According to a report from Reuters on July 4, consensus from 27 analysts compiled by LSEG SmartEstimate indicates that driven by the surge in demand for AI technology and the resulting rebound in memory prices, Samsung Electronics’ operating profit for Q2 2024 (ending June 30) is projected to skyrocket by 1,213% from KRW 670 billion in the same period last year to KRW 8.8 trillion (roughly USD 6.34 billion), marking the highest since Q3 2022.

Other memory giants are also optimistic about the operation afterwards. Take Micron as an example. Regarding the AI frenzy, Micron CEO Sanjay Mehrotra claimed that in the data center sector, rapidly growing AI demand enabled the company to grow its revenue by over 50% on a sequential basis.”

Mehrotra is also confident that Micron can deliver a substantial revenue record in fiscal 2025, with significantly improved profitability underpinned by our ongoing portfolio shift to higher-margin products.

On the other hand, SK Group also stated that by 2026, the group will invest KRW 80 trillion in AI and semiconductors, while continuing to streamline its businesses to increase profitability and return value to shareholders.

Read more

• [News] SK Hynix to Invest USD 75 Billion in AI Push, with 80% of It Flooding into HBM
• [News] Memory Giant Micron’s 3Q24 Earnings Report Released, Outlook Slightly Better Than Expected

(Photo credit: Samsung)

China aims to establish at least 50 AI standards by 2026, as outlined in a new draft policy from Beijing, according to a report by South China Morning Post. The draft policy, released on Tuesday by the Ministry of Industry and Information Technology (MIIT), will not only cover training for large language models (LLMs), but even semiconductors.

This initiative is part of China’s effort to catch up with the U.S. in AI development, the report noted. Earlier in April, Alibaba’s chairman, Joe Tsai, mentioned in an interview that China is at least two years behind its leading US counterparts, like OpenAI and Google, in the global AI race.

China’s proposed standards will cover training for large language models (LLMs), which are the foundation of generative AI services like ChatGPT. Additionally, they will address safety, governance, industrial applications, software, computing systems, data centers, and the technical requirements and testing methodologies for semiconductors.

According to MIIT, these standards are expected to apply to at least 1,000 Chinese technology companies. The document also states that China will participate in creating at least 20 international AI standards, the report said.

MIIT’s draft policy identifies 12 critical technologies in the AI supply chain, including LLMs, natural language processing, computer vision, and machine learning, which involves systems performing complex tasks akin to human problem-solving. The draft policy also identifies four layers that comprise China’s AI industry chain: the foundation (including the computing power, algorithms, and data needed to train LLMs), the framework, the model, and applications.

Citing an industrial expert, the report indicated that the latest draft policy, unlike the usual command-and-control regulations, has adopted a pro-market, soft-law approach to guide and promote China’s AI industry. This stance, which is comparatively innovation-oriented and market-friendly, will not only enable the establishment and development of an AI ecosystem, but benefit other industries as well.

China’s tech giants, led by Huawei, has been aggressively advancing in the AI arena. Previously, Huawei claimed its second-generation AI chip “Ascend 910B” could compete with NVIDIA’s A100 and was working to replace NVIDIA, which holds over 90% of the market share in China. However, according to ChosunBiz, the chip, being manufactured by China’s leading semiconductor foundry, SMIC, has been in mass production for over half a year, yet the yield rate remains around 20%.

On the other hand, in response to US export bans, NVIDIA has commenced to sell H20, its AI chip tailored for the Chinese market earlier this year.

Read more

• [News] Huawei Faces Production Challenges with 20% Yield Rate for AI Chip
• [News] NVIDIA Reportedly Facing Price Cut Pressure of H20 Chip in China Amid Competition with Huawei

According to a report from Commercial Times, Arthur Chiao, Chairman of Winbond, stated that this upward market cycle for the memory sector has arrived on time. Reportedly, customers are not worried about shortages, and all products made by Winbond will sell well all year round, boosting the momentum in 2025.

Looking at Winbond’s recent revenue trend, the company’s performance has risen in the second quarter, further hinting that the upward market cycle has arrived on time. Chao anticipates that this upward cycle could last for two years, making 2025 a good year throughout, with a possible downturn in 2026.

Considering Winbond’s NOR Flash, which has held the largest global market share since 2020, Chiao noted that this product is widely used in automotive, communication, telecommunications, wearable devices, and other technological applications. Overall, its sales recovery also represents a revival of the electronics market.

Regarding individual industries, as per the same report, Winbond expects the PC end market to grow by 5% to 10% in 2024. The mobile phone market, which has been in decline for three years, is also rebounding from its trough, with an estimated single-digit percentage growth. Consumer products, the first sector to undergo inventory adjustments, are also the fastest to recover. Networking and communications, driven by the growing application of Wi-Fi 7, is also optimistic in the second half of the year.

Winbond is also implementing the NCNT (Non-Taiwan, Non-China) strategy. Arthur Chiao emphasized that global trends are irreversible, and the company is starting to make early preparations in response to customer demands. Winbond’s General Manager, Pei-Ming Chen, added that the company will outsource packaging and testing to a partner factory in Malaysia and will first conduct product verification work. Although costs will rise, customers have indicated that it is acceptable.

Chiao further stated that in response to the AI trend, Winbond has adjusted its strategy and business organization. The company is transitioning from a component supplier to a service-oriented manufacturer and have established a dedicated business unit for customized memory solutions (CMS).

