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Regarding the impact on the wafer foundry industry from the latest specifications publicly announced by the Bureau of Industry and Security on May 15th, the latest analysis of DRAMeXchange from TrendForce has pointed out that despite the extra interpretation room for the relevant regulations, the known specifications state that additional volume of wafer orders after May 15th will require approval. In addition, the US has not ruled out the possibility in enhancing the normative intensity on Huawei or overall Chinese brands, thus the subsequent impact on wafer foundries may not be optimistic.
According to the latest investigations by the DRAMeXchange research division of TrendForce, the Bureau of Industry and Security of the U.S. Department of Commerce announced an expansion of the trade restrictions against the Chinese technology giant Huawei on May 15. The new rules, once implemented, will compel all foreign semiconductor manufacturers that use U.S.-made equipment to obtain a special license from the U.S. government in order to supply chips to Huawei and its subsidiaries or affiliates such as HiSilicon. While these rules are subject to further interpretation, TrendForce’s investigation finds that their effect on Huawei’s procurement of memory components (both DRAM and NAND Flash) is limited for now, with both DRAM and NAND Flash suppliers able to continue their shipments to Huawei. Worth noting, however, is the fact that the U.S. government will keep tightening its oversight on Huawei and Chinese technology enterprises on the whole. Therefore, further observations are needed to determine how much of an impact the enforcement of future restrictions will have on the ability of memory suppliers to sell their products and on the overall demand of the memory market going forward.
TSMC announced on May 15 that it will construct a new 12-inch wafer fab specializing in advanced process nodes in Arizona. The fab is expected to break ground in 2021 and enter mass production in 2024. TSMC will be manufacturing semiconductor chips with 5nm process technology, at a capacity of 20k wafer starts per month. Funding for the project is expected to reach about US$12 billion, to be invested across nine years starting in 2021. The DRAMeXchange research division of TrendForce estimates annual CAPEX for the project to be about $1.3 billion on average. Given that TSMC’s annual CAPEX for 2019 and 2020 is about $15 billion on average, the Arizona project would account for less than 10% of TSMC’s overall CAPEX.
According to TrendForce’s latest investigations, owing to the gradual easing of the China-U.S. trade war and increased packaging and testing demand for 5G, AI chips, and smartphones, the global packaging and testing (OSAT, outsourced semiconductor assembly and test) industry was able to sustain the upward trend of its quarterly revenue in 1Q20. The global top 10 OSAT companies’ revenues combined for US$5.903 billion in 1Q20, a 25.3% increase YoY. However, as the demand of end devices came to a screeching halt because of the COVID-19 pandemic, the OSAT industry may potentially start to decline in 2H20.
According to the latest investigations by the DRAMeXchange research division of TrendForce, DRAM suppliers were able to successfully reduce their inventories in 1Q20, with significantly lower inventory levels at the end of 1Q20 compared to the beginning of the year. Hence, suppliers are no longer under imminent pressure to slash prices, and overall DRAM ASP rose by about 0-5% QoQ. However, while governments responded to the COVID-19 pandemic by implementing citywide and nationwide lockdown policies, the resultant logistic disruptions in turn affected DRAM bit shipment as well. Therefore, in spite of the minor rise in ASP, global DRAM revenue decreased by 4.6% QoQ, reaching US$14.8 billion.
