In a bid to catch up with leading players like TSMC, the South Korean government is said to have approved a national-level initiative aimed at actively promoting the development of advanced chip packaging technologies, according to a report from South Korean media outlet TheElec.

Citing anonymous sources, the report on April 30th indicates that the feasibility of the aforementioned plan has passed the preliminary examination conducted by the Korea Institute of S&T Evaluation and Planning (KISTEP).

According to reports, the preliminary review targeted a national-level project with a value exceeding KRW 50 billion, with direct government sponsorship exceeding KRW 30 billion. Such projects rarely pass the review in one go, but the aforementioned chip packaging case is an exception.

Most of the reviewers at KISTEP have reportedly reached a consensus, recognizing the necessity of the project to catch up with leaders in advanced packaging like Taiwan’s TSMC, making South Korea a frontrunner.

As per TrendForce’s previous report, by 2027, Korea’s share in advanced process capacity is originally expected to reach 11.5%, with room for further growth.

However, the budget for the 7-year project has been reduced from the original KRW 500 billion to KRW 206.8 billion. After passing the preliminary feasibility review, the project is expected to be formally announced later this year (2024) and is scheduled to commence implementation next year.

Cited by the same report from TheElec, a source involved in the project stated that the budget cut was entirely expected, but the project’s single-pass approval is indeed noteworthy, indicating the government’s deep understanding of the importance of chip packaging.

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(Photo credit: TSMC)

As the pressure from the United States to strengthen export controls on semiconductor manufacturing equipment to China continues to grow, as per a report from Yonhap News Agency (YNA), the United States has reportedly urged allies such as Japan, the Netherlands, Germany, and South Korea to join forces and expand the scope of their containment measures, extending to equipment, raw materials, optical components, and other areas.

While countries like the Netherlands, Japan, and Germany have yet to make their positions known, the same report indicates that the South Korean government, in efforts to maintain stability in its relationship with the United States, is considering cooperation with U.S. efforts to impose export controls on semiconductor equipment to China.

YNA’s report has indicated that, since October 2022, when the U.S. government announced a ban on American companies exporting equipment and technology essential for advanced semiconductor manufacturing to China, it has continuously urged its allies to implement similar levels of export controls on exports to China.

Sources cited by the report indicate that initially, the Netherlands and Japan, which have high levels of semiconductor technology, were the primary targets of U.S. pressure. However, starting from the second half of 2023, the pressure from the United States on South Korea has intensified, even directly naming specific South Korean companies.

In February this year, the U.S. Department of Commerce and the South Korean Ministry of Trade, Industry, and Energy reportedly held negotiations on this issue. Sources cited in YNA’s report revealed that the U.S. side is concerned that South Korea could become a loophole in its export controls on semiconductor technology to China, and South Korea is working to address U.S. concerns.

The same sources stated that although the South Korean government has not yet made a decision on this matter, considering national interests and taking into account the U.S. position, it is at least inclined to “partially” meet U.S. demands.

Per the same report, the South Korean government is also concerned that measures related to export controls on China will adversely affect the competitiveness of the South Korean semiconductor industry. South Korean companies’ semiconductor equipment technology is already inferior to that of the United States, Japan, and the Netherlands. If exports to China, particularly crucial ones, are further restricted, it will undoubtedly worsen the situation for the semiconductor industry in South Korea.

Yeo Han-koo, a senior researcher at the Peterson Institute for International Economics (PIIE) who formerly served as Director-General of Trade Negotiations at the South Korean Ministry of Trade, Industry, and Energy, noted that considering the recent dynamics in U.S.-China relations and international geopolitical factors, South Korea faces challenges in completely disengaging. However, South Korea aims to minimize losses for its companies to the greatest extent possible and is committed to exploring reasonable compromise solutions with the United States.

On the other hand, as per TrendForce’s previous report, China is focusing aggressively on mature process technologies (28nm and older), particularly in response to export controls on advanced equipment by the US, Japan, and the Netherlands. By 2027, China’s share in mature process capacity is expected to reach 39%, with room for further growth if equipment procurement proceeds smoothly.

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(Photo credit: iStock)

Despite challenges, Samsung Semiconductor remains optimistic about the market outlook for the second half of the year. According to a report from TechNews citing sources , to compete with TSMC and enhance efficiency to meet market demands, Samsung is reportedly adjusting the expansion schedule of its fabs.

As per a report from global media outlet SamMobile, Samsung Semiconductor is adjusting the construction schedule of its Pyeongtaek Plant 4 (P4) in South Korea to prioritize the construction of the PH2 production line, temporarily halting the construction of the new production line at the semiconductor plant 5 (P5).

In addition, Samsung is said to be reallocating resources to invest in the PH2 production line at the P4 plant. Once the cleanroom is completed, it will be dedicated to contract chip manufacturing.

