Supply chain trends in large Semiconductor industry
HBM4 Standard to be finalized, launching a new battlefield
High Bandwidth Memory (HBM) is a DRAM (Dynamic Random Access Memory) solution for data-intensive applications that require extremely high throughput. HBM is designed to solve the problems of insufficient traditional memory bandwidth and capacity, especially in AI, high-performance computing and other fields, with increasing demands for memory performance. HBM4, an evolved version of HBM3, can improve data processing efficiency and maintain high bandwidth and low power consumption.
Recently, JEDEC, an international industry standard-setting organization, announced that the HBM4 standard is about to be finalized. The news has aroused the attention of the industry, also indicating that a new battle in the HBM field has been launched.
In the field of semiconductor storage, the storage vendors participating in the HBM market competition mainly include SK hynix, Samsung and Micron, and the competition among them has continued to HBM3e. SK hynix announced a tripartite alliance with TSMC and Nvidia to jointly produce the next generation HBM. An executive of Samsung once said that the company's goal is to launch the sixth generation HBM(HBM4) in 2025. Micron, as a rising star in the field of HBM, has evolved its HBM technology to HBM3e. In 2028, it will officially start HBM4E.
After generations of development, HBM has developed to HBM3E, and it is expected to enter the mainstream market in 2025. Meanwhile, some manufacturers such as SK hynix, Samsung and Micron are also vigorously catching up with the next round of new technology, namely HBM4.
At present, it is expected that under the leadership of various industry tycoons in this field, manufacturers will quickly start their development pace to mass produce HBM4 as soon as possible. However, if we want to see actual products (e.g. For AI solutions) for terminal users, we have to wait a little longer.
South Korea's memory chip exports perform well in H1 2024
According to the official data released by South Korea on July 15th, in the first half of this year, Korea’s ICT industry exports grew by 28.2% YoY to US$108.85bn, setting the second-highest record for the same period in history. In the ICT industry, the export volume of semiconductors of South Korea surged 49.9% YoY, up to US$65.83bn.
On a market segment basis, South Korea’s memory exports surged by 88.7% YoY, driven by increased exports of products like HBM. Due to increased investment in servers and data centers as well as increased demand for personal computers and other devices, exports of computers and peripheral devices rose by 35.6% YoY. However, mobile phone exports decreased by 2.8% YoY to US$5.58bn. In June, ICT exports rose by 31.1% YoY, up to US$21.05bn, the highest value for the same month in history. Among them, semiconductor exports were US$13.44bn, also setting a record high for the same month, and memory chip exports soared by 85.2% YoY, up to US$8.83bn. In general, South Korea’s semiconductor exports, especially memory chip exports, grew strongly in H1 this year.
Unlike South Korea's slowdown memory chip exports in the previous two years, the exports in H1 this year rose in full swing. Since the end of 2022, South Korea's memory chip exports have been falling continuously. Many world-class manufacturers, such as Samsung, SK hynix, and Micron, have also cut production to reverse the situation of oversupply in the market. It was not until the end of 2023 that the market resumed positive growth for the first time. Now the market is recovering in a more and more vigorous way. The expansion of global AI market and the recovery and sustainable development of IT equipment demands are one of the main factors driving the continuous increase of chip demand. As South Korea is the world's largest country of manufacturers of memory chips, its continuous positive growth of chip exports means that the global overall storage demand continues to rise and the technology industry is booming.
Samsung rumored to transfer 30% capacity to produce HBM
According to report on July 17th, a supplier of Samsung's supply chain disclosed that it was informed by Samsung that its HBM product HBM3e has passed the certification of Nvidia and will be available this quarter. In this regard, Samsung will transfer up to 30% of its existing DRAM capacity to produce HBM3e,so as to ensure the supply to big customers such as Nvidia.
In addition, Samsung already warned its supply chain partners to "stock up" related standard DRAM products in advance, and relevant supply chain manufacturers have received the notice, which also makes the rumor that Samsung will transfer much of its DRAM capacity to produce HBM more credible.
HBM is a key component of AI chip. With the increasing demand of AI chips, HBM is also in short supply. At present, in the HBM market, SK hynix holds a leading position, and Samsung continues to develop HBM, hoping to catch up with SK hynix. Since Samsung passed the verification by Nvidia, it means that Samsung can supply a large number of products to Nvidia, thus further enhancing its HBM market share and narrowing the gap with SK hynix.
