The Japanese Ministry of Economy, Trade, and Industry’s 2024 White Paper on International Economy and Trade reveals that in its examination of imported goods sources, over half of the import value for 1,406 product categories (accounting for over 30% of the total) comes from China. This figure is 1.5 times higher than that of the United States, which relies on China for only 567 product categories. Thus, Japanese media Nikkei’s report has highlighted that this data underscores Japan’s significant dependence on China within its supply chain.

According to Nikkei, Japan’s trade statistics for 2022 covered approximately 4,300 types of goods. The report indicates that nearly 40% of these products are highly dependent on a single import source, with China being the predominant supplier.

Specific data further hints that Japan’s highly dependent imports from China include laptops, air conditioners, organic chemicals, and rare-earth metals. Additionally, over 90% of Japan’s imported household appliances originate from China. Moreover, China serves as Japan’s primary supplier of phosphorus, a key raw material for fertilizer production.

The data also indicates that Japan imports 252 and 151 types of goods that are “highly dependent” on the United States and South Korea, respectively, ranking these countries second and third in terms of Japan’s import dependency. In contrast, other G7 members exhibit lower levels of dependency on single import sources compared to Japan.

Per Nikkei’s report, essential minerals, semiconductors, and fertilizers have been designated as critical goods by the Japanese government. The data in the latest White Paper indicates that Japan’s supply chain is significantly dependent on China, highlighting the importance of diversifying procurement sources and conducting risk assessments. Japan has already started implementing measures to reduce reliance on China in cooperation with the United States and Europe.

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• [News] Semiconductor Equipment Sales Soared in Chinese and Japanese Markets
• [News] New Regulations Reportedly Introduced by Japan Regarding Semiconductor Exports

(Photo credit: Lenovo)

According to a report from Commercial Times, Apple is said to have informed its suppliers and partners that it is confident in boosting sales of the upcoming iPhone 16, set to be released in the second half of this year, through the addition of AI features. Reportedly, the goal is to increase iPhone 16 shipments by approximately 10% compared to the iPhone 15, reaching 90 million units in the second half of this year.

Apple showcased its advancements in AI at the annual Worldwide Developers Conference (WWDC) in June, including the introduction of the generative AI large model Apple Intelligence, AI upgrades for Siri, and collaboration with OpenAI. Apple is expected to launch Apple Intelligence in the U.S. market this fall, with full functionality projected to be available in the spring of next year.

Per sources cited by Bloomberg, Apple did not perform well in the second half of last year, particularly facing challenges in its third-largest market, China. Huawei’s Mate 60 Pro, equipped with a domestically manufactured 7nm processor, has gained favor among local consumers.

The same report from Bloomberg indicated that after a turbulent 2023, Apple is relying on AI services to boost demand for its new products. Data cited by Bloomberg shows that in the second half of last year, iPhone 15 shipments were approximately 81 million units.

Furthermore, for the first quarter this year, TrendForce reported that Apple also faced a decline in sales in the Chinese market, resulting in a drop in annual production to 47.9 million units. This decline prompted several adjustments within the component supply chain, although production plans for processor chips remained unchanged. TrendForce posits that the second quarter falls within a product iteration gap for Apple, and production is expected to decrease by approximately 10%. 

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• Q1 Smartphone Production Increases Due to Low Base Last Year, Expected to Decline 5–10% in Q2, Says TrendForce
• [News] Apple’s AI Push on iPhone 16 in China Faces Obstacles in Finding Local Partners

(Photo credit: Apple)

The semiconductor industry, driven by AI, is entering a new upward cycle. According to a forecast report from SEMI, after the trough in 2023, the total sales of equipment in 2024 will hit a new high, with growth momentum continuing into 2025. Among this trend, per a report from Commercial Times, major companies including TSMC, Intel, Samsung, SK hynix, and Micron are all actively preparing, with plans to continue increasing capital expenditure next year in preparation for the AI era.

TSMC and Intel are the most proactive foundries. Intel plans to increase its capital expenditure by 2% in 2024, reaching USD 26.2 billion; TSMC’s capital expenditure for this year is expected to be between USD 28 billion and USD 32 billion.

The same report further cited sources, indicating that TSMC’s capital expenditure this year will reach the upper end of the estimated range. Next year, the upper limit is expected to increase by another USD 5 billion to USD 37 billion, potentially reaching the second-highest level in its history.

It’s reported that customer demand for TSMC’s 2nm process capacity has exceeded expectations. In addition to Apple securing the first batch of TSMC’s 2nm capacity, non-Apple customers are also actively planning for advanced processes. TSMC continues to advance its goal of mass production of the 2nm process by next year.

