While South Korean memory giants Samsung Electronics and SK hynix saw their sales in China double in the first half of this year, the country as a whole seems to heavily rely on China for essential semiconductor raw materials as well, with silicon, germanium, gallium and indium seeing the largest increase, according to a report by the Korea Eximbank Overseas Economic Research Institute on September 24 cited by Business Korea.

Despite the efforts to diversify supply chains, the report highlights the growing reliance of South Korea on China for critical semiconductor raw materials. For instance, the importance of silicon, a vital component in silicon wafer production, has been increasing, as the country’s reliance on China for the ingredient rose from 68.8% to 75.4% in 2022, the report states.

Meanwhile, South Korea’s reliance on rare earths, which are used in semiconductor abrasives, is also said to be on the rise, the report notes. The reliance on tungsten, crucial for semiconductor metal wiring, experienced a slight increase as well.

It is worth noting that since August of last year, the Chinese government has imposed export restrictions on critical minerals, including germanium and gallium, as a counteract to U.S. export sanctions. According to the U.S. Geological Survey, China produces 98% of the world’s gallium and 60% of germanium.

Even before the sanction, there is a significant rise in South Korea’s dependence on China for these critical minerals. Business Korea notes that the country’s dependence on germanium, which is frequently used in next-gen compound semiconductors, surged by 17.4 percentage points to 74.3% in 2022.

In addition, reliance on gallium and indium increased by 20.5 percentage points to 46.7%, according to the report.

Under the scenario of China’s export restrictions on key minerals, which were implemented in August and December of last year, the local production by major Chinese companies has not significantly declined, the report notes.

For instance, Samsung’ NAND flash facility in Xi’an, China, has increased its share for the company’s total NAND capacity during the past few years, from 29% in 2021 to 37% in 2023, with expectations to reach 40% this year, according to the report.

Read more

• [News] China’s Gallium and Germanium Export Restrictions Risk Chip Production Shortages
• [News] Chip War Escalates: China to Enforce State Ownership of All Rare Earth Materials in October

(Photo credit: Samsung)

According to a Wall Street Journal report cited by Reuters, two of the world’s largest chipmakers, TSMC and Samsung Electronics, have explored potential chip projects in the United Arab Emirates (UAE) that could be worth over $100 billion in the coming years.

Top executives from TSMC have visited the UAE and discussed building a chip plant complex comparable to the company’s most advanced facilities in Taiwan, WSJ reported, citing sources familiar with the talks.

In response to the rumors, TSMC stated that the company always welcomes constructive discussions that promote the development of the semiconductor industry with an open attitude. TSMC is currently focused on its existing global projects and has no specific plans for new overseas investments at this time.

South Korea’s Samsung Electronics is also considering large-scale chip manufacturing operations in the UAE, with the discussions still in early stages, according to unnamed sources cited by WSJ.

Senior figures from Samsung recently visited the UAE and engaged in discussions about the project, though it is still in its infancy and could face technical and other challenges, the WSJ noted.

Neither TSMC nor Samsung responded immediately to Reuters’ request for comment.

The UAE is expected to fund these projects, with Abu Dhabi’s sovereign wealth fund, Mubadala, playing a central role, WSJ said, adding that the broader aim is to increase global chip production and lower prices without cutting into chipmakers’ margins.

As tech deals accelerate in the region, Washington has grown more concerned about the UAE and other Middle Eastern countries becoming channels for advanced U.S. AI technology reaching China.

Notably, the UAE has recently made strides in positioning itself as a key player in advanced technologies. In March, the Financial Times reported that Abu Dhabi’s newly formed AI investment company, MGX, had begun preliminary discussions with OpenAI regarding chip business investments—part of the UAE’s ambition to become a global leader in AI development.

Earlier this year, in February, the WSJ also reported that OpenAI CEO Sam Altman had met with investors in the UAE and other regions to discuss massively scaling up production of chips, power, and other key AI infrastructure—a move that could eventually require up to $7 trillion in investments.