Read more

• [News] DDR3 Price Rebound Expected in the Upcoming Quarters, Benefiting Taiwanese Manufacturers
• [News] From Technical Prowess to Integration Capability, TSMC and Intel Target Advanced Packaging to Seize Ecosystem Opportunities

(Photo credit: Winbond)

Apple is reportedly pushing the boundaries of AI with the upcoming iPhone 16 series, which is expected to have computational power that surpasses industry expectations. According to a report from Economic Daily News, it has suggested that Apple is developing the A18 chip for this year’s iPhone 16 models, with performance potentially exceeding that of Apple’s current most powerful AI chip, the M4. This advancement means the iPhone 16 series will be more capable of running AI models on-device, adapting to various AI tasks.

While these applications are primarily aimed at high-end smartphones, the sources cited by the same report have shown optimism that TSMC and Foxconn, as parts of Apple’s supply chain, are likely to benefit from this development.

The same report further cites the rumor that the A18 chip developed for the iPhone 16 series will feature a highly powerful neural engine, crucial for handling generative AI functions. To keep up with the AI trend, Apple introduced its proprietary AI application, “Apple Intelligence,” in collaboration with OpenAI at this year’s Worldwide Developers Conference (WWDC). This application is designed for high-end models like the iPhone 15 Pro and Pro Max, with hardware capabilities exceeding expectations.

The iPad Pro which unveiled in May is the first to feature the M4 chip. Compared to its predecessor, the M2, the M4 chip boasts up to a 50% increase in CPU speed. Built with TSMC’s second-generation 3-nanometer technology, the M4 chip includes Apple’s fastest neural engine to date, capable of supporting up to 38 trillion operations per second.

If the A18 chip is equipped with an even more powerful neural engine, its computational speed will surpass that of the M4 chip. This means the iPhone 16 series will be able to run AI models locally with greater efficiency. Reportedly, TSMC is the exclusive supplier for the iPhone 16’s processors, therefore expected to be benefited from the strond demand of A18.

On the other hand, Foxconn, historically the largest assembler of iPhones, has recently focused on high-end models. As Apple intensifies AI functionality in new devices, the market anticipates a new wave of device upgrades, enhancing Foxconn’s performance in consumer electronics in the latter half of the year.

Read more

• [News] Apple Unveiled M4 Chip for AI, Heralding a New Era of AI PC
• [News] Battle in AI PCs: Exploring Intel, AMD, and Qualcomm Chips’ AI Computing Power

(Photo credit: Apple)

On June 21, ASE Group announced that ASE Semiconductor will collaborate with Hung Ching Construction to build a K28 plant in Kaohsiung. The project is expected to be completed in the fourth quarter of 2026 and will focus on end testing of advanced packaging processes, and high-performance computing for artificial intelligence (AI) chip.

ASE’s CFO Dong Hongsi introduced that for the K28 plant construction project, ASE Semiconductor will provide the land it held in Kaohsiung while Hung Ching Construction will provide fund support. The plant will have one basement level and seven above-ground floors. As to the rights and value distribution between the two parties, ASE Semiconductor and Hung Ching Construction will respectively hold a share of 22.24% and 77.76%. Upon completion, ASE Semiconductor or its subsidiaries will have the first purchase rights for Hung Ching Construction’s property ownership.

It was reported previously that as an important part of the company’s operational plans, ASE’s Kaohsiung plant had purchased land in Tashe for phased development in a bid to  address the demands for end testing of advanced packaging processes, AI chip high-performance computing, and heat dissipation needs. Phase one, the K27 plant, was completed in 2023, primarily setting up Flip Chip and IC testing production lines.

At a financial result briefing in February this year, ASE stated that to expand advanced packaging capacity, this year’s overall capital expenditure will increase by 40% to 50%, reaching a historical high. Of this, 65% will be allocated to packaging, especially advanced packaging projects, with over 60% used for packaging testing and 30% for electronic manufacturing services.

Moreover, ASE is optimistic about the potential of AI technology and expects AI revenue contributions to double to USD 500 million by the end of 2024 compared to 2023. AI-related revenue is expected to account for a single-digit percentage of the total ATM (Packaging and test) business this year, surpassing last year’s low single digit. And the industry anticipates that next year’s proportion could reach a high single-digit percentage.

Advanced packaging industry has been in high gear in recent years, and ASE has made significant investment in this area over the past two years. In February this year, Infineon and ASE announced that ASE would invest approximately TWD 2.1 billion to acquire Infineon’s two backend assembly and test plants in Philippines and South Korea. This acquisition aims to expand ASE’s  power chip module packaging & test and lead frame packaging for automotive and industrial automation applications, with the transaction expected to be completed by the end of 2Q24.

On January 19, ASE announced that its Malaysian subsidiary would invest MYR 69.696 million to acquire land use right in the Gardenia Tech Park in Penang, Malaysia to meet operational needs. Industry analysts believed this investment was primarily for expanding advanced packaging capacity. It was reported that ASE Semiconductor has been actively expanding its packaging and test capacity in Malaysia. In November 2022, its new factories 4 and 5 in Penang broke ground, with construction expected to be completed by 2025.

Additionally, in late December 2023, ASE Semiconductor announced that it had leased the 7th floors of both K21 and K22 buildings from ASE TEST in Kaohsiung’s Nanzi district to expand its packaging capacity. The industry believed that the intention was to increase its advanced packaging capacity for AI chip.

Read more

• [News] ASE Sets Up New Facility in Kaohsiung for Advanced Packaging, Targeting Completion in 2026
• [News] ASE Expands Production at Kaohsiung Plant, Focusing on Advanced Packaging for AI Chips