Weekly News | Supply chain trends in Semiconductor industry #135

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Weekly News | Supply chain trends in Semiconductor industry #135

泓明链动产业

2024-09-09

135th of weekly news

Supply chain trends in large Semiconductor industry

Policy Trend（September 2）

Netherlands Prime Minister’s latest statement about ASML’s mask aligners

When discussing whether to further tighten the export rules of semiconductors to China, Dick Schoof, Prime Minister of the Netherlands, stressed the economic interests of mask aligner giant ASML. Dick Schoof said that the Dutch government will pay special attention to the economic interests of ASML when making a decision, and he believed that these interests need to be weighed against other risks and that economic interests are extremely important. Dick Schoof also mentioned that ASML is an extremely important innovative company for the Netherlands and should not be affected under any circumstances, because its global status will be affected.

When receiving interview previously, the new CEO of ASML mentioned the development of China and stressed that China still lags behind the USA in key chip tech for 10 years and it still has a long way to go, but at present the market needs legacy chips made in China. He disclosed to Handelsblatt, a German media, that China still lags behind the USA in semiconductor technology for 10 years, but its proficiency in legacy chip manufacturing still gives it an advantage. The whole world still needs legacy chips produced in China, which helps to fill the gap between supply and demand in Europe. In fact, Europe still has a long way to go to realize self-sufficient in semiconductor production.

Comments:

China is the third largest market of ASML immediately after Taiwan and South Korea, and Chinese companies hold 20% of its current backlog of orders. After the previous rounds of export restrictions, China’s chipmakers mainly purchase ASML’s old equipment that is not subject to export restrictions. Such equipment is used to manufacture legacy chips that are crucial to global industrial manufacturing. In recent years, ASML has repeatedly shown dissatisfaction with the insufficient support from the Dutch government. In its view, restricting exports to China will stimulate China to develop new technologies and compete with ASML. In addition to its business in China, ASML also fears that the increasingly obvious anti-immigration policy of the Dutch government may damage ASML's ability to attract foreign talents.

Market Trend（September 4）

India approves the 5th wafer fab, but the weakness of local semiconductor industry is obvious

Recently, the Indian government approved the proposal to establish the 5th semiconductor manufacturing plant in Gujarat, which is an important measure for India to strengthen domestic semiconductor production and reduce its dependence on imports. The new plant will receive an investment subsidy of 33bn rupees (about RMB2.8bn) from the central government of India. It is expected that the plant will serve many industries such as automobiles, EVs, consumer electronics, telecommunications and mobile phones, and its production capacity will reach 6 million chips per day.

This initiative reflects the Indian government's strategy of strengthening semiconductor capabilities, aiming at enhancing India's capabilities in the semiconductor industry to support the growing demand for electronic components in various fields. Although India's share in the chip market is less than 1%, far behind China's share of 34%, the Indian government makes the world’s most generous investment plan in semiconductor. The central government provides a 50% subsidy for semiconductor industry, the state extends a 20% to 25% subsidy, and enterprises only need to pay the rest. The overall government incentive ratio exceeds 70%.

Comments:

With the background of increasing geopolitical tensions, Taiwan’s semiconductor companies are exploring taking India as an alternative manufacturing center, but major challenges hinder the realization of this potential cooperative relationship. Taiwan enterprises need to consider five key factors when deciding their investment location, including support of local customers, adequate infrastructure, supply chain stability, local government policy support and adequate talent supply. A major challenge is the lack of a sound local supply chain. Although India has a strong capability in IC design, it still lacks comprehensive application and testing & packaging infrastructure.

In addition, Indian companies are often price-sensitive, which will affect their willingness to purchase locally produced chips. If Indian companies find cheaper alternatives abroad, they will often give priority to imported chips rather than domestic ones, which makes India’s efforts to establish a sustainable business model more complicated.

Company Trend（September 5）

Intel chip foundry suffers setback

Sources familiar with the matter told Reuters that Intel's contract manufacturing business has suffered a setback after tests with chipmaker Broadcom failed, which is a blow to the company's turnaround efforts. According to people familiar with the matter, the tests conducted by Broadcom involved sending silicon wafers - foot-wide discs on which chips are printed - through Intel's most advanced manufacturing process known as 18A. Last month Broadcom received the wafers back from Intel. After its engineers and executives studied the results, the company concluded the manufacturing process has not met the demand of high-volume production.

Reuters could not determine the current relationship between Broadcom and Intel or whether Broadcom had decided to give up the potential manufacturing deal. An Intel spokesperson said in a statement that Intel 18A is powered on, healthy and yielding well, and it remains fully on track to begin high volume manufacturing next year. There is a great deal of interest in Intel 18A across the industry but, as a matter of policy, it did not comment on specific customer conversations. A Broadcom spokesperson said the company is "evaluating the product and service offerings of Intel Foundry and has not concluded that evaluation."

Comments:

Intel's contract manufacturing business was launched in 2021, and it has been advancing its target of achieving “five process nodes in four years”. At present, Intel 7 and Intel 4 have been completed, and Intel 3, Intel 20A and Intel 18A using RibbonFET and Power Via technologies are also progressing steadily. Intel plans to make itself the world’s second largest foundry by 2030, and its estimated trade value will be up to US$100bn. However, Broadcom's test failure may have an impact on Intel's grand goal.

Facing these challenges, Intel adopts a strategy of system-level foundry to deal with its foundry business by using its know-how, strength in the chip system field, including chip, IP, system architecture consulting, etc. Intel’s foundry business has won the support of the world's leading EDA and IP companies, such as Synopsys, Cadence, Siemens and Ansys, which helps its customers to adopt Intel’s technologies more easily.

