Polysilicon

In the polysilicon market, post-holiday trading sentiment remains subdued, with overall deliveries primarily focusing on delivering previous orders. After the recent price hikes for polysilicon, trading activity has been tepid. Ingot manufacturers are mainly adopting a wait-and-see attitude, purchasing only as needed.

Polysilicon output is expected to see a slight rebound of nearly 2% this month, reaching about 130,000 to 140,000 tons. The demand for polysilicon may decrease further, and surplus supply could potentially become more serious this month.

Polysilicon prices are likely to stabilize this month under manufacturers’ firm stance, with future observations focusing on capacity adjustments and the impact of pre-stocking for the polysilicon futures market on the supply-demand balance.

Wafers

On the supply side, wafer production continues its downward trend month-on-month, estimated to be in the 48-49 GW range. On the demand side, the downward trend in cell production persists, and with module manufacturers continuously forcing prices down, the price pressure on wafers remains high, offering limited support.

The demand for 182N wafers has turned downward, and the proportion of production in this category has also been reduced this month. Meanwhile, the share of 210RN wafers in total output has increased significantly, with 210 wafers (R-type) accounting for nearly 20%. The gap caused by adjustments in downstream product sizes is rapidly being filled, leading to an oversupply of wafer and further price pressure on wafer manufacturers.

Cells

Cell production is expected to decrease by 4-5% month-on-month, with cell production adjusted down to 50-51 GW. This trend of production divergence is expected to intensify in Q4. On the demand side, major manufacturers have seen a slight recovery in orders due to the booming ground-mount installations, but overall module production recovery remains limited. The intense price competition in the module sector makes it difficult to support cell prices.

Prices for certain sizes have been revised downward this week, with P-type M10 and G12 both falling to RMB 0.27/W, while N-type G12R saw a faster production surplus, dropping to RMB 0.27/W as well.

Modules

Module production this month shows divergence. Overall, monthly production is up by 3-4%, reaching 49-50 GW. On the demand side, centralized PV installations have led to a slight recovery in orders for some manufacturers, but there has been no clear recovery in distributed PV projects. Overseas, inventory backlog issues in Europe are intensifying, leading to another month-on-month decline in module prices.

Prices for all types of modules remained stable this week. For bifacial M10-TOPCon modules, major manufacturers have adjusted their pricing range to RMB 0.65-0.73/W, while smaller manufacturers are offloading inventory at lower prices around RMB 0.65/W to return cash flow. For bifacial G12-HJT modules, mainstream pricing is concentrated in the RMB 0.75-0.83/W range.

PV Glass

On the supply side, production is expected to decrease month-on-month due to line maintenance and kiln closures. On the demand side, September saw relatively low stocking levels among module manufacturers. With the expected increase in module production post-holiday, stocking activity should pick up. However, rising inventories and a continued decline in upstream soda ash prices will continue to exert significant pressure on PV glass prices.

At TSMC’s upcoming earnings call on Thursday (October 17th), capital expenditure has become one of the key points of interest for the market. According to a report from Economic Daily News, institutional investors believe that TSMC’s capital expenditure range this year will remain unchanged. While next year’s capital expenditure plan will be announced at the next earnings call in January, it is suggested that capital expenditures for 2025 will increase compared to this year.

TSMC is currently in the quiet period before earnings call. According to the report from Economic Daily News, institutional investors point out that TSMC’s focus on 2nm-related mass production plan could significantly boost subsequent capital expenditures.

It is estimated that in 2025, TSMC’s capital expenditure will reach USD 32 billion to USD 36 billion, making it the second highest in history, with an annual growth rate of approximately 20%. TSMC’s increase in capital expenditure will significantly benefit ASML, Applied Materials, and related suppliers in Taiwan, the report noted.

In the earnings call in July, TSMC mentions that, to meet the customer demand, this year’s expected capital expenditure range will be narrowed. The original forecast in April was between USD 28 billion and USD 32 billion, which was adjusted to a range of USD 30 billion to USD 32 billion in July.

As for TSMC’s capital expenditures in the past, the historical high occurred in 2022, when it reached a record of USD 36.29 billion. In contrast, TSMC’s actual capital expenditure for 2023 is USD 30.45 billion, falling below the lower bound of the expected USD 32 billion set by the company during the October 2023 earnings call. This shortfall has sparked discussions in the market at that time.

Previously, sources indicated that TSMC has invested heavily in research and development related to advanced 2nm processes. The demand for 2nm technology is stronger than anticipated, and there are indications that production capacity planning will also include expansions in the Southern Taiwan Science Park, as suggested by the report from Economic Daily News.

According to the report, TSMC’s 2nm capacity expansion is expected to encompass four phases in Hsinchu Science Park and Baoshan, along with Phase 2 in Kaohsiung. If the plans for the Southern Taiwan Science Park come to fruition, TSMC’s 2nm technology could achieve a total of at least eight phases and eight fabs of production capacity.

Read more

• [News] Preview for TSMC’s Key 3nm Clients ahead of Earnings Call: Order Surge Expected in 2025
• [News] TSMC’s Newly Acquired AP8 Facility in Southern Taiwan Rumored to Start Production in 2H25
• [News] TSMC Took Another Step in Advanced Process Expansion

(Photo credit: TSMC)

Intel, grappling with financial difficulties, is set to enter a peak phase of layoffs this week after announcing plans to cut around 15,000 jobs. According to a report by CTECH, following the departure of employees who opted for early retirement at the end of September, Intel is moving forward with its workforce reduction plan, aiming to complete the layoffs by the end of the year.

CTECH reported that managers across Intel’s divisions have already submitted lists of employees recommended for layoffs to their superiors. These employees will soon be notified, with many expected to receive notices as early as this week. Intel’s CEO, Pat Gelsinger, stated last month that most layoff notices will be issued around mid-October.

