As per a report from Korea Economic Daily citing unnamed sources on July 15th, Samsung Electronics is preparing to mass-produce the logic die for HBM4 using its advanced 4nm process.

The logic die, situated at the bottom of the chip stack, is a core component of HBM. Memory manufacturers are already capable of producing logic dies for existing products like HBM3e. However, regarding HBM4, the sixth-generation model, with its custom features demanded by customers, requires additional wafer processing steps.

Reportedly, Samsung’s 4nm process, which boasts is said boasting a yield rate exceeding 70%, is one of their flagship technologies. This advanced process is also used in producing the Exynos 2400 processor for their flagship AI smartphone, the Galaxy S24.

An industry source cited by the report further stated that the 4nm process is much costlier than the 7nm and 8nm but significantly better in terms of chip performance and power consumption. Reportedly, Samsung, which manufactures HBM3e with the 10nm process, is looking to take the throne in the HBM sector by applying the 4nm process.

On the other hand, SK Hynix announced its collaboration with TSMC in April 2024. In a statement released on April 19th, SK Hynix stated that the two semiconductor giants will collaborate on developing the 6th generation HBM4 chips, with production scheduled for 2026.

The same report from the Korean Economic Daily also addressed that, Samsung has reportedly deployed employees from its System LSI division to the newly established HBM research team. In response to Samsung’s actions, SK Hynix and TSMC have decided to add the 5nm process in addition to the originally planned 12nm process for producing the logic die of HBM4.

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• [News] Samsung Develops Custom HBM with Tech Giants, with Commercialization Expected in HBM4
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(Photo credit: Samsung)

According to a report from Commercial Times, with expectations that tensions between the U.S. and China remain unresolved for the time being, and China’s continued production in mature process semiconductor foundries and communication equipment, the trend of decoupling from China is likely to expand.

The U.S.-China trade war has continued for several years, with the U.S. announcing in May an additional tariff on Chinese imports, including a substantial 50% tariff on semiconductor products manufactured in China by 2025. This move has further intensified the trade conflict between the two superpowers.

Thus, as per the same report, as concerns over overcapacity in various industrial products in China heighten this year, coupling with the unresolved U.S.-China relations, Taiwanese foundries including UMC, VIS, Powerchip, and networking companies such as WNC, SERCOM and Arcadyan may be benefited from the potential increased outsourcing orders.

Consequently, despite aggressive pricing competition from Chinese mature process foundries, the average selling price (ASP) and overall operational performance of Taiwan’s major mature process foundries have exceeded expectations in the first half of this year.

TrendForce previously indicated that, the supply chain’s order-shifting has become more proactive with the imposition of US tariffs. Qualcomm, which began cooperation discussions with Vanguard in 2021, has made its production plans more aggressive this year. This has prompted Vanguard to expand the first-phase capacity of its new Fab5 plant by 3Q24 and to complete cross-plant validation for Qualcomm’s PMIC to meet demand. Since 2022, MPS has also started shifting orders, including plans with both Vanguard and PSMC.

In recent years, the limitations on Chinese companies’ expansion in the U.S. have also allowed Taiwanese networking companies to capture significant American infrastructure opportunities. WNC covers optical fiber, 5G FWA, and enterprise networking businesses, with over 60% of its revenue from the Americas. SERCOMM Corporation has penetrated the North American optical fiber broadband upgrade market, securing key North American telecom operators. Meanwhile, Arcadyan Technologys’ optical fiber products have entered top-tier North American telecom operators.

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• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls
• [News] China Lists Semiconductor Self-Reliance Challenges, Excluding Lithography Equipment

(Photo credit: iStock)

The heightened tensions between China and the U.S. are expected to escalate further. According to a report from Commercial Times, this has been reflected in the past quarter’s increased demand for AI servers among Chinese Cloud Service Providers (CSPs) and enterprises.

Following NVIDIA’s recent rush orders, Taiwanese server manufacturers such as Inventec, Wistron, and Foxconn are also experiencing increased demand for H20-related orders from Chinese customers. Reportedly, these orders are expected to ramp up in the third and fourth quarters.

Industry sources cited by the same report further indicate that NVIDIA’s recent rush order, with a scale of 100,000 H20 units, is expected to be fulfilled by mid-fourth quarter. While Wistron, a major substrate supplier, started to ramp up shipments from late second quarter.

Inventec, which benefited from strong H20 demand from Chinese customers in the first half of the year, is said to be seeing a shift in AI server shipments to predominantly U.S. customers in the second half. However, the demand from Chinese customers has not disappeared and is expected to continue providing momentum for Inventec’s performance.

SuperMicro, which is reportedly expanding its server sales business in the Chinese market through the channel resources of Taiwanese graphics card manufacturer Leadtek, is also expected to bring positive benefits to Leadtek’s sales operations in China and Northeast Asia. Additionally, with the recovery of its own AI workstation business and the expected demand for H20 from Chinese customers, Leadtek is likely to become one of the major beneficiaries of the surge in orders from Chinese clients in the second half of the year.

On the other hand, due to the impact of U.S. chip restrictions, it’s hinted that some Chinese customers are increasingly leasing high-end AI computing power services from global companies to meet the current AI model training needs.

This trend is indirectly boosting the order pull for high-end AI server products from Tier 2 and Tier 3 data center operators in Europe and the Asia-Pacific region, simultaneously providing shipment momentum for related Taiwanese manufacturers.