Another source cited by Commercial Times reveals that TSMC accelerated equipment orders in the second quarter and further increased momentum in the third quarter, primarily to ensure the smooth launch of the 2nm process by mid-next year.

In the HBM sector, Samsung and SK hynix are reportedly raising funds to prepare for significant production expansion in 2025.  A report from Korean media outlet Korea Economic Daily (KED) indicated that Samsung Electronics and SK hynix are considering applying for loans from the Korea Development Bank, with planned loan amounts of KRW 5 trillion (roughly USD 3.6 billion) and KRW 3 trillion (roughly USD 2.2 billion), respectively.

Micron’s capital expenditure plan for the 2024 fiscal year is about USD 8 billion. In the fourth quarter of the 2024 fiscal year, Micron will spend approximately USD 3 billion on fab construction and new wafer fab equipment (WFE). For the 2025 fiscal year, Micron plans to significantly increase its capital expenditure, targeting 30% of its revenue, or about USD 12 billion. Earlier, Micron’s Chief Operating Officer, Manish Bhatia, stated that the scale of the HBM business is expected to expand to several billion dollars in the 2025 fiscal year.

Read more

• [News] TSMC’s Capital Expenditure to Surge Next Year, Driven by Rising 2nm Demand
• [News] Micron Slightly Raises Capital Expenditure for 2024, HBM Expected to Further Drive Revenue Growth in 2025
  

(Photo credit: Micron)

Amid the rising memory market prices and the continuously improving supply-demand balance, original manufacturers (OEMs) have seen their business performance steadily climb, generally achieving a turnaround from losses to profits.

Meanwhile, memory module manufacturers have also enjoyed rapid growth in their performance. With strong support from AI, memory manufacturers are optimistic about future market conditions, with some even stating that 2025 will be a significant upward cycle year for the memory industry.

• OEM and Module Manufacturers Recorded Strong Financial Results

Recently, two OEMs, Micron and Winbond, have disclosed their latest financial data.

Micron’s financial report for the period from March to May 2024 shows that the company’s revenue for the quarter was USD 6.811 billion, an 81.5% increase YoY. Non-GAAP operating income was USD 941 million, and net income was USD 702 million, a 47% increase QoQ. Specifically, Micron’s DRAM revenue was approximately USD 4.7 billion, a 13% increase QoQ, while its NAND business revenue was approximately USD 2.1 billion, a 32% increase QoQ.

The average selling prices (ASP) for both DRAM and NAND increased by more than 20% QoQ. Micron stated that its revenue, gross margin, and earnings per share for the quarter exceeded the upper limit of its guidance range. Looking ahead to next quarter, Micron expects its revenue to reach USD 7.4-7.8 billion.

Winbond’s self-clearing revenue report for June 2024 shows that consolidated revenue for June was TWD 7.378 billion, a 5.56% increase YoY; the cumulative consolidated revenue for January to June was TWD 41.605 billion, a 14.53% increase YoY.

In terms of memory module manufacturers, companies such as Adata, Phison, and Team Group all reported year-on-year revenue growth for June and the first half of the year. Adata’s revenue for June reached TWD 2.954 billion, a year-on-year increase of over 29.38%, with a cumulative consolidated revenue of TWD 20.91 billion for the first half of this year, up by 48.56% YoY. Team Group’s revenue for June was TWD 2.796 billion, a 44.93% increase YoY, while Phison’s revenue was TWD 5.361 billion, a 55.93% increase YoY, both setting new monthly revenue records.

BIWIN and TWSC recently disclosed announcements expecting substantial year-on-year growth in net profit for the first half of 2024. BIWIN expects net profit after deducting non-recurring gains and losses to be CNY 275-325 million, a year-on-year increase of 191.12-207.69%. TWSC expects operating revenue to be CNY 2-2.3 billion, a year-on-year increase of 238.68-289.48%.

• Memory Companies Anticipate an Upward Trend in 2025

Both OEMs and module manufacturers hold positive attitudes towards the outlook for future memory market.

Micron, as one of the three major DRAM manufacturers, has seen its HBM business grow by leaps and bounds in recent years, greatly benefited from the AI wave. Therefore, Micron is steadfastly optimistic about the potentials of AI and HBM. Micron expects to generate several hundred million dollars in revenue from HBM in fiscal 2024, which is expected to reach several billion dollar in fiscal 2025. Additionally, Micron reiterated that HBM has been in tight supply, and its HBM memory chips have already sold out for 2024 to 2025.

