China has turned itself into “the world’s market” for semiconductor, while it eyes to play a crucial role in chip manufacturing by procuring more equipment. The latest reports by Bloomberg and Technews, citing data from China’s General Administration of Customs, indicates that Chinese imports of chip equipment in the first seven months of 2024 hit a new high, totaling USD 26 billion.

It is worth noting that in July 2024, the Netherlands’ total exports to China exceeded USD 2 billion, reporting the second-highest single-month record ever, the reports say, which can be largely contributed to China’s stockpiling of ASML’s systems and other machinery.

Tightening U.S. Export Restrictions May Lead to China’s Import Surge with Mature Nodes Its Major Focus  

The primary reason behind this surge, according to Bloomberg, may likely be that Chinese tech companies are preparing for further export restrictions on advanced chip manufacturing tools launched by the U.S. and its allies.

The report states that Chinese tech companies are particularly focused on purchasing semiconductor equipment for mature process, from companies like ASML, Applied Materials, and Tokyo Electron. The move allows fabs in China to produce chips needed for local industries, primarily the automotive sector.

Most of the equipment was said to be lithography systems used for mature nodes, which are crucial for Chinese foundries like SMIC. The company is rumored to produce 5nm chips for Huawei this year, by using old deep ultraviolet (DUV) lithography machines purchased from ASML.

New Local Fabs Opening up, Driving China’s Chip Making Equipment Procurement

In addition to counter the possible export restrictions from the U.S., the reports state that China’s aggressive procurement may also be due to the expansion wave of fabs this year. According to SEMI’s projection, among the 42 new fabs expected to go online in 2024, China leads by 18, which further boosts the country’s purchase of semiconductor production equipment.

The momentum also drives demand for local semiconductor equipment manufacturers in China. Chinese semiconductor company Advanced Micro-Fabrication Equipment Inc. (AMEC) reported a strong second quarter, with its revenue up 36.46% year-on-year to RMB 3.448 billion. Its etching equipment revenue reached RMB 2.698 billion, a year-on-year increase of 56.68%.

Read more

• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants
• [News] Samsung and SK hynix’s China Revenue Doubled in 1H24, Reportedly Driven by Semiconductor and HBM Demand

(Photo credit: SMIC)

Earlier in July, ASML CEO Christophe Fouquet noted that though China’s progress on cutting-edge chips is ten years behind the U.S., the world is in need of the legacy chips it manufactured. Now it seems that in order to become “the world’s factory,” China has to turn itself into “the world’s market” first.

And it has already been doing so. Over 40% of major semiconductor equipment manufacturers’ revenue in the second quarter of 2024, including that of Applied Materials, ASML and Tokyo Electron, came from China. In addition, another report by Maeli Business Newspaper highlights that Samsung Electronics and SK hynix also saw their sales in China double in the first half of this year.

Samsung’s Revenue from China Doubled in 1H24, Mainly Boosted by Semiconductors

Citing comments from Analysts, the report attributes China’s strong demand for Korean semiconductors to the country’s aggressive economic stimulus measures and the surge in AI, coinciding with the semiconductor upturn.

Citing Samsung’s semi-annual report on the 22nd, the report notes that its sales in China soared to KRW 32.3452 trillion (around USD 24.2 billion) in the first half of 2024, doubling from KRW 17.808 trillion in the first half of last year. According to Samsung’s website, China accounted for 17% of its revenue in the second quarter of 2024, rising from 11% in 2Q23.

The sales figures for China reported by Samsung encompass not only its flagship semiconductor products but also others like smartphones and home appliances. However, it is worth noting that unlike the situation in the U.S. and Europe, where the revenue structure is more diversified, semiconductors are believed to constitute the majority of sales in China, the report suggests.

HBM May Be a Major Contributor of South Korean Memory Giants’ Soaring Revenue in China

The soaring revenue in China echoes with the rumor that the U.S. is reportedly mulling new measures to limit China’s access to AI memory, an arena South Korean memory giants excel at. A previous report by Reuters noted that as the restrictions might be imposed as early as late August, Chinese tech giants like Huawei and Baidu, along with other startups, are said to be stockpiling high bandwidth memory (HBM) semiconductors from Samsung Electronics.