Although Samsung will transfer its existing 30% DRAM capacity to produce HBM products, which will help alleviate the supply shortage of HBM in the market, it will also greatly reduce the supply of standard DRAM products. As Samsung is the global leader in DRAM chips and its products account for more than 45% of the whole market, it will inevitably lead to the tight supply and rising price of DRAM products in the global market.
Samsung's initiative will affect more than 13% of the world's existing DRAM capacity, and manufacturers will no longer invest in DRAM products such as DDR4 or DDR5, which will lead to a shortage of DRAM products in the market. DRAM is facing an unprecedented "super cycle” due to the imbalance between supply and demand. The supply gap of standard DRAM is 23% higher than that of HBM, and the price is expected to rise all the way.
US to break bottleneck of chip development
American chip design has held a leading position in the semiconductor industry over many years, but in recent years, its semiconductor manufacturing share has dropped to 10%. Currently, East Asian manufacturers supply about 65% of the world's semiconductors. After the COVID-19 pandemic and due to the intensified geopolitical tensions with China, the vulnerability of the USA, as a semiconductor importer, has never been so obvious - this poses a problem to the USA, because everything from computing and iPhone to war scenario simulation needs chips.
In response to this situation, the USA launched the CHIPS Act, allocating US$52bn dollars to promote the development of its domestic semiconductor industry, build a self-sufficient supply chain, and maintain its leading position in technology until 2050, so as to boost the economy and promote national security. Currently, the expansion of the semiconductor manufacturing industry in the USA is seeing dawn, and there are increasing new facilities. However, the country faces the problem of labor shortage, lack of mature engineering engineers, scientists and technicians, so it is impossible to provide the production capacity equivalent to its investment. Moreover, the newly-built plants are far from the gathering place of traditional scientific and technological talents, which also causes difficulties in chip manufacturing development.
Under the current situation, talent management strategy plays a key role in the competition of American semiconductor manufacturing industry, and all stakeholders concerned with this strategy can benefit from it. Therefore, it is necessary for the USA to effectively fill the key talent gap.
First of all, make a comprehensive labor plan that matches the chip capacity expansion to ensure that there are required skills at the right place and the right time. Secondly, implement innovative global talent acquisition model, such as outsourcing recruitment processes to enter the global professional talent pool. Thirdly, redesign the reward strategy to enhance the attraction and retention of scarce technical talents. At the same time, establish enterprise colleges or universities to upgrade or retrain existing employees and customize trainings for new employees. Also, promote cultural transformation and create an innovative working environment to attract top talents. Moreover, optimize site selection, contact with local talent clusters to meet the chip capacity requirements and control costs. With the increasingly fierce competition for talents, companies that can quickly implement above strategies will be more likely to gather talents.
China accounts for 49% of ASML’s equipment sales! Its stock price plummeted by 13% due to US extended jurisdiction!
Mask aligner giant ASML officially released its financial report for Q2 2024. Although company’s Q2 results and new orders exceeded its expectations, its earnings guidance are slightly lower than the market expectations.
Coupled with the impact of the news that the USA threated to impose “long arm” jurisdiction（i.e., the implementation of "FDP rules”; items produced overseas using US-origin components or made using U.S. technology may still be subject to the Export Administration Regulations) over semiconductor giants of allied nations such as ASML and Tokyo Electron to force them to further support semiconductor export restrictions, the stock price of ASML once plunged by 13% in trading time and fell by 12.74% at closing time, and its market value declined to US$400bn to US$366.69bn.
It is worth mentioning that apart from ASML, affected by the same news, the stock prices of two other American semiconductor equipment manufacturers also plummeted, with the stock price of Applied Materials down 10.48% and that of Lam Research down 10.07%. Meanwhile, it also brought down the stock prices of a number of American chip companies, with the stock price of AMD down 10.21%, that of Qualcomm down 8.61%, and that of Nvidia down 6.62%.
Obviously, after Dutch’s New Restrictions on Exports of Chip-Making Equipment to China came into effect and the license of ASML expired at the end of 2023, the business revenue of ASML was affected in the past two quarters, but there is still a strong demand of ASML’s equipment in the Chinese mainland market, and the demand orientation has shifted to the unrestricted DUV equipment.
Even so, it seems that the USA still plans to further strengthen export restrictions, such as putting pressure on the Dutch government to require ASML to further stop providing after-sales service and technological support for its advanced lithography equipment in China and threatened to implement "long-arm jurisdiction" on it. Considering the fact that the Chinese mainland market is still ASML's largest market of lithography system, this caused the sharp decline of the stock price of ASML. However, as of now, the Dutch government has not yet issued a policy to restrict the after-sales service, so ASML is still serving the customers in Chinese mainland customers as before.
