Following previous controversies of supplying 7nm chips to Huawei through proxies, TSMC has reportedly notified all its AI chip customers in China by formal emails that starting next week (November 11), it would halt shipments of all the 7nm and more advanced chips to its AI/GPU clients there, according to Chinese media outlet ijiwei.

While this decision may temporarily reduce TSMC’s business in China, in the long run, TSMC could gain more opportunities in the U.S. market by complying with American regulations, the report says.

According to ijiwei’s analysis, TSMC’s move, which highlights the foundry giant’s delicate position in the global semiconductor supply chain amid the heating chip war between the world’s two superpowers, could become a watershed moment in the future of technology development, with long-lasting impacts.

According to the ijiwei report, with the newly elected Trump claiming that TSMC should pay a “protection fee,” the company’s latest move seems to be an effort to align itself with the U.S. Department of Commerce. The two parties, together, have created a stringent review system to completely block advanced process from China’s reach, the report notes.

According to another media outlet SEMICONVoice, the U.S. Department of Commerce has reportedly instructed TSMC to make the move, as production could only proceed after being reviewed and approved by the U.S. Department of Commerce’s BIS (Bureau of Industry and Security) and receiving a license. This would effectively tighten the availability of advanced 7nm and below processes for all Chinese AI chips, GPUs, and autonomous driving ADAS systems, the report notes.

According to the latest report by Bloomberg and Reuters, TSMC has almost finalized binding agreements for multi-billion dollar grants and loans to back its U.S. factories, which may allow it to receive the funding from the Biden administration soon.

TSMC’s package, announced in April, includes USD 6.6 billion in grants and up to USD 5 billion in loans to aid the construction of three semiconductor factories in Arizona.

On the other hand, TSMC’s decision would be a major blow to China’s AI ambition, as AI and GPU companies in China will no longer have access to TSMC’s advanced process, which could lead to higher costs and longer time-to-market, and significantly impact their product performance and market competitiveness, the ijiwei report states.

A supply chain reshuffle is likely to follow, as Chinese chip design companies may need to seek alternative foundries, according to the report.

China’s SMIC, currently the world’s third largest foundry, is said to successfully produce 5nm chips using DUV lithography instead of EUV. However, as previously reported by the Financial Times, industry sources have indicated that SMIC’s prices for 5nm and 7nm processes are 40% to 50% higher than TSMC’s, while the yield less than one-third of TSMC’s.

According to TrendForce, as of the second quarter of 2024, SMIC maintains a solid 5.7% market share, securing its position in third place, after TSMC (62.3%) and Samsung (11.5%).

Read more

• [News] TSMC Reportedly Halts Shipments to Chinese Firm Sophgo After Chip Found in Huawei Processor

(Photo credit: TSMC)

China’s exports showed a significant rebound in October, according to data released by the General Administration of Customs of the People’s Republic of China (GACC) on November 7, marking the highest growth rate since July 2022.

The total export value, measured in USD, reached approximately $309 billion, reflecting a year-on-year increase of 12.7%, well above the previous month’s 2.7% growth. Imports totaled around $213.34 billion, representing a 2.3% year-on-year decline, which was a notable improvement compared to the 7.2% drop in the prior month. The trade surplus stood at $96 billion, the third-highest monthly record.

By destination, exports to the United States rose by 8.1% year-on-year, up 2.2% from the prior month, while exports to the European Union grew by 12.7%, driven in part by a rush to export ahead of anticipated trade barriers.

On the product level, crude oil imports declined by 9% year-on-year, marking the sixth consecutive month of decline, indicative of weak domestic demand. Steel exports surged by 24.4%, showing a 13.1% increase over the prior period, pointing to excess production capacity in China’s industrial sector. Electronic exports, China’s largest category to the U.S., increased by 13.7% year-on-year, expanding by 10.7% from the previous month, though mobile phone exports declined by 0.7%, the only decline within the electronics segment.