CTECH quoted Gelsinger in a message to employees, stating that Intel has already passed the halfway mark in its goal of reducing the workforce by approximately 15,000 employees by the end of the year, largely through voluntary early retirements and separation packages. However, he acknowledged that more difficult decisions lie ahead, with the next round of notifications expected in mid-October.

Intel announced in early August that it would cut approximately 15% of its workforce and suspend dividend payments starting in the fourth quarter. This layoff plan is part of Intel’s broader effort to implement a $10 billion cost restructuring

Then, on September 16th, Intel announced plans to transform its foundry business into a wholly-owned subsidiary with its own board of directors.

(Photo credit: Intel)

Last week, Chinese stocks declined as the absence of new fiscal stimulus measures weighed on the market, with the CSI 300 Index dropping by 3.3%. In contrast, the U.S. S&P 500 Index continued to hit new highs, buoyed by gains across various sectors. In the bond market, easing concerns about the economy pushed the U.S 10-year Treasury yield back above 4%, while the spread between 10-year and 2-year Treasury yields widened to around 13 basis points. The U.S. Dollar Index also edged up slightly to approximately 103.

Key Economic Data Review for Last Week:

U.S. CPI:
The September CPI rose 2.4% year-over-year (previously 2.5%), slightly above market expectations of 2.3%, but still the lowest level since February 2021. This increase primarily reflected higher prices for apparel, medical services, and transportation services.

Meanwhile, rent inflation, which is closely watched by the Federal Reserve, rose 4.8% year-over-year (previously 5.0%), while owners’ equivalent rent increased 5.2% (previously 5.4%), both continuing their gradual decline.

Read more at Datatrack

U.S. Michigan Consumer Sentiment Index:
The preliminary reading for the October University of Michigan Consumer Sentiment Index came in at 68.9, down 1.2 from September. The report showed that consumer optimism about the current economic situation was up 8% compared to the same period last year, although dissatisfaction with high prices remains.

Optimism about business prospects reached its highest level in six months, but confidence in personal finances, both current and future, showed slight declines. With the presidential election approaching, some consumers are finding it difficult to make long-term economic forecasts.

Read more at Datatrack

Key Economic Data Review for This Week:

U.S. Retail Sales (10/17):
September employment data showed that the labor market remains balanced, while services PMI continued to expand, reflecting the resilience of the service sector in supporting U.S. consumption and employment. The market currently expects September retail sales to show a year-over-year decline to 1.8% (previously 2.1%) due to last year’s high base, but strong consumer resilience is likely to support a monthly increase of 0.3% (previously 0.1%).

Read more at Datatrack

Eurozone Monetary Policy Meetings (10/17):
For the first time, the Eurozone’s September Harmonised Index of Consumer Prices (HICP) fell below the 2% target range. With the region’s economy weakening and several central bank officials expressing support for a rate cut, the market expects the European Central Bank to lower rates by 25 basis points in October, with a further 25 basis point cut anticipated in December.

Read more at Datatrack

China GDP (10/18):
Recent monthly data for China’s industrial output, retail sales, and fixed asset investment have all continued to decline. The market expects China’s third-quarter GDP to grow by 4.6% (previously 4.7%) due to weak demand, making the 5% annual growth target increasingly challenging to achieve.

Read more at Datatrack

Ahead of TSMC’s upcoming third-quarter earnings call this Thursday, a report by the Commercial Times gives a heads-up on the foundry giant’s outlook of 3nm orders next year. With NVIDIA and AMD ramping up their next-gen AI accelerators, combined with the strong demand from smartphone chips, orders for TSMC’s 3nm node are set to see a surge in 2025, the report indicates.

According to analysts cited by the report, most flagship smartphone chips are expected to be manufactured with 3nm next year. For instance, Apple’s A19 Pro is said to adopt TSMC’s N3P process, while the Android phones are likely to follow suit.

In terms of the demand from AI accelerators, the report notes that AMD’s MI350 series will likely be manufactured with the 3nm node, which is going to benefit TSMC.

It is worth noting that according to another report by Commercial Times, at Advancing AI 2024 last week, AMD CEO Lisa Su highlighted the company’s close partnership with TSMC, saying that she would be glad to see the CHIPS Act bringing more manufacturing lines back to the U.S.

Sources cited by Commercial Times suggest that for now, AMD has no plans to collaborate with chip makers other than TSMC, and that the company is currently conducting a qualification assessment for chip production at TSMC’s Arizona fab (Fab 21).

On the other hand, Commercial Times indicates that NVIDIA’s orders on TSMC will likely see an increase next year, which would further tighten the foundry giant’s capacity in 3nm and 5nm. NVIDIA’s R-series GPUs are reportedly to be manufactured with TSMC’s 3nm as well, the report notes, but it would not be released until 2026.

TSMC is expected to see strong 3nm demands from other tech giants in 2025 as well. According to the report, Intel is said to outsource most of its Lunar Lake chips to TSMC, while the AI PC chip MediaTek co-develops with NVIDIA is also rumored to be built using the 3nm process. The report states that this chip is expected to debut in the second quarter of next year and enter mass production in the third quarter.

Sources cited by the report note that as clients turn to place orders on 3nm for their latest AI accelerators, foundry capacity will further be strained. Notably, TSMC’s CoWoS packaging reportedly allows interposers reaching 3.3 times for its maximum reticle size to manufacture chips such as NVIDIA’s B200, AMD’s MI300, or Intel’s Gaudi 3, with the number of chips produced on per interposer becoming fewer.

Read more

• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?
• [News] NVIDIA and MediaTek Reportedly Team up on 3nm AI PC Processors, with Tape-outs Expected This Month

(Photo credit: TSMC)