Although Intel's foundry business has suffered setback, the company is still actively promoting the development of its technologies and services, hoping to provide more AI chips in the AI era to meet the industry's demand for computing power. The future of Intel's foundry business will depend on whether it can overcome the current challenges and continue to keep its technological leadership in the highly competitive market.

Supply & Demands（September 3）

BOE supplies display for IPhone16

On September 3rd, report said that BOE, Samsung and LG Display were listed as the display suppliers of Apple's new flagship iPhone 16 series. Following the previous models, Apple is expected to release a total of four models this year: standard model, Plus, Pro and Pro Max. Samsung Display supplies OLED panels for all the four models, LG Display supplies panels for the models of Pro and Pro Max, and BOE supplies OLED panels for standard models.

According to the report, it was originally predicted that the standard models of iPhone 16 series will adopt BRS design, but it is expected that this design will only be applied to Pro series. BRS (border reduction structure) is a borderless technology, aiming to make the bottom bezel as thin as possible to enable an ultra-thin border display screen. The method of realizing this design is to reduce the area of the lower border by rolling the copper wires at the bottom upwards. Last year, at the request of Apple, Samsung and LG Display provided display screens using this technology for iPhone 15 Pro series. However, it is learned that there are some problems occurring in the actual packaging process. Packaging process is the last step of OLED manufacturing process. It can block oxygen and moisture from penetrating into organic materials by sealing, thus prolonging the service life of products. It is said that the first batch of display screens using BRS technology have the problem of panel tilting.

Comments:

BOE has successfully obtained the license to supply OLED panels for Apple's new flagship iPhone 16 series and is listed as a panel supplier for iPhone 16 series together with Samsung and LG Display. Samsung Display supplies OLED panels for all the four models, LG Display supplies panels for the models of Pro and Pro Max, and BOE supplies OLED panels for standard models. This indicates that BOE's display screen manufacturing technology has reached the international advanced level and can hold a position in the world's top smartphone. Although the conditions are very strict, BOE seems to have successfully obtained the license to supply OLED panels for the standard model of iPhone 16, and the panels will be supplied by both BOE and Samsung. This is an important milestone for BOE, indicating its competitiveness in the high-end display market.

Domestic News（September 2）

Domestic AI unicorn raised funds of nearly RMB1bn!

Recently, Zhipu AI, a unicorn enterprise in the domestic AI field, has completed a new round of financing with a valuation of RMB20bn. This series of financing was led by Zhongguancun Science City Ltd., which is a market-oriented investment platform established by the government of Haidian District. Since its establishment in 2019, Zhipu AI has completed at least 11 series of financing, attracting well known investors and industry giants including Hillhouse, Qiming Venture Partners, Meituan, Ali, Tencent and Xiaomi. The technology and products of Zhipu AI have remarkable competitiveness in the field of AI big model, and it is accelerating its commercialization process, especially showing its tech strength and market potential in the text-to-video large AI model.

In addition, Infinigence AI, an enterprise focusing on AI infrastructure initiated by Professor Wang Yu at the Department of Electronic Engineering of Tsinghua University also announced that it has completed A series financing of nearly RMB5mn. Although it has been established for a short time, Infinigence AI has raised funds of nearly RMB 1bn, which shows that the market highly recognizes its technology and business model.

Domestic News（September 6）

China’s access to GAA banned due to US new export control

The government of the USA is considering further imposing export restrictions of semiconductor technology on China, especially for the export of GAA chip technology and HBM technology. GAA technology is the key to manufacturing cutting-edge chips and can provide power and performance advantages. At present, only Samsung produces chips with this technology on its 3nm node. Intel and TSMC also plan to adopt GAA technology in the future. ·BIS recently sent a draft GAA rule to the technical advisory committee, but the specific terms have not been finalized. In addition, the USA is also considering launching new restrictions on the export of HBM technology, which is very important for building AI accelerators. These measures may have an impact on the global semiconductor supply chain, and may also prompt China to accelerate R&D and production of local semiconductor technology.

At present, it is not clear when the USA will announce the final decision, but these potential restrictions have attracted the attention of the industry. China has expressed its opposition to these actions of the USA and stressed that it will take necessary measures to safeguard its legitimate rights and interests.

Domestic News（September 5）

The biggest chipmaker acquisition is coming!

UNT announced that it plans to acquire 72.33% equity of UNT Yuezhou at a consideration of RMB5.897bn, which may set the highest semiconductor acquisition record in the A-share market this year. This initiative enables UNT to wholly control UNT Yuezhou so as to further integrate resources and enhance the company's competitiveness in the semiconductor industry.

Although UNT Yuezhou lost RMB1.116bn in 2023, UNT is optimistic about the acquisition, believing that with the increase of business volume and the optimization of product structure, UNT Yuezhou is expected to improve its profitability and become one of the important profit sources for the listed company in the future. With this acquisition, UNT will concentrate its superior resources to advance the rapid development of SiC and analog IC, realize the unified management of 8-inch silicon-based production capacity, promote the deep integration of its internal management, process platform, customized design and supply chain, simplify its management processes and improve operational efficiency.

编辑 | 泓明数字营销部

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泓明链动产业泓明供应链集团于1995年创始于中国（上海）自由贸易试验区，深耕中国集成电路产业供应链20年，是中国数智化产业供应链服务引领者。集团总部位于张江科学城，在全国17个城市建立了31个产业供应链物流中心。

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