China’s first 40nm bright-field nano-patterned wafer defect inspection system released
Tianzhun Technology (TZTEK) launched domestic first 40nm bright-field nano-patterned wafer defect inspection equipment system - TB1500 and completed its in-factory verification, marking that a new breakthrough has been made in domestic high-end semiconductor inspection system.
Wafer defect inspection system plays a key role in ensuring quality, reducing cost and promoting process iteration in chip production, and bright-field defect inspection system is valued by the industry because of its high inspection accuracy and full coverage of defect types.
TB1500 is the latest achievement of silicon semiconductor, and its core components are self-developed using advanced signal processing algorithm, which can improve the signal-to-noise ratio and inspection sensitivity. DaVinci G5 performed well in the 12-inch 40nm process node. In addition, TB2000 designed for 28nm process node is progressing smoothly, and all core components have been developed. According to the plan, the prototype will be released at the end of 2024. This series of achievements showcases the development potential of domestic semiconductor inspection equipment.
China Big Fund II invests RMB2bn+ in XLMEC
Chongqing Xinlian Microelectronics Company Limited (XLMEC) is a key project carefully built by Chongqing Municipal Government. Recently, it is reported that the phase II of China Integrated Circuit Industry Investment Fund (CICF, or the so-called "China Big Fund II”) invested heavily in XLMEC.
XLMEC focuses on the 12-inch high-end characteristic IC process line with 55-28nm process nodes. The project is of great significance, and China Big Fund II invested RMB2bn in it, with a total investment of over RMB25bn, showing its huge scale investment and ambition. In terms of capacity planning, the project has an ambitious goal. The planned capacity of the project is 40,000 chips/month, and the phase I capacity is 20,000 chips/month, which will provide sufficient chip supply for related industries and will advance industrial development greatly.
XLMEC aims to build itself the most advanced special process wafer fab in the western region and invests a lot in R&D, production, and sales of chips. At the same time, it strives to cooperate with more excellent talents and manufacturers.
In general, the company has promising development prospects and is expected to play a key role in the field of IC and make great contributions to the progress of science and technology industry and economic development in the west of China.
Domestic high-end mask officially released
Recently, Wuxi DIS Microelectronics Limited ( Wuxi DIS) completed the installation and debugging of key equipment of its high-end mask project. The production line was put into operation smoothly, and the first set of 90nm high-end mask products were produced and delivered. In H2 2024, Wuxi DIS will focus on mass production of 90nm process node, complete mass production of 40nm process node in 2025, and upgrade to 28nm process node in 2026 to continuously enhance its core competitiveness. After the project reaches its full capacity, it will increase its capacity of 90nm-28nm high-end masks by 2,000 pieces/month, with a total capacity of 5,000 pieces/month.
At the ceremony of "Wuxi DIS high-end mask production line put into operation and successful delivery of the first set of 90nm products", Wuxi DIS general manager introduced that mask manufacturing is a key link in the semiconductor industry chain and connects chip design and manufacturing. As the localization rate of mid-to high-end semiconductor masks is rather low, there is great room for the growth of the industry. The construction of the high-end mask project helps remedy the weakness, strengthen the advantages, and fill the gaps. In the future, it is necessary for Wuxi DIS to ignite the high-quality development engine with new quality productive forces, and further consolidate its position as the leader in the IC mask field.
Ningbo Keystone ushered in key node by introducing the first electron beam mask aligner
Ningbo Keystone Technology Co., Ltd. introduced the first electron beam mask aligner, which is of great significance to the mass production of its 40nm photomask process node and the R&D of its 28nm photomask process node. The company is committed to the mass production of 45-28nm semiconductor photomasks. Photomask is the key raw material in the upstream of the semiconductor industry chain, and it plays a role similar to the "negative film" of a camera. At present, most of China's high-precision photomasks are imported, and the localization rate of photomasks is rather low. Keystone is accelerating the project construction and has made a new record of the construction speed of the digital economy industry in Qianwan New Area. Its phase I clean room is expected to provide mask-making services at home and abroad by the end of the year, with capacity of 5000 pieces/month. Keystone is an important link to complete the semiconductor industry chain in the new area. After being put into production, it can fill the gap of domestic high-order process photomasks and will break the foreign monopoly. Qianwan New Area is vigorously bringing in key digital economy projects and has introduced more than 60 related projects with a total investment of over RMB30bn. In addition, the Area has also established a development fund to promote the development of related industries.
编辑 | 泓明数字营销部
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