Sodium-ion batteries are burgeoning as a popular alternative to lithium-ion batteries, thanks to the efforts of Chinese automakers who are pushing for its mainstream adoption.

Leading Chinese companies like CATL and BYD are ramping up the production of sodium-ion batteries. In mid-April, CATL and Chery unveiled their new battery brand, “ENER-Q”, which includes full product lines including sodium-ion, iron phosphate lithium, and ternary lithium batteries. Chery’s new energy vehicles will be the first to use CATL’s sodium-ion batteries.

Following CATL, BYD is rumored to start mass production of its sodium-ion batteries in the second half of this year, which will be used in its compact hatchback, the Seagull series. Both the moves have once again sparked discussions about battery technology in the market.

Geopolitical risks fuels Sodium-ion Batteries

Considering market supply and technical stability, lithium-ion batteries and iron phosphate lithium batteries are still the most popular types of batteries for electric vehicles. The former has a higher energy density but contains cobalt and nickel, which drives up costs. The latter has a lower cost but a lower energy density.

Sodium-ion batteries, on the other hand, have been overlooked due to their low energy density compared to traditional lithium-ion batteries.

So, why are companies like CATL and BYD turning to sodium-ion batteries?

Geopolitical risk is a major factor. Most lithium mines are located in countries like the US, Australia, and Canada. In today’s anti-China political climate, these materials could be used as bargaining chips to curb China’s electric vehicle industry. China won’t want to be at the mercy of other countries when it comes to the fate of its EV industry, so developing new technological routes is crucial.

From a mass production perspective, sodium is a more abundant element in the Earth’s crust than nickel, cobalt, or lithium carbonate, with a distribution that’s more evenly spread out. As such, sodium could be a better fit as a positive electrode material in batteries in the long run. Industry experts predict that sodium-ion batteries could even cost 20% less than iron phosphate lithium batteries once it reaches economies of scale.

The Supporting Actor in EV Batteries

However, a closer look into the pros and cons of both the materials may reveal that it’s not a zero-sum game. Instead, their characteristics can complement each other and help to accelerate battery technology development.

CATL’s new sodium-ion battery has an energy density of up to 160Wh/kg, which is comparable to the iron phosphate lithium battery in its Kirin battery system, but still lags behind the 255Wh/kg of ternary lithium batteries.

As a result, CATL is mixing sodium-ion and ternary lithium batteries in Chery’s new energy vehicles to balance cost and performance.

BYD is also expected to use a mix of sodium-ion and iron phosphate lithium batteries. Assuming this is true, it will echo the market’s assumption that sodium-ion batteries are not overturning the battery industry, but rather helping battery manufacturers maintain flexible product portfolios that cater to different market segmentations.

To give an example, CATL’s lithium iron phosphate batteries have been utilized in heavy-duty vehicles like 120-ton ore trucks and marine service vessels since 2022, where charging efficiency and cost take precedence over high energy density.

Therefore, sodium-ion batteries are likely to become a complimentary choice for lithium iron phosphate batteries, as they offer advantages such as high-rate charging, low cost, and high safety. This will definitely give car makers more flexibility in their future product strategies.

OpenAI’s ChapGPT, Microsoft’s Copilot, Google’s Bard, and latest Elon Musk’s TruthGPT – what will be the next buzzword for AI? In just under six months, the AI competition has heated up, stirring up ripples in the once-calm AI server market, as AI-generated content (AIGC) models take center stage.

The convenience unprecedentedly brought by AIGC has attracted a massive number of users, with OpenAI’s mainstream model, GPT-3, receiving up to 25 million daily visits, often resulting in server overload and disconnection issues.

Given the evolution of these models has led to an increase in training parameters and data volume, making computational power even more scarce, OpenAI has reluctantly adopted measures such as paid access and traffic restriction to stabilize the server load.

High-end Cloud Computing is gaining momentum

According to Trendforce, AI servers currently have a merely 1% penetration rate in global data centers, which is far from sufficient to cope with the surge in data demand from the usage side. Therefore, besides optimizing software to reduce computational load, increasing the number of high-end AI servers in hardware will be another crucial solution.

Take GPT-3 for instance. The model requires at least 4,750 AI servers with 8 GPUs for each, and every similarly large language model like ChatGPT will need 3,125 to 5,000 units. Considering ChapGPT and Microsoft’s other applications as a whole, the need for AI servers is estimated to reach some 25,000 units in order to meet the basic computing power.

As the emerging applications of AIGC and its vast commercial potential have both revealed the technical roadmap moving forward, it also shed light on the bottlenecks in the supply chain.

The down-to-earth problem: cost

Compared to general-purpose servers that use CPUs as their main computational power, AI servers heavily rely on GPUs, and DGX A100 and H100, with computational performance up to 5 PetaFLOPS, serve as primary AI server computing power. Given that GPU costs account for over 70% of server costs, the increase in the adoption of high-end GPUs has made the architecture more expansive.

Moreover, a significant amount of data transmission occurs during the operation, which drives up the demand for DDR5 and High Bandwidth Memory (HBM). The high power consumption generated during operation also promotes the upgrade of components such as PCBs and cooling systems, which further raises the overall cost.

