The latest official data from South Korea, the world’s largest memory production country, indicates a turnaround in October’s memory exports, marking the first growth in nearly 16 months. Meanwhile, the latest report from the Taiwan Semiconductor Industry Association (TSIA) anticipates a quarter-on-quarter growth of 9.1% in Taiwan’s memory and other manufacturing output for this season, leading the semiconductor manufacturing industry.

These signals suggest a recovery in the memory market. Key players in Taiwan’s memory industry, such as Nanya Technology and Winbond, are expected to see significant operational momentum.

South Korea stands as the world’s largest memory manufacturing country, with Samsung and SK Hynix ranking as the top two global DRAM manufacturers, collectively holding a market share of approximately 70%. They also play a significant role in NAND Flash storage memory, with Samsung leading the global market and SK Hynix being among the top five manufacturers. The shift in South Korea’s memory export figures to growth signifies a stabilization in global memory demand, making it a crucial indicator for the industry’s recovery.

The South Korean Ministry of Trade, Industry, and Energy announced on November 14th that in October, South Korea’s memory exports increased by 1% compared to the same period last year, a significant improvement from the 18% YoY decline in September.

Notably, the export rebound was led by a 12.2% growth in semiconductor packaging, and the YoY decline rate in DRAM exports also narrowed to a single digit, marking the first time in over a year.

The TSIA also cited data from the Industrial Technology Research Institute (ITRI) International Division yesterday, estimating an 8% quarterly increase in Taiwan’s foundry production value in the fourth quarter. Additionally, the memory and other manufacturing sectors are expected to see a 9.1% quarterly increase, leading all semiconductor manufacturing industries. This underscores the ongoing recovery in the memory industry.

Taiwanese memory manufacturers are optimistic about the future market outlook. Nanya Technology’s General Manager, Pei-Ing Lee, analyzing the demand side, Lee notes that the server market displayed relative weakness in the first three quarters of the year. However, with the increasing demand in cloud services, a recovery is foreseen in the fourth quarter. In the mobile phone market, there are signs of a rebound in demand in the Chinese market after experiencing a period of weakness for at least a year. Additionally, the PC market is experiencing a positive impact from the rising demand for DDR5, leading to a comparatively healthy performance.

Winbond Electronics is also expressing positive sentiment towards the upcoming market developments. Since the fourth quarter of last year, Winbond Electronics has been adjusting production in response to market weakness, initially announcing a 40% production cut. As demand improves, the recent reduction in production has been reduced to 20%, and the shipment volume is expected to increase in the fourth quarter. Prices are anticipated to remain stable or experience a slight decline, with overall operations not expected to be worse than the third quarter, offering a hopeful outlook for slight improvement.

Winbond Electronics anticipates that if terminal demand remains similar to or consistent with this year in 2024, with manufacturers having depleted their inventories, purchasing power will rebound.

The company’s analysis suggests that this trend will be observed across various markets, including PCs, laptops, and smartphones. Additionally, the server domain is expected to return to growth as well.

TrendForce reports indicate a price increase for both DRAM and NAND Flash starting in the fourth quarter. DRAM prices, for instance, are projected to see a quarterly surge of about 3-8%.

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• Q4 DRAM Contract Prices Set to Rise, with Estimated Quarterly Increase of 3-8%, Says TrendForce

According to UDN’s report, the Taiwanese government has introduced the “Taiwan Chip-Driven Industrial Innovation Program,” an investment of NT$300 billion with an annual average of NT$30 billion.  On October 2, Executive Yuan Commissioner Tsung Tsong Wu and Chairperson of the National Science Council revealed that this program welcomes foreign participation but will consider prerequisites such as competition with local talent.

When asked about what attracts international startups to Taiwan, Tsung Tsong Wu emphasized that while the $30 billion investment over a decade is significant, Taiwan’s strength lies in its complete industry ecosystem, covering everything from IC design and manufacturing to packaging and testing.

The government and private sector collaborate to achieve the best results, making international startups and chip designers eager to come to Taiwan. The aim is to turn Taiwan into the global destination for related industries’ dreams.

The National Science Council presented the “Taiwan Chip-Driven Industrial Innovation Program” to the Executive Yuan on October 2. Tsung Tsong Wu explained that out of next year’s $12 billion technology budget, approximately $4 billion will be allocated to generating AI-driven innovations across all industries, attracting international investments, and supporting startups. Additionally, around $8 billion will be dedicated to strengthening talent development and advancing towards cutting-edge processes.

While the initial investment for the first year of the “Taiwan Chip-Driven Industrial Innovation Program” is $1.2 billion, critics have raised concerns about its insufficiency. The National Science Council clarified that although the initial investment is relatively low, the budget allocated will increase from 2025 onwards, adapting to the evolving economic landscape.

Tsung Tsong Wu emphasized that the program encompasses both advanced and mature processes. While Taiwan is perceived to have an advantage in advanced processes, many mature processes, such as 3DIC, are vital for future industry innovations.

(Photo Credit: TSMC)

According to reports in the Indian media, India has decided to delay the implementation of import restrictions on electronic products such as laptops, tablets, and servers. This delay pushes the commencement date to November 2023. As a result, Taiwanese, American, and Chinese laptop manufacturers are now reevaluating their production strategies in India and expediting their applications for importing electronic goods.
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Owing to an uncontrolled spread of the COVID-19 pandemic, Taiwan has instituted Level 3 restrictions throughout the island. With employees from several tech companies testing positive for the virus, major foundries, including TSMC and VIS, are successively finding positive cases among their midst as well. Worries have therefore cropped up in the global semiconductor supply chain over whether the supply of chip can remain unaffected despite the infections in Taiwan.

Taking into account Taiwan’s share of foundry capacity within the global total, the aforementioned supply chain’s worries are not without merit. According to TrendForce’s investigations, Taiwanese foundries, including TSMC, UMC, VIS, and PSMC, collectively account for about 50% of the global foundry capacity, meaning about 50% of the global supply of chips is contingent on Taiwan.

However, TrendForce also finds that, despite the domestic spread of the pandemic, which forced various companies to institute WFH policies for their employees, most semiconductor fabs are operating without interruptions at the moment, indicating that the COVID-19 pandemic has yet to impact the production and supply of chips.

As well, both TSMC and VIS have immediately made public announcements stating that their operations remain unaffected by the positive cases. However, whether the pandemic can be sufficiently managed and whether it will hinder the supply of semiconductors going forward remains to be seen.

（Cover image source: Pixabay）