Citing a source from the semiconductor industry, Maeli states that the rapid growth of HBM is driving a significant shift in China’s DRAM market. The surging demand, derived from the need for server and enterprise PC upgrades as well as the launch of new AI-equipped PCs, appears to have boosted sales in China, benefiting South Korean memory giants.

The current HBM market leader, SK hynix, currently operates a DRAM plant in Wuxi, a packaging facility in Chongqing, and a NAND plant acquired from Intel in Dalian. Its sales in China in 1H24, according to the report, is estimated to amount to KRW 8.6061 trillion (around USD 6.4 billion), more than doubling its sales from the same period last year (KRW 3.8821 trillion).

The report, citing SK hynix’s semi-annual report, notes that the sales and net profit of SK hynix Semiconductor China in 1H24 were KRW 2.6624 trillion and KRW 119.4 billion, respectively. In the same period last year, it reported a loss of KRW 165.6 billion.

Read more

• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants
• [News] Chinese Tech Giants Reportedly Stockpile Samsung’s HBM ahead of Potential U.S. Restrictions

(Photo credit: Samsung)

Per Korean media theElec on August 19, Samsung Electronics is considering outsourcing part of its Micro LED display production to a third party including China-based MTC.

According to industry sources cited by Korean media, Samsung is currently evaluating the possibility of outsourcing production due to cost considerations, particularly for the low-end Micro LED display targeting markets like India and the Middle East.

Industry sources further reveal that the proportion of outsourced orders is expected to account for 20-30% of Samsung’s total Micro LED display products.

It’s reported that Samsung mainly provides Micro LED display for residential and commercial applications. In TV market, Samsung purchased Micro LED chips from San’an and PlayNitride.

After these chips are placed on substrate, transferred and packaged, Samsung directly handles other processes. For low-end products, the majority of current Micro LED production is done by itself, with only a small portion outsourced.

Technically, Samsung’s latest Micro LED TV uses LTPS TFT (Low-Temperature Polycrystalline Silicon Thin-Film Transistor) technology, while its commercial Micro LED display is still based on PCB technology.

The report suggested that if Samsung outsources the production of commercial Micro LED modules to manufacturers like MTC, they would assemble them for Samsung using PCBA (Printed Circuit Board Assembly) methods.

Given that companies like MTC in China have improved their Micro LED module technology, Samsung believes there is no significant difference between outsourcing production and completing the related module processes in-house.

Moreover, it could reduce production cost. If cooperates with MTC, Samsung expects Micro LED production cost to potentially decrease by 5-10%.

Besides cost reduction, Korean media point out that Samsung’s consideration of outsourcing low-end product production could allow it to focus on Micro LED module bonding and seamless technology, which are closely related to semiconductor manufacturing processes.

Industry sources highlight that the bonding and seamless technology of Micro LED modules are more critical, as these processes determine the final quality of Micro LED, despite the highly overlapping supply chains of Micro LED chips among manufacturers.

In fact, Samsung’s plan to reduce Micro LED cost has long been an open secret within the industry. As per Korean media reports in July, Samsung has already initiated its cost reduction plan and is currently working with relevant partners to push this project forward.

However, it’s worth noting that the potential partner mentioned by Korean media is BMTC. According to information from LEDinside, MTC’s LED business includes two downstream subsidiaries: VMTC and BMTC.

The former focuses on COB fine-pitch display business, while the latter on SMD LED packaging, backlighting, and lighting. If Samsung were to collaborate with MTC on Micro LED manufacturing, the corresponding products would theoretically be VMTC’s COB modules.

Currently, no official confirmation is disclosed, and the actual situation remains to be verified.

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(Photo credit: Samsung)

China’s GPU company Lisuan Technology, based in Shanghai, has averted the crisis of bankruptcy, as it secures around 328 million yuan (nearly USD 46 billion) in financing from domestic NAND/ DRAM manufacturer Dosilicon and others, according to a report by Chinese media outlet Sina.

