China’s top panel makers, including BOE, TCL CSOT, HKC, and CEC-CHOT, are cutting production to support TV panel prices. Speculations indicate a capacity utilization drop below 60% in the first quarter, benefiting Taiwanese panel companies like Innolux and AUO. Despite these efforts, industry sources caution of a panel industry slowdown due to reduced demand, possibly resulting in lower TV panel prices, reported by TechNews.

The memory industry saw a big downturn due to major players like Samsung, SK Hynix, and Micron drastically reducing production. This resulted in a surge in memory prices and a gradual recovery for the entire memory industry. Panel makers may adopt a similar strategy to boost the overall panel industry as well.

Chinese panel companies currently command a global market share of over 70% in TFT-LCD, with the world’s top 3 LCD panel makers from China: BOE, TCL CSOT, and HKC. As China holds the largest share of panel production capacity, a reduction in production by major players could have a more substantial impact on the panel industry compared to the effects on the memory industry caused by Samsung, Micron, and others.

According to TrendForce’s report in November, BOE began adjusting its production levels in the Q3 and will continue to do so in Q4, with an estimated decrease of 7 percentage points in utilization rates. CSOT, on the other hand, maintained high utilization rates in Q3, supported by major customer stockpiling and the ramp-up of the T9 new production line. However, due to reduced procurement of TV panels by both in-house group brands and international frontline brands, CSOT’s utilization rate is expected to decrease by about 17 percentage points to 76% in Q4.

HKC, which still has two production lines not running at full capacity, anticipates a 14 percentage point decrease in its utilization rates for Q4. This is primarily due to the need to reduce production of one of its main products, the 32-inch TV panel, to alleviate inventory pressures and avoid significant price drops.

In response to this, both Innolux and AUO express their intention to dynamically adjust production capacity utilization in line with market conditions. This strategic flexibility is aimed at fostering a more robust and balanced industry order.

Overall, most panel makers are adopting a more conservative approach to production for 1Q24. Furthermore, several panel makers have indicated a two-week Lunar New Year shutdown for 2024. As a result, TrendForce anticipates that overall Gen5+ LCD panel utilization rates may be revised down to 70% or lower in 1Q24 to maintain the market supply-demand balance.

(Image: BOE)

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According to TechNews’ report, TSMC and Samsung fiercely compete in the semiconductor foundry sector. Earlier market reports suggested that Qualcomm’s Snapdragon 8 Gen 4 mobile processor might adopt a dual-foundry strategy with TSMC and Samsung manufacturing simultaneously.

However, according to the latest industry information, due to Samsung’s conservative expansion plan for next year’s 3nm production capacity and unstable yields, Qualcomm has officially canceled the plan to utilize Samsung for next year’s processors. The dual-sourcing model is now postponed until 2025.

Samsung began mass production of its first-generation 3nm GAA (SF3E) process at the end of June last year, marking Samsung’s initial use of the innovative GAA architecture for transistor technology. The second-generation 3nm process, 3GAP (SF3), will utilize the second-generation MBCFET architecture, optimizing it based on the foundation of the first-generation 3nm SF3E. It is expected to enter mass production in 2024.

The dual-foundry strategy for Qualcomm was initially leaked by the reputable source Revegnus via the X platform (formerly Twitter). It was mentioned that the Snapdragon 8 Gen 4 processor would adopt TSMC’s 3nm (N3E) process, while Samsung’s 3GAP process would be used for the Snapdragon 8 Gen 4 supplying Samsung’s Galaxy series smartphones. Other sources suggested that due to limited capacity at TSMC’s 3nm production, Qualcomm had to seek Samsung as an alternative chip foundry.

As a result, Qualcomm originally anticipated dual-foundry production with both TSMC and Samsung in 2024, with hopes of being the first customer for the 3GAP process. However, considering Samsung’s conservative 3nm production capacity plan for next year and the instability in yields, Qualcomm decided to scrap the plan and exclusively rely on TSMC, pushing the dual-foundry strategy to 2025.

Currently, TSMC’s 3nm process technology capacity is on the rise, with expectations that by the end of 2024, monthly production capacity will reach 100,000 wafers, and the revenue contribution will increase from the current 5% to 10%.

(Photo credit: Qualcomm)

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According to the South Korean media The Korea Economic Daily’s report, Samsung Electronics has established a new business unit dedicated to developing next-generation chip processing technology. The aim is to secure a leading position in the field of AI chips and foundry services.

The report indicates that the recently formed research team at Samsung will be led by Hyun Sang-jin, who was promoted to the position of general manager on November 29. He has been assigned the responsibility of ensuring a competitive advantage against competitors like TSMC in the technology landscape.