Not to mention the technical hurdles posed by the complex design architecture – for example, a new approach for heterogeneous computing architecture is urgently required to enhance the overall computing efficiency.

The high cost and complexity of AI servers has inevitably limited their development to only large manufacturers. Two leading companies, HPE and Dell, have taken different strategies to enter the market:

• HPE has continuously strengthened its cooperation with Google and plans to convert all products to service form by 2022. It also acquired startup Pachyderm in January 2023 to launch cloud-based supercomputing services, making it easier to train and develop large models.
• In March 2023, Dell launched its latest PowerEdge series servers, which offers options equipped with NVIDIA H100 or A100 Tensor Core GPUs and NVIDIA AI Enterprise. They use the 4th generation Intel Xeon Scalable processor and introduce Dell software Smart Flow, catering to different demands such as data centers, large public clouds, AI, and edge computing.

With the booming market for AIGC applications, we seem to be one step closer to a future metaverse centered around fully virtualized content. However, it remains unclear whether the hardware infrastructure can keep up with the surge in demand. This persistent challenge will continue to test the capabilities of cloud server manufacturers to balance cost and performance.

(Photo credit: Google)

From the Entity List in 2020 to the Chips and Science Act of 2022, the US government has been tightening its grip on China’s semiconductor industry by blocking the export of advanced semiconductor manufacturing equipment. The pressing question on everyone’s mind is: Will China’s semiconductor industry crumble under this pressure?

The answer, based on recent market reactions, is a resounding no.

Riding the Waves through Headwinds

Despite international semiconductor equipment manufacturers facing production cutbacks, China’s semiconductor equipment industry is thriving. In the first quarter, Naura, the leading semiconductor equipment manufacturer, reported a whopping 68.56%-87.29% increase in revenue, with a 171.24% to 200.3% increase in net profit. This has spurred growth across the entire Chinese A-share market for semiconductor equipment concept stocks such as Piotech, PNC process System, Advanced Micro, ACM Research and Hwatsing Technology.

This growth highlights a great leap forward in semiconductor process technology. Despite the adverse effects of the US’s broad-based restrictions, they have nonetheless created a favorable environment for testing and substitution opportunities. This, in turn, has enabled Chinese manufacturers of semiconductor equipment to increase their market share in the area of established semiconductor processes.

Full Speed Ahead: Aiming High for 5nm

In key semiconductor manufacturing processes such as thin film deposition, etching, ion implantation, CMP, and cleaning, Chinese manufacturers have already moved beyond traditional equipment development cycles and are progressing towards advanced process technology at full speed.

According to TrendForce, Chinese semiconductor equipment companies such as Naura and Advanced Micro(AMEC) are capable of supporting 28/14 nm in some process steps, and have even tentatively established their presence in 5 nm process technology.

Our summary identifies the main players to watch in thin film deposition, etching, and EUV:

• Thin film deposition: Naura

Naura has achieved full coverage of PVD, CVD, and ALD product lines, with product lines matching international leaders such as Applied Materials, Lam, and Tokyo Electron. Naura has unique competitive advantages in the PVD field, with over 20% of its PVD equipment being supplied to Chinese 12-inch production lines such as YMTC(Yangtze Memory Technologies Co., Ltd), making it the second-largest PVD equipment supplier after Applied Materials.

Additionally, since 2012, Naura has sold over 200 PVD equipment, gradually achieving their goals for equipment substitution.

• Etching: AMEC and Naura

As the leading CCP etching machine, AMEC has successfully penetrated TSMC’s 5nm production line, becoming the first domestic etching equipment to break through in the advanced process area. AMEC has also achieved large-scale adoption in 64-layer, 128-layer 3D NAND process, and 1x DRAM process. These main product portfolios contributed to the company’s 47.3% YoY revenue growth rate in the first half of 2022. In addition, AMEC’s etching equipment also enjoys a high gross profit margin of 46.02%.

On the other hand, Naura is at the forefront of ICP silicon etching equipment. Its first-generation 12-inch etching equipment underwent certification for 90-65nm at the SMIC’s fab in Beijing in 2008. In addition, with the support of national research projects, Naura’s ICP etching machine has also broken through 14nm barriers and been adopted by mainstream foundries.

• Photolithography: Shanghai MicroElectronics Equipment(SMEE)

Photolithography is a critical process that China is strategically including in their semiconductor industry plans. They’re aiming to develop 28nm immersion exposure machines and core components through collaborative efforts: SMEE will lead the overall design and integration, with five or more companies providing key components.

Although SMEE has preliminary DUV exposure machine technology, it’s limited to more mature processes on 8-inch and 12-inch wafers at 90nm, 110nm, and 280nm, leaving a significant gap with international leaders.

From Toddler to Major Player

Although China’s equipment manufacturers are still at their toddler stage, the increasing momentum suggests that they will continue to make significant progress. Assuming that China’s policy support towards the development of 14nm and below semiconductor processes remains unchanged in the coming years, it is highly likely that the country’s market will fundamentally experience a transformation.