In summary, expectations of higher tariffs on Chinese goods by the incoming U.S. administration and rising trade barriers against Chinese steel and electric vehicles have driven Chinese exporters to accelerate shipments. While this may support GDP growth, reliance on exports alone is unlikely to resolve broader economic challenges.

November 8 marks the final day of the National People’s Congress Standing Committee session, with markets closely watching for potential policy measures aimed at boosting domestic demand.

Read more at Datatrack

Amid concerns on the impact of the U.S. presidential election as well as the ongoing chip war between the world’s two superpowers, China’s chipmaking equipment market is expected to contract next year, according to a report by Nikkei. Citing remarks from SEMI, in 2025, the semiconductor equipment market in China is anticipated to drop below USD 40 billion and back to the level of 2023, after peaking in 2024.

According to SEMI, the decline can be attributed to the cooling demand after a period of accelerated purchasing spurred by U.S.-China tensions, the Nikkei report mentions. Spending on semiconductor manufacturing equipment in China is projected to exceed USD 40 billion this year for the first time, according to SEMI.

On the other hand, according to an executive of the Chinese branch of a global chip equipment supplier cited by the report, in 2025, the semiconductor equipment market in China is anticipated to decrease by 5-10% from the previous year, which is resulted from the decline of utilization rates for equipment at China’s semiconductor factories as well as the previous rush in purchases.

The projection aligns with Dutch chip equipment giant ASML’s financial forecast released earlier in October. It now forecasts 2025 net sales between 30 billion and 35 billion euros (USD 32.7 billion to USD 38.1 billion), in the lower end of its previous guidance range, according to a report by CNBC.

Though during the July-September quarter, China contribute to around 50% of ASML’s sales, Chief Financial Officer Roger Dassen noted that the company expects its China business to show a “more normalized percentage in our order book and also in our business,” indicating that China would come in at around 20% of its total revenue for next year, according to the CNBC report.

It is also worth noting that according to SEMI, the market contraction in China extends beyond next year. According to the Nikkei report, SEMI projects that China’s spending on chipmaking equipment will experience an average annual decline of 4% in compound growth from 2023 to 2027.

On the other hand, chipmaking equipment spending remains robust in regions other in China. Citing SEMI’s projection, Nikkei notes that spending in the Americas is projected to grow 22% annually between 2023 and 2027, with Europe and the Middle East increasing by 19%, and Japan by 18%.

Despite declining growth, China will remain the largest market for semiconductor manufacturing equipment, with estimated spending of USD 144.4 billion from 2024 to 2027, according to SEMI. This exceeds investments in South Korea (USD 108 billion), Taiwan (USD 103.2 billion), the Americas (USD 77.5 billion), and Japan (USD 45.1 billion).

To elaborate a bit, Nikkei suggests that China’s heightened outlay aligns with its goal of achieving greater self-sufficiency in chip production, as its self-sufficiency rate was only 23% in 2023.

Naura Technology Group, a state-owned company, is China’s largest supplier of semiconductor manufacturing equipment, followed by Advanced Micro-Fabrication Equipment (AMEC), according to Nikkei.

Read more

• [News] ASML Reports Disappointing Q3 Bookings while Lowering 2025 Forecast, Raising Concerns in Chip Sector
• [News] SMIC Reportedly to Manufacture 5nm Chips for Huawei Without EUV Machinery

(Photo credit: Naura Technology)

In recent years, the LED display market has seen shifting trends and demand, creating both opportunities and challenges. How should LED companies respond to these changes? At the 2024 TrendForce Self-Luminous Display Industry Seminar, TrendForce analysts discussed the future growth drivers for the LED display market, analyzing the outlook for emerging applications and the competitive landscape in the industry.

Due to factors such as government budgets, price competition, and technological rivalry, demand for LED displays in China in 2024 is expected to be moderate.