The team will be placed under Samsung’s chip research center within its Device Solutions (DS) division, which oversees its semiconductor business, as mentioned in the report.

Reportedly, insiders claim that Samsung aims for the latest technology developed by the team to lead the industry for the next decade or two, similar to the gate-all-around (GAA) transistor technology introduced by Samsung last year.

Samsung has previously stated that compared to the previous generation process, the 3-nanometer GAA process can deliver a 30% improvement in performance, a 50% reduction in power consumption, and a 45% reduction in chip size. In the report, Samsung also claimed that it is more energy-efficient compared to FinFET technology, which is utilized by the TSMC’s 3-nanometer process.

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• [News] IC Design Companies Seek Advanced Process Second Source, Overview of Competition Between TSMC and Samsung

(Photo credit: Samsung)

According to the Economic Daily News’ report, industry sources indicate that Samsung, a major supplier of CIS, has issued a price increase notice to customers on November 29th, projecting an average price increase of up to 25% in the first quarter of next year.

The individual product lines may see an even higher increase, reaching levels of up to 30%, primarily in specifications with 32 million pixels and above. This suggests that the CIS market is poised for a new cycle of price increases.

Previously, the CIS market was impacted by subdued demand in the consumer market, leading to a decline in market prices and making CIS one of the first component to experience price declines. However, entering the latter half of this year, the demand for smart devices, particularly in the smartphone market, has started to recover comprehensively.

This is driven by strong procurement efforts from Chinese smartphone brands, significantly boosting inventory demand and becoming the catalyst for the rapid clearance of CIS inventory.

(Photo credit: Samsung)

China is actively investing in chips with a mature process of 20nm and above. According to Chosun Ilbo, some insiders signal a potential shift of over 50% of global mature-node chips production to China within the next 2 to 3 years. As semiconductors focusing on mature process account for 75% of overall chip demand, China’s growing influence in this sector raises significant security concerns.

During the APEC SME Technology Conference and Fair in Qingdao on the 9th of this month, Wei Li, former Vice President of SMIC, emphasized the necessity for China to prioritize the localization of semiconductors with a 20nm process and above. This category includes semiconductors focusing on mature process, where Li acknowledged China’s technology lags behind international counterparts by more than 5 years.

Despite China’s efforts for independent development, the semiconductor industry faces comprehensive restrictions from the United States, heavily relying on imports for materials, equipment, and design software, with only about 10% being domestically produced. China, holding over 1/3 of the global chip market, struggles with a self-sufficiency rate below 15%, hindering its industrial progress, especially with foreign countries imposing export controls on advanced process and equipment.

According to South Korean media reports, concerns have arisen within the industry about the potential impact on the global semiconductor supply chain as China expands its mature processes. Despite the recent surge in demand for advanced chips like AI chips and servers, semiconductors focusing on mature process still constitute 75% of overall demand. These chips are crucial not only in autonomous vehicles, automobiles, and home appliances but also in military applications. If China monopolizes this market, it could lead to a severe security crisis.

China is rapidly increasing its market share in the mature-node chips sector, with the government offering up to a 10-year corporate tax exemption for new domestic semiconductor plants. Last year, SMIC invested USD 8.9 billion in Shanghai to build a 28nm plant.

Data from TrendForce indicates that China plans to construct 32 semiconductor plants by 2024, surpassing Taiwan’s 19 and the United States’ 12.

China’s Wafer Fabs Hits 44 with Future Expansion 32, Mainly Targeting on The Mature Process

China’s Expansion into the mature process market poses big challenges for Korean enterprises. Chinese companies are gaining ground in various sectors, including the image sensor market, encompassing DDI semiconductors used in OLED panels. Beyond manufacturing capabilities, China has achieved noteworthy levels of design expertise in semiconductor technologies.

On the other hand, in previous press release, TrendForce predicted China’s mature process capacity to grow from 29% this year to 33% by 2027. Leading the charge are giants like SMIC, Hua Hong Group, and Nexchip, while Taiwan’s share is estimated to consolidate from 49% down to 42%.

TSMC, UMC, and Samsung are the frontrunners in this technology currently. Yet, Chinese players like SMIC and Nexchip are hot on their heels, swiftly closing the gap. SMIC’s 28HV and Nexchip’s 40HV are gearing up for mass production in 4Q23 and 1H24, respectively—narrowing their technological gap with other foundries.

China’s Share in Mature Process Capacity Predicted to Hit 29% in 2023, Climbing to 33% by 2027, Says TrendForce

As China enhances its influence over mature-node chips, both the U.S. and the EU are contemplating countermeasures. Despite months of discussions, there are still no concrete results regarding these potential measures.
(Image: SMIC)