbide capacity to 35 times that of the fiscal year 2021 by 2030.

With these competitive and cooperative scenarios unfolding, it’s evident that neither automotive nor SiC companies are holding back in their pursuit of SiC power device production or improvements.

In July this year, Renesas Electronics signed a 10-year agreement and paid $2 billion in advance to Wolfspeed for the supply of 150mm bare and epitaxial SiC wafers. Renesas Electronics also reached an agreement with Mitsubishi Electric, with Mitsubishi investing 260 billion yen in technology and expansion, including the construction of a new SiC factory in Japan.

As a technological leader in producing SiC substrates, epitaxy, and power devices, Coherent is not to be overlooked by these major corporations.

On May 26th this year, Coherent and Mitsubishi Electric announced that they had signed a MOU and reached a project collaboration agreement to jointly scale up the mass production of SiC power electronic products on a 200mm technology platform.

Mitsubishi Electric announced that it would invest approximately 260 billion yen over a five-year period ending in March 2026, with approximately 100 billion yen dedicated to constructing a new SiC power device factory based on a 200mm technology platform and strengthening related production facilities. According to the MOU, Coherent will develop 200mm n-type 4H SiC substrates for Mitsubishi Electric’s future SiC power devices to be produced at the new factory.

In the future, Mitsubishi Electric aims to produce large quantities of silicon carbide chips using Coherent’s 200mm wafer technology in the Japanese market.

In the 2023 fiscal third-quarter earnings conference call, Mary Jane Raymond, the Chief Financial Officer of Coherent Inc., mentioned that the revenue composition of the company’s four main markets is as follows, based on regional distribution: North America accounts for 53%, Europe accounts for 20%, Japan and Korea account for 14%, China accounts for 11%, and 3% goes to other regions worldwide.

For Coherent, capturing 14% of the sales in the Japanese and Korean markets is highly significant. If Coherent continues its collaboration with Japanese partners, it is highly probable that the production capacity of SiC power devices in Japanese-related companies will be increased. Additionally, this will allow Coherent to further expand its influence and presence in Japan.

(Photo credit: Coherent)