However, international markets continue to grow, with stable progress in Europe and North America, and strong performance in the Asia-Pacific region, particularly in Southeast Asia and the Middle East. In the long term, the LED display market is expected to maintain growth, driven by three main factors:

1. Expansion from Developed to Developing Economies
   China is the global manufacturing base and origin of LED displays. In the first phase, the Chinese market expanded into developed economies overseas. With continuing reductions in LED display costs, the market is entering a second phase, extending into developing economies.
2. Expansion from Government and Large Corporate Clients to Small and Medium Enterprises
   Over more than 20 years, LED display prices have steadily declined, and the client base has expanded from government (B2G) to business (B2B) sectors, with potential for future expansion to consumers (B2C).

For manufacturers, the distribution model has grown in importance, and demand for channel-driven LED displays is rising. Companies are actively adjusting their strategies, establishing distribution networks in China and globally to reach a wider customer base.

3. Expansion from Traditional to Emerging Applications
   Traditional applications for LED displays include corporate meetings, security monitoring, retail exhibitions, public areas, transportation, and outdoor advertising. With advancements in Micro/Mini LED technology, LED displays are increasingly used in emerging applications like LED integrated displays, virtual production, and cinema/home theaters, indicating strong growth potential.

Overall, TrendForce projects that the global LED display market size will reach $7.516 billion in 2024 (up 2.8% YoY) and could grow to $10.2 billion by 2028, with a compound annual growth rate (CAGR) of 7% from 2023 to 2028.

Recently, Chinese semiconductor companies Natural Semicon and Zensemi have recently announced advancements in their 12-inch wafer production lines, while Chinese equipment manufacturers Naura, Hwatsing, and JSG have reported promising developments in 12-inch equipment technology.

Natural Semicon’s 12-inch Production Line in Zhuhai Achieves Milestone

On November 2, Zhuhai-based Natural Semicon successfully connected its 12-inch wafer-level TSV (Through-Silicon Via) integration production line. On the same day, Natural Semicon unveiled its “Ninefold” technology platform, the first Chinese-named wafer-level 3D integration technology system.

Upon completion of Phase I, the new production line will have an annual capacity of 240,000 TSV-integrated units to support applications in AI, high-performance computing, and more. The project is expected to begin full-scale production on December 30, 2024. Moving forward, Phase II is set to boost capacity to 600,000 units annually between 2028 and 2032 as part of a strategic growth phase.

Zensemi Completes 12-inch Wafer Project Connection

Recently, Zensemi’s COO reported in an interview with CNR that the Zensemi project took just 18 months from groundbreaking to line connection. To date, Zensemi has produced 1,000 wafers, which are now undergoing a 1,000-hour reliability test. The company plans to commence mass production soon.

At a June 28 launch event, Zensemi inaugurated its 12-inch wafer production line for intelligent sensor chips, which is the first of its kind in China and second worldwide. The chips produced will target sectors such as IoT, industrial control, and automotive electronics. Starting next year, the line is expected to supply 20,000 chips monthly from Guangzhou’s Zengcheng district.

China’s Top Equipment Manufacturers Announce 12-inch Equipment R&D Progress

Chinese equipment manufacturers Naura, Hwatsing, and JSG have shared updates on their 12-inch equipment developments.

Naura recently delivered its domestically developed 12-inch plasma-enhanced chemical vapor deposition (PECVD) system to a client. The Cygnus series PECVD system is designed to produce high-quality films for applications such as passivation, isolation, anti-reflective coatings, and etching stop layers in logic, memory, and advanced packaging. It can handle large, high-warp wafers and produce films like silicon oxide, silicon nitride, and other compounds.

On October 31, Hwatsing revealed in its investor relations report that its flagship CMP and thinning equipment saw broader applications and greater market acceptance in the first three quarters of 2024. Its new Universal H300 CMP system is now in limited production, receiving orders from key customers, while its 12-inch high-precision wafer thinning machine, Versatile-GP300, completed its initial customer validation and met batch production requirements.

On October 28, JSG disclosed that it has expanded R&D in semiconductor equipment for large silicon wafers, chips, and packaging, achieving breakthroughs in domestic production of 8- to 12-inch wafer equipment. These products have reached mass production and are well received by downstream customers, leading in market share within China’s domestically produced crystal growth equipment sector.

(Photo credit: Zensemi )