At this point, China’s semiconductor industry will enter a new era of high-speed growth, paving the way for the country to become a major player at global level. As China’s domestic market grasps the technology and commercial logic along the way, it will potentially have more influence over the global supply chain, as a result triggering a shift in the worldwide semiconductor industry in the long run.

The compound semiconductor market has been flourishing in recent years thanks to the strong demand from markets such as electric vehicles and renewable energy. This has led to an increase in M&A as companies race to establish their position in the industry.

The market has seen a significant surge in M&A deals over the last few years: from 2006 to 2017, there was only one deal every two years, but since 2018, there have been six deals annually, surpassing historical data.

While SiC and GaN are the top categories for M&A, 21 of the transactions are directly related to SiC. This is because after its development over 20 years, SiC has been able to be mass-produced for market demands, particularly in the automotive industry where SiC has become the mainstream technology.

Vertical Integration driven by Industry Titans

Industry leaders in the US and Europe, such as Wolfspeed, On Semi, II-VI, ST, and Infineon, have started accelerating vertical integration in recent years, as reflected in the frequency of M&A.

The United States has led 12 M&A deals, with only four of them occurring before 2018, and Wolfspeed contributed to three of them. Over the past three years, On-Semi, II-VI, and Macom have led several deals with a focus on SiC’s vertical integration to meet market demands.

In Europe, there were eight M&A deals in total, all of which took place in 2018 and beyond, with ST and Infineon being the major players. Both companies have been accumulating technical strength through strategic acquisition to maintain their leading ground in the SiC power device market.

In 2019 and 2020, ST acquired Norstel AB to bolster its SiC wafer manufacturing capabilities and Exgan to improve the GaN power device design expertise. Similarly, Infineon acquired Siltectra GMbH in 2018 to gain control of the crucial SiC wafer cold split process technology and recently acquired GaN Systems to reinforce its presence in the GaN market.

It’s evident from the cases that the high frequency of M&As in the US and Europe is mainly driven by leading companies in the industry, gradually defining the landscape of the market.

Wolfspeed, which has grown into a leading company after a long period of time, has accumulated enough capital for M&A and gradually been transforming into a platform-type company. Meanwhile, Onsemi, ST, and Infineon, which have traditionally been platform-type companies with established expertise in the field of compound semiconductors, are now ramping up their M&A activities to expand market presence and generate strong growth momentum.

Market Landscape Continues to Change

M&A deals among semiconductor equipment companies are also receiving attention. Recently, ASM and Veeco have successively acquired LPE and Epiluvac, indicating that equipment manufacturers have also realized the huge potential of the SiC market and are accelerating their investment.

Given the rapid technology breakthroughs, the overall SiC power device market is predicted to grow at an annual rate of 41.4% to reach $2.28 billion by 2023 and $5.33 billion by 2026 at 35% annual growth, according to TrendForce’s latest report.

However, with the current market boom comes a new challenge – the supply shortage. One of the biggest obstacles to industry growth is the scarcity of SiC substrate material, despite efforts from companies like STM and Onsemi to ramp up their production.

Manufacturers are now on the hunt for both internal and external sources to keep the supply flowing. While most of the SiC substrate suppliers are expanding, only a few, like Wolfspeed, are controlling the manufacturing capacity for high-end SiC substrates used in automotive main inverters, which worsens the bottleneck in SiC devices’ production for cars.

With that being said, major players must quickly address technology hurdles and supply issues to bridge the market gap. This will inevitably drive intense competition and industry consolidation, and only the ones that can adapt quickly will be thriving in the long run.

Read more:

• SiC vs. Silicon Debate: Will the Winner Take All?
• Chinese Players Rally for Demand Surge in MOSFET, IGBT, and SiC

According to TrendForce’s latest panel price analysis, due to the low inventory level of panel manufacturers and the strategy of maintaining production regulation, the overall supply and demand of TV panels have reached balance. With the strengthening of the stocking momentum for TV panels in China, the price increase trend of TV panels in April can still continue, but the price difference between first-tier and second-tier brand customers is relatively large.

Second-tier brand customers mostly can only accept the price increase of the panel manufacturers, while first-tier brand customers still have a certain degree of bargaining space. Looking at the TV panel prices in April, all sizes have maintained an upward trend, with 32 inches expected to increase by 1USD, 43 inches by 3USD, 50 inches by 6 USD, 55 inches by 7~8 USD, 65 inches by 13USD, and 75 inches by 10~11 USD. With this price increase trend, TV panel prices may have a chance to return to the cash cost level in May.

After the monitor panel prices stabilized in March, there are currently signs of strengthening demand for some consumer models, including high-end gaming monitors and some entry-level affordable ones. This is partly due to downstream customers replenishing inventory demand, and also preparing for the upcoming 618 promotion in China. Therefore, it is expected that the full-size monitor panel prices in April will remain stable.

Turning to notebook panel, Chromebook demand has rebounded in Q2, but other mainstream models are still affected by brand customers’ inventory destocking, leading to no clear increase yet. Therefore, notebook panel prices in April are expected to remain stable, with potential for increase depending on the timing of inventory destocking and demand momentum.