Pyeongtaek is a major semiconductor manufacturing center for Samsung, serving as a significant hub for its foundry business and a crucial memory plant. South Korea’s Pyeongtaek currently has the operational P1, P2, and P3 plants, with the construction of the P4 and P5 underway.

Reportedly, Samsung is expected to expand its contract manufacturing capacity to secure more clients from its competitor, TSMC. Additionally, the P4 plant will also establish the PH3 production line to produce DRAM and other components. Samsung’s adjustment in plans reflects its anticipation of rising market demand and its efforts to prepare to meet those demands.

While Samsung stated that the suspension of the P5 plant was for inspection purposes, sources cited in the SamMobile report believe that Samsung likely slowed down the progress of the P5 plant due to the previous downturn in the semiconductor market.

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(Photo credit: Samsung)

In a bid to enhance its foundry capabilities, Samsung is earnestly integrating hybrid bonding technology. According to industry sources, Applied Materials and Besi Semiconductor are establishing equipment for hybrid bonding at the Cheonan Campus, slated for use in next-generation packaging solutions like X-Cube and SAINT.

According to a report from South Korean media outlet The Elec, industry sources have indicated that Applied Materials and Besi Semiconductor are installing hybrid bonding equipment at Samsung’s Cheonan Campus, a key site for advanced packaging production. Officials from the South Korean industry also mentioned that a production line is currently under construction, with the equipment intended for non-memory packaging.

Compared to existing bonding methods, hybrid bonding enhances I/O and wiring lengths. Samsung’s latest investment is expected to strengthen its advanced packaging capabilities, introducing the X-Cube utilizing hybrid bonding technology.

Industry sources cited by the report have suggested that hybrid bonding could also be applied to Samsung’s SAINT (Samsung Advanced Interconnect Technology) platform, which the company began introducing this year. The platform includes three types of 3D stacking technologies: SAINT S, SAINT L, and SAINT D.

SAINT S involves vertically stacking SRAM on logic chips such as CPUs. SAINT L involves stacking logic chips on top of other logic chips or application processors (APs). SAINT D entails vertical stacking of DRAM with logic chips like CPUs and GPUs.

TSMC, the leading semiconductor foundry, also offers hybrid bonding in its System on Integrated Chip (SoIC) for 3D packaging services, which is similarly provided by Applied Materials and Besi Semiconductor. Intel has also applied hybrid bonding technology in its 3D packaging technology, Foveros Direct, which was commercialized last year.

Reportedly, industry sources anticipate that Samsung’s investment in hybrid bonding facilities is poised to attract major clients such as NVIDIA and AMD. This is because the demand for hybrid bonding among fabless customers is steadily increasing.

(Photo credit: Samsung)

Negotiations between Hyundai Motor and the U.S. government concerning tax incentives for the Korean automaker’s USD 5.5 billion EV plant in Georgia have yet to reach a conclusion.

It was first reported on August 31st 2023, indicating that Hyundai Motor Group and LG Energy Solution (LGES) would invest an additional USD 2 billion in their battery cell manufacturing joint venture (JV) at the Metaplant in Bryan County, Georgia.

The company subsequently aimed to expedite the construction of its factory in Georgia and establish partnerships with local battery suppliers to align with the Inflation Reduction Act (IRA), as stated by Hyundai’s CFO Seo Gang-Hyun during an earnings call.

In an latter interview, Georgia Governor Brian Kemp expressed concerns that the IRA is adversely affecting Korean companies. Korea Joongang Daily further noted that no Korean electric vehicles, including those from Hyundai Motor and Kia, are currently listed for the IRA tax credit. According to TrendForce’s analyst, the market share in 2023 for Hyundai Motor and Kia combined is 10.6%, which ranks as 4th in the US market, behind GM, Toyota, and Ford.

Currently, the U.S. Energy Department has reportedly yet provided a definitive response to Hyundai’s request for a 30 percent tax credit under the IRA, as per a report from the Korean media outlet Korea Joongang Daily. As reported by The Korea Daily, the potential value of these incentives could be around USD 350 million.

“We’ve been constantly discussing with the U.S. government for the incentives,” Hyundai Motor confirmed regarding the news. “Nothing has been decided, and we’re waiting for the result.” Still, reportedly, Hyundai and Kia have not announced any cuts to EV production or investment.

TrendForce notes that the automotive industry is currently facing high raw material and labor costs, as well as significant investments in electrification and autonomous driving. Balancing the protection of local enterprises, maintaining competitiveness, and managing consumer costs is an urgent task for governments worldwide. Most countries are focusing on the country of origin rather than the brand of vehicles in their restrictive measures.

Measures taken by the US—specifically for EVs—include requiring that EVs and their batteries be assembled in North America. Furthermore, critical minerals in the batteries must originate from countries that have signed free trade agreements with the US to qualify for subsidies totaling US$7,500.

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(Photo credit: Hyundai)