(Photo credit: TSMC)

In 2024, the storage market is experiencing dynamic changes, with many positive developments, including rising contract prices, significant revenue growth for manufacturers, and multiple breakthroughs in technology. Amid this, major storage companies are gearing up for new challenges, especially as the NAND flash memory sector faces an impending shift.

How Far Have Major Companies Progressed with NAND Flash Technology?

This year, major storage manufacturers like Samsung, Micron, and SK Hynix have all made notable advancements in NAND flash technology.

In terms of NAND cell technology, Samsung has become the first in the industry to mass-produce its 9th generation V-NAND with QLC technology. On September 12, Samsung announced it had begun mass production of its 1Tb QLC (Quad-Level Cell) 9th generation vertical NAND (V-NAND), incorporating several groundbreaking technologies.

From a technological innovation perspective, Samsung’s 9th generation QLC V-NAND employs its unique channel hole etching technology to achieve the industry’s highest stack height with a dual-stack structure. Leveraging the expertise of TLC 9th generation V-NAND, the cell area and peripheral circuits are optimized, resulting in an 86% higher bit density than the previous generation.

Compared to earlier versions, the design of Samsung’s 9th generation QLC V-NAND improves data retention performance by about 20%, enhancing product reliability. Writing performance has doubled, and data input/output speeds have increased by 60%. Additionally, its low-power design reduces power consumption for both read and write operations by approximately 30% and 50%, respectively. This is achieved by sensing only the necessary bit lines (BL) to minimize power usage.

In terms of applications, Samsung plans to expand the use of the 9th generation QLC V-NAND from branded consumer products to mobile universal flash storage (UFS), PC, and server SSDs to meet the demands of customers, including cloud service providers.

Sung Hoi Hur, Executive Vice President and Head of Flash Product and Technology at Samsung Electronics, stated that as the enterprise SSD market grows rapidly and demand for AI applications increases, the company will continue to strengthen our leadership in the high-capacity, high-performance NAND flash market through 9th-generation QLC and TLC V-NAND.

However, at present, the mainstream products in the market are still TLC NAND flash memory particles. On August 6, SK Hynix’s Solidigm launched PCIe 5.0 data center SSDs, the D7-PS1010/1030 series, based on SK Hynix’s 176-layer 3D TLC NAND.

On September 11, SK Hynix announced the development of its high-performance SSD “PEB110 E1.S” for data centers, available in 2TB, 4TB, and 8TB versions. Currently undergoing validation with global data center customers, SK Hynix plans to begin mass production in the second quarter of next year.

On the other hand, Micron announced in late July that its SSD products featuring 9th generation (G9) TLC NAND technology had entered mass production, targeting personal devices, edge servers, enterprises, and cloud data centers. Micron’s G9 NAND achieves a data transfer rate 50% faster than current NAND technology used in SSDs. Its per-chip write and read bandwidths are 99% and 88% higher, respectively, than other NAND solutions. The Micron 2650 NVMe SSD, based on G9 NAND, achieves near-PCIe 4.0 performance levels, with a sequential read speed of up to 7,000 MB/s.

Micron also launched its new data center SSD, the 9550 NVMe SSD, featuring 232-layer 3D TLC NAND. It supports various AI workloads, offering a sequential read speed of 14.0 GB/s and a write speed of 10.0 GB/s—67% higher than competitive SSDs. The 9550 SSD’s random read speed reaches 3,300K IOPS, 35% higher than competitors, with random write speeds 33% higher.

The future of QLC SSDs is promising

Industry information indicates that NAND Flash, the core medium for data storage, is vital for SSD performance. Current SSDs use both TLC (Triple-Level Cell) and QLC flash.

In the AI era, there is a growing demand for storage, with SSDs playing a critical role. According to TrendForce, SSDs not only store model parameters during AI model training but also create checkpoints to save progress, making them crucial for high-speed data transfer and durability. As a result, customers primarily opt for 4TB/8TB TLC SSDs to meet the rigorous demands of AI training processes.