Winbond Chairman Arthur Chiao noted that Winbond began to see a decline in memory sales since 2Q22 and signs of sales increase in 2Q24 after eight quarters. He expects sales volume to rise, followed by price increase. He positively predicts that the industry will enter an upward cycle over the next two years, and 2025 will experience remarkable growth. To sum up, he views the market outlook for next year as optimistic.

Adata Chairman Simon Chen emphasized that upstream manufacturers currently have a very positive and proactive attitude towards prices. The allocation of production capacity is prioritized for HBM with the highest gross margin, followed by general-purpose DDR5 and DDR4. Capital expenditures are also profit-oriented.

As a result, short-term spot price fluctuations do not affect the continuous and stable upward trend of DRAM and NAND Flash contract prices in the third quarter. Moreover, some DRAM spot prices have started to rebound recently. He is optimistic that after a short-term adjustment in the spot market, the company’s shipments will return to a growth trajectory as the coming of the traditional peak season in 2H24.

• NAND Flash Price Increase to Shrink in 3Q24

It’s worth noting that although memory manufacturers are generally optimistic about the future market, and the AI development has indeed boosted demand for products such as servers, HBM, and enterprise SSD, the downstream terminal application market has not yet fully recovered.

Meanwhile, the active moves in expanding production by original manufacturers may lead to changes in the future supply-demand balance. These factors suggest that the increase in some product contract prices in the future memory market may shrink.

TrendForce reports 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 the third quarter is expected to continue rising, with an anticipated increase of 8–13%. The price of conventional DRAM is expected to rise by 5–10%, showing a slight contraction compared to the increase in the second quarter.

In terms of NAND Flash, TrendForce indicates that industry companies will continue to invest in server construction, and particularly, enterprise SSD will see order increase as a result of the expansion of AI adoption, while consumer electronics demand remains weak. In addition, original manufacturers tend to be active in expand production in 2H24. As a whole, the sufficiency ratio of NAND Flash supply will rise to 2.3% in the third quarter, and the blended NAND Flash price increase will converge to 5-10%.

Looking at the price trend of NAND Flash this year, the price of NAND Flash accelerated to rebound as original manufacturers remained conservative in production increases in 1H24, which enabled them to return to profitability.

However, as manufacturers significantly expand production in 2H24, and retail market demand has still not recovered yet, the decline in wafer spot prices has widened, with some wafer prices falling more than 20% below contract prices. This presents a challenge for the future increase in wafer contract prices.

Read more

• [News] Memory Utilization Rate Near Full Capacity, Surpassing Mature Nodes Foundries
• [News] Memory Market Recovery is Near, as Winbond Expects a Good Year in 2025

(Photo credit: Micron)

While still working in the final stage of HBM3e qualification with NVIDIA, Samsung Electronics is also advancing in the AI memory market with custom high bandwidth memory (HBM) solutions. According to reports by PassionateGeekz and China Flash Market, the memory giant is collaborating with major clients, such as AMD and Apple, to develop tailored HBM products, which are expected to be commercially available in the era of HBM4.

Citing Choi Jang-seok, head of Samsung’s new business planning team at memory division, the reports note that many customers of Samsung are switching from traditional, general HBM to customized products, as the latter promises better performance, power and area (PPA), while offering greater value than current options.

PassionateGeekz notes that at the Samsung Foundry Forum 2024 earlier this week, Choi further highlighted two forms of customized HBM Samsung has been developing. It is worth noting that Samsung is developing a large-capacity HBM4 memory with a single stack capacity of 48GB, which is expected to enter production in 2025.

On the other hand, Samsung also illustrated the innovation of the 3D stacking of HBM DRAM and customer-specific logic chips. By bypassing the interposer and base die required in the existing 2.5D packaging solution, the HBM chip can be directly integrated into the computing SoC in 3D. Samsung’s custom HBM, therefore, by eliminating intermediaries and substrates, can significantly reduce power and area.

TrendForce also observed that for HBM4, standard processes and capacities have been settled. The three major suppliers are in the development stage, with each buyer initiating custom requests. For future generations of HBM, new directions have been proposed, as HBM may no longer be just arranged next to the SoC main chip but could also stack directly on top of it.

While all the options are still under feasibility discussion and not finalized, TrendForce believes the future HBM industry will shift towards more customized production. Compared to other DRAM products, this approach aims to break away from the framework of commodity DRAM in terms of pricing and design, offering more specialized solutions.

Read more

• [News] Samsung Establishes New HBM Team to Advance HBM3, HBM3e and HBM4 Development
• [News] Overview of Expansion Plans by HBM Giants

(Photo credit: Samsung)