On August 20^th, Dosilicon made an announcement, stating that it plans to invest 200 million yuan of its own funds to increase the stake in Lisuan Tech. By subscribing to an additional 5 million yuan of Lisuan’s newly registered capital, the memory company will hold approximately 37.88% of Lisuan’s equity.

On the other hand, the report notes that other investors plan to inject a total of 128 million yuan to Lisuan, subscribing to a total of 3.2 million yuan in its newly added registered capital. In total, Lisuan Tech has received 328 million yuan in financing from Dosilicon and others.

Regarding the reasons behind the investment, the report indicates that there is a certain level of synergy between Dosilicon and its target company, Lisuan Tech. As Dosilicon has already established a portfolio of both standard and niche DRAM products, its R&D team can further engage in technical collaboration with the graphics rendering chip design team at Lisuan to enhance the design capabilities of both parties.

The report, citing public information, states that Lisuan Tech, with 20 years of experience in GPU development and design, is one of the few domestic companies in China capable of providing customized high-performance GPU solutions.

The firm’s first 6nm GPU, based on its self-developed ‘Pangu’ architecture, is ready for tape-out, the report suggests. The product even boasts to offer performance on par with NVIDIA’s high-end graphics cards.

However, due to delays in securing financing, the company has fallen into difficulties, with rumors circulating that it was facing bankruptcy.

According to the data cited by the report, in 2023, Lisuan had no revenue and a net loss of 145 million yuan. In the first half of 2024, it reported no revenue and a net loss of 97.9 million yuan. The bulk of the losses was said to stem from R&D investments.

Read more

• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants
• [News] China Makes Progress in Chip Tool Self-Sufficiency, Yet Lithography Remains a Key Bottleneck

(Photo credit: Lisuan Tech)

On July 4th, the EU announced a provisional anti-subsidy tariff on electric vehicles imported from China, with a final decision set for October 30th. On August 20th, the EU released a draft decision regarding the final anti-subsidy tariffs, adjusting the rates for different Chinese electric vehicle manufacturers based on the latest investigation progress.

Notably, as per a report from Commercial Times, the tariff on Tesla’s electric vehicles has been reduced from 20.8% in July to 9%. Tariffs on vehicles from BYD and Geely have also been slightly lowered.

On August 20th, the European Commission disclosed its draft decision on the final anti-subsidy investigation for electric vehicles imported from China, making slight adjustments to the proposed rates.

Tesla saw the most significant reduction, while BYD and Geely received minor cuts. Specifically, BYD’s tariff rate was reduced from 17.4% to 17%, and Geely’s from 19.9% to 19.3%.

Additionally, other companies that the EU deemed cooperative will face a tariff of 21.3%. Chinese automakers and SAIC Motor, which were assessed as not fully cooperating with the investigation, will have their tariffs adjusted from 37.6% to 36.3%.

The European Commission also decided not to retroactively impose the anti-subsidy tariffs, with the final decision expected by October 30th.

The EU maintains the opinion that Chinese electric vehicle production benefits from extensive government subsidies and thus proposes a final tariff of up to 36.3%, slightly lower than the provisional 37.6% tariff imposed on Chinese imports in early July.

In response, the China Chamber of Commerce to the EU expressed concerns, stating that both the development of the European automotive industry and reports from the EU itself show insufficient evidence that Chinese new energy vehicles have caused substantial harm to the EU market.

Source: China Chamber of Commerce

The Chamber criticized the EU’s decision to impose trade measures based on a perceived “threat of injury,” arguing that this approach contradicts WTO principles and is unacceptable to the industry.

The Chamber emphasized that the competitive edge of Chinese-made electric vehicles is not due to subsidies but rather stems from industrial scale, supply chain advantages, and intense market competition.

Read more

• [News] EU Plans to Impose Tariffs as High as 38.1% on Chinese Electric Vehicles Amid Trade War
• [News] EU Reportedly Delays Decision on Imposing Tariffs on Chinese Electric Cars

(Photo credit: Pixabay)