QLC SSDs, however, are gaining attention due to their higher storage density, which optimizes server space and reduces energy consumption. They can help large-scale data centers lower their total cost of ownership (TCO) while still meeting high-performance storage needs. Industry experts predict that as more data is generated in the form of videos and images, requiring larger storage capacities, TLC/QLC SSDs of 16TB or more will become the primary products for AI inference applications.

According to TrendForce, AI-related SSD procurement is expected to exceed 45 exabytes (EB) in 2024, with SSD demand in AI servers projected to grow by over 60% annually in the coming years. The share of AI SSDs within the NAND Flash market could rise from 5% in 2024 to 9% in 2025.

The Changing Landscape of the NAND Flash Market

On September 9, TrendForce’s latest research  indicates that in the second quarter of 2024, Samsung maintained its global leadership in the NAND Flash market with a 36.9% market share, up 0.2% from the previous quarter. SK Group followed with a 22.1% share, down 0.1%. Other key players include Kioxia (13.8%), Micron (11.8%), and Western Digital (10.5%).

In terms of revenue, Samsung, SK Group, Kioxia, Micron, and Western Digital all experienced quarter-on-quarter growth in NAND Flash revenues during the second quarter. Overall, NAND Flash revenue increased by 14% in the second quarter.

TrendForce indicates that as the inventory adjustments for server endpoints near completion and AI drives demand for high-capacity storage products, NAND Flash prices continued to rise in Q2 2024. However, due to high inventory levels at PC and smartphone manufacturers, NAND Flash bit shipments decreased by 1% quarter-over-quarter. Despite this, the average selling price increased by 15%, with total revenue reaching USD 16.796 billion, a 14.2% increase from the previous quarter.

Looking ahead to Q3, TrendForce expects that all NAND Flash suppliers have returned to profitability as of Q2 and plan to expand production capacity in Q3 to meet strong demand from AI and servers. However, due to weak market performance in the PC and smartphone sectors in the first half of the year, it is challenging to boost NAND Flash shipments. It is estimated that the average selling price of NAND Flash products will increase by 5% to 10% in Q3, while bit shipments may decrease by at least 5% due to a lack of peak season demand. Industry revenue is expected to remain roughly the same as the previous quarter.

(Photo credit: Samsung)

In early September, rumors have it that TSMC’s first US fab in Arizona began producing engineering wafers using the 4nm process in April, with yields reportedly comparable to those manufactured in its Southern Taiwan Science Park facility. Now here’s the latest update: the fab has started trial production for Apple’s A16 chip, according to a report by Tim Culpan at substack, a technology columnist.

Tim Culpan notes that the mobile processors are manufactured with TSMC’s 5nm, or the so-called N4P node, which is the same as the node used in Taiwan to manufacture A16. The N4P node is actually a member of the 5nm family, as it is regarded as an enhanced version of 5nm, the report explains.

It is worth noting that Apple’s A16 SoC, though launched two years ago with iPhone 14 Pro, is considered as one of the most advanced mobile chips for the company, as the chip is also be seen in iPhone 15 and iPhone 15 Plus models. Culpan indicates that the move marks a milestone that instead of beginning with some less critical chips, Apple and TSMC intend to aim high from the start.

According to Culpan, Apple’s A16 is currently being trial-produced at TSMC Arizona’s “Fab 21” Phase 1 facility, with a small production volume. However, once the second stage of the Phase 1 fab is completed, the output will significantly increase.

TSMC plans to build three plants in Arizona, each with cleanroom spaces twice the size of typical logic fabs in the industry. The first fab is expected to begin mass production in the first half of 2025.

TSMC’s second fab in Arizona will use 2nm process technology to meet strong AI-related demand, with production expected to begin in 2028. The third fab will employ 2nm or even more advanced process.

However, the situation for Samsung’s investment in the U.S. would be a different story. A previous report from Korean media outlet Business Korea noted that persistent issues with its 2nm yield rate have led Samsung to decide to withdraw personnel from its Taylor, Texas plant, signaling another setback for its advanced wafer foundry business.

As for Intel, which proactively pursues the support of the U.S. government, it is holding steadfast on its investments in the country despite recent announcements to spin-off its foundry business and delaying the projects in Germany and Poland for two years.

