Semiconductor Market News (MAY. 27 to JUN. 02)| Broad Prospects for Edge AI; AMD, Intel, and Others Propose UALink to Connect and Scale AI Chips...

01. NAND Demand Momentum Expected to Pick Up in Q3

According to TrendForce’s latest memory spot price trend report, the weak demand is putting more and more pressure on sellers, causing spot prices of modules and chips continue to record a sharper fall than the week before. Meanwhile, regarding NAND Flash prices, the spot market continued to drop this week, while suppliers are thus hoping that the traditional peak season (3Q24) would generate additional demand. Details are as follows:

DRAM Spot Price:

Trading activities have further slowed down in the spot market compared with last week. Since it is now near the end of May, the weak demand situation is putting more and more pressure on sellers, and spot prices of modules and chips continue to fall. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) has dropped by 0.42% from US$1.917 last week to US$1.909 this week.

NAND Flash Spot Price:

The spot market is seeing activities of truncation due to suppliers’ pressure in funds yielded by their excessive inventory, and the chaotic negotiation of prices has been widened in scale, though inquiries on market prices and transactions are maintained on the lesser end under lethargic demand. Suppliers are thus hoping that the traditional peak season (3Q24) would generate additional demand, and prompt the market to get rid of further inventory. Spot prices, as a result, continued to drop this week. 512Gb TLC wafers have dropped by 2.79% in spot prices this week, arriving at US$3.479.

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02. Advantech, A Leader in Industrial Computers, Sees Opportunities in Edge AI

Advantech, a leading company in industrial computers, is optimistic about the opportunities in edge AI, according to Chairman KC Liu at the shareholders' meeting on the 30th. Liu expressed that edge AI represents a fantastic industry opportunity for Advantech over the next decade, emphasizing its immense potential. In fact, not only Advantech but also many industrial computer manufacturers are optimistic about the business prospects brought by edge AI, with some companies even considering it a key driver for this year.

Institutions have indicated that with the advent of generative AI, the market size for AI edge computing is expected to reach $19.52 billion this year, with an annual compound growth rate of 20%. By 2030, it is estimated to reach $60.43 billion.

Meanwhile, the rapid development of cloud servers driven by AI applications is set to enter various industrial fields in the next phase. Data centers will propel the explosion of edge AI, and the rigid demand for machine vision is becoming apparent, presenting a significant opportunity in the industrial IoT sector.

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03. Samsung Electronics Workers' Union Announces First Strike

The Samsung Electronics National Union has announced plans for its first large-scale strike on June 7. The strike stems from ongoing discussions since the beginning of the year regarding the extent of pay raises, with both sides unable to narrow their differences to date.

The Samsung Electronics National Union stated, "We can no longer tolerate the company's persecution of the union and its disregard for labor rights, so we are announcing a strike." Approximately 28,000 employees are expected to participate in the strike, accounting for about 20% of Samsung Electronics' total workforce.

Samsung Electronics holds a global market share of 45% in DRAM and 30% in NAND flash memory chips. This large-scale strike is akin to a "disguised production cut," which may exacerbate the price surge of DRAM and NAND flash memory chips. However, the impact on wafer foundry operations is expected to be limited.

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04. AMD, Intel, Others Propose UALink To Connect, Scale AI chips

On May 31, Intel, Google, Microsoft, Meta, and other tech giants announced the formation of a new industry organization called "Ultra Accelerator Link (UALink)."

The group aims to establish industry standards and lead the development of connectivity components between AI accelerator chips in data centers, challenging Nvidia's dominant position in AI accelerators.

UALink is positioned as a competitor to Nvidia's NVLink and InfiniBand technologies. ?It is part of a range of intra-data center connectivity options, including PCI Express (PCIe) and Compute Express Link (CXL).

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05. Google to Invest $2 Billion in Malaysian Data Center and Cloud Hub

Google plans to invest $2 billion in Malaysia, developing its first data center and a Google Cloud hub in the latest big foray by a U.S. tech giant in the Southeast Asian country.

The news follows Microsoft's recent announcement that it would put $2.2 billion over the next four years into building Malaysia’s new cloud and artificial intelligence infrastructure.

Prime Minister Anwar Ibrahim hailed Google’s investment as a sign of faith in Malaysia’s governance and economy. ?Anwar said Thursday that the investment is expected to add $3.2 billion to the economy and create 26,500 jobs by 2030.

The investments are a coup for Anwar as he seeks to consolidate his strength against a strong Islamic opposition.

Google said in a statement that the new hubs will be developed at a business park in central Malaysia's Selangor state, to meet growing demand for cloud services and for artificial intelligence literacy programs for Malaysian students and educators.

Malaysia will be the 12th country to house a Google data center. ?The Malaysian Google Cloud hub — which will deliver services to large enterprises, startups and the public sector, will join 40 regions and 121 zones currently in operation around the world, it said.

“This investment builds on our partnership with the government of Malaysia to advance its ‘Cloud First Policy,’ including best-in-class cybersecurity standards,” said Ruth Porat, Alphabet Inc.'s president and chief financial officer.

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06. Malaysia Unveils National Semiconductor Strategy To Boost Sector

Malaysia unveiled its national semiconductor strategy (NSS) on Tuesday with an eye on boosting the sector in the country, attracting high-value investments and widening collaboration with international partners.

The key thrust of the strategy is to build up collaborations within the Association of Southeast Asian Nations (ASEAN) grouping and also multinational companies, democratizing the spread of technology.

"Ultimately, the NSS is a means for Malaysia to advance and democratize technology for the good of all humanity," he said in a special address at the Semicon Southeast Asia 2024 exposition, which aims to boost Malaysia's transformation into a semiconductor powerhouse and regional manufacturing hub.

The NSS strategy will be implemented in three phases: the first focusing on Malaysia leveraging its existing industry capacity to modernize outsourced assembly and testing with advanced packaging.

The second phase focuses on advancing capabilities in cutting-edge logic and memory chip design, fabrication, testing and looking to integrate the purchasers of chips, and the final phase is to support the development of Malaysian firms in semiconductor design, advanced packaging and manufacturing equipment.

"To stay flexible and agile, the NSS will be a living document, evolving as needed, but we remain steadfast