According to sources cited by Commercial Times, the demand for H20 orders from Chinese customers has been quite unstable this year, with sudden spikes of urgent orders.

However, as the confrontation between China and the U.S. might intensify due to the upcoming U.S. presidential election, Chinese companies may be prompted to increase their demand for H20 in the coming quarters. This could significantly boost the AI server business for related Taiwanese manufacturers in the second half of the year.

Regarding the need for H20, TrendForce previously mentioned that Chinese companies would continue to buy existing AI chips in the short term. NVIDIA’s GPU AI accelerator chips remain a top priority—including H20, L20, and L2—designed specifically for the Chinese market following the ban.

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• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei
• [News] NVIDIA’s China-Exclusive H20 to Begin Pre-sales Next Month

(Photo credit: NVIDIA)

According to a report from Economic Daily News, benefiting from the upcoming peak season for smartphones, a recovery in the PC market, and a more than 30% surge in silver prices this year, global giants such as Murata and TDK are planning to raise product prices. Targeted products include multilayer inductors and beads, with potential price hikes of up to 20%, marking a rare significant increase in the passive component industry in recent years.

Industry sources cited by the same report have noted that the passive components sector, after undergoing inventory adjustments for over one year, is now seeing inventory levels returning to healthy levels. This, coupled with customers replenishing stocks, the traditional peak season approaching, and significant cost increases, presents an opportunity for rare price hikes in products such as multilayer inductors and ferrite beads.

Industry sources cited by the report also highlight that silver accounts for up to 60% of the cost in manufacturing multilayer inductors and beads. With silver prices having surged nearly 40% at one point this year and still up 35% year-to-date despite a recent slight pullback, manufacturers are facing substantial cost pressures in mass-producing these components.

Leading global inductor manufacturers include Japanese companies like Murata, TDK, and Taiyo Yuden, as well as Taiwan’s Yageo and Walsin Technology groups. With major smartphone manufacturers launching new models in the second half of the year, the recovering PC market, and rising silver prices, industry sources indicate that top-tier companies like Murata and TDK may increase prices for multilayer inductors and beads. Large-size products are expected to see the first price hikes, ranging from 10% to 20%.

Industry sources further explain that multilayer inductors are characterized by magnetic shielding, which eliminates electromagnetic interference and effectively suppresses high-frequency oscillations in circuits. This makes them highly suitable for high-density circuit designs. Depending on their size, these inductors are widely used in consumer electronics and even servers.

On the other hand, ferrite beads are designed using ferrite materials and a multilayer manufacturing process. Their impedance varies with frequency, meaning they achieve high impedance at high frequencies, offering superior high-frequency filtering characteristics. This effectively suppresses noise interference, making them suitable for end products like smartphones, tablets, laptops, and power supplies.

Reportedly, the operations of passive component manufacturers have been gradually recovering. Leading passive component manufacturer Yageo is optimistic, noting that customer inventory levels are becoming healthier this quarter. The company expects its capacity utilization rate to continue increasing and holds an optimistic outlook for the market moving forward.

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• Passive Component Industry Nearing Bottom, Embracing AI and Automotive

(Photo credit: YAGEO)

Though Samsung has denied the rumor that its HBM3e passed NVIDIA’s qualification tests, multiple Taiwanese companies in the supply chain reportedly learned that the product is expected to receive certification soon, and will start shipping in Q3. As memory manufacturers are said to shift at least 20-30% of their production capacity to HBM, tightening supply further, DDR5 prices in Q3 will reportedly be on the rise.

It is reported that some of Samsung’s supply chain partners have recently received information to place orders and reserve capacity as soon as possible, which indicates the memory giant’s HBM may begin shipments smoothly in the second half of the year. The move may also imply that the internal capacity allocation within Samsung will accelerate, shifting the focus of production lines to HBM.

Taiwanese memory supply chain sources reportedly believe that the news of Samsung’s HBM certification is likely to be confirmed at the upcoming Samsung financial report meeting, which will take place on July 31. It is said that memory manufacturers will relocate at least 20-30% of their production capacity, driving DDR5 prices to rise.

TrendForce notes that a recovery in demand for general servers—coupled with an increased production share of HBM by DRAM suppliers—has led suppliers to maintain their stance on hiking prices. As a result, the ASP of DRAM in Q3 is expected to continue rising, with an anticipated increase of 8–13%. Due to high average inventory levels of DDR4 among buyers, purchasing momentum will be focused on DDR5.

On the other hand, regarding NAND prices in Q3, TrendForce reports that while the enterprise sector continues to invest in server infrastructure, the consumer electronics market remains lackluster. This, combined with NAND suppliers aggressively ramping up production in the second half of the year, is likely to curb the blended price hike to a modest 5–10%.

According to TrendForce’s latest analysis, Samsung’s initial plan to pass NVIDIA’s certification in Q2 was delayed, making it falling behind SK hynix and Micron. Simultaneously, some HBM suppliers also faced lower-than-expected production yields, leading to concerns about a shortage of HBM3e 8hi materials for the H200 GPU shipments starting in Q2 2024.

However, Samsung adjusted its 1alpha nm front-end production process and back-end stacking process in the first half of 2024, leading the industry to expect that sample production could be completed in Q3 2024, followed by product certification.

Read more

• [News] Samsung’s HBM3e Reportedly Passed NVIDIA’s Certification Though It Denies the Rumor
• Demand for Servers to Support Second Half of the Year; DRAM Prices Expected to Increase by 8–13% in Q3, Says TrendForce

(Photo credit: Samsung)