Intel plans to invest USD 100 billion over the next five years in new fabs and expansions across Arizona, New Mexico, Ohio, and Oregon, creating 10,000 manufacturing jobs and 20,000 construction jobs.

Read more

• [News] Showing Positive Progress, TSMC’s Arizona Fab Reportedly Reaches Production Yields on Par with Taiwan
• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab

(Photo credit: Apple)

Regarding the continuous struggle of its foundry business, Samsung has reportedly decided to make another move, as its semiconductor division (DS) plans to undertake a major organizational restructuring within the year, according to a report by Chosun Biz.

Through the restructuring, DS Division President (Vice Chairman) Jeon Young-hyun is said to focus on addressing major issues related to organizational culture, such as the lack of communication between departments and team self-interest, the report notes.

The revelation follows Samsung’s reported up to 30% layoffs in overseas workforce last week, as noted by Reuters. The plan, set to be implemented by the end of this year, will affect jobs across the Americas, Europe, Asia, and Africa.

Citing industry sources, the report indicates that Samsung Electronics’ DS division plans to strengthen collaboration processes by integrating existing team-based structures into a project-centered model, with an aim to resolve issues arising from the siloed operation of departments.

As a comprehensive semiconductor company with a broad range of businesses, Samsung faces quite a few challenges, while the proliferation of business units and task forces leads to competition and friction between departments. In the development of chips or processes, differing interests among departments—such as semiconductor design, fabrication, and reliability evaluation—can cause communication problems, which may ultimately lead to business failures.

Samsung has been fighting to catch up with its rivals, not only in the foundry sector but in memory as well. Chosun Biz notes that the Korean semiconductor giant is lagging behind competitors in areas like high-bandwidth memory (HBM), cutting-edge DRAM, and foundry technology over the past 2-3 years, which may be attributed to this organizational culture.

Samsung’s foundry division has been working out to mass-produce 3-nm GAA (Gate-All-Around) technology for around three years but still struggles with customer acquisition. A report by The Korea Times states that the yield for Samsung’s 3nm process remained in the single digits until Q1 this year, and slightly improved to about 20% in Q2, though still significantly below the 60% threshold generally needed for mass production.

In terms of DRAM, Samsung seems to gradually lose the leading edge as it has started to fall behind SK hynix, especially in the HBM market. In its latest attempt, Samsung teams up with its foundry rival, TSMC, on the development of HBM4, according to Business Korea.

Moreover, Samsung is facing challenges on the DDR5 DRAM market. Chosun Biz suggests that discrepancies between the quality goals set by the development department and the actual specifications of the mass-produced product delayed Samsung’s entry into the server DDR5 DRAM market by more than 3-6 months, compared to SK hynix.

The report took its setback in the 10-nm 5th generation (1b) DDR5 server DRAM last year as an example. The product, which supplied to Intel, failed to meet the promised performance and was deemed substandard.

In early September, another report by Korean media outlet ZDNet reveals that the tech giant might be facing difficulties in its cutting-edge mobile DRAM, as Samsung’ Mobile eXperience (MX) Division reportedly raised concerns with the DS Division about delays in the delivery of 1b-based LPDDR (low-power DRAM) samples, which are intended to be used in the Galaxy S25 series.

A Samsung Electronics spokesperson cited by Chosun Biz admitted that there continues to be a disconnection between the departments developing new processes and those responsible for mass production, with serious issues arising from the shifting of blame for failures.

However, would Samsung’s latest effort work out? An industry insider cited by the report notes that Intel has attempted to make a change through the “IDM 2.0” strategy over the past three years, but solving these issues in a short period of time has proven difficult. He suggests that it is necessary to go beyond just restructuring to fundamentally change the organization.

Read more

• [News] Samsung Partners with TSMC, Its Foundry Rival, on HBM4 Development
• [News] Samsung Reportedly Buckling Under Pressure, with Plans to Cut Overseas Workforce by Up to 30%

(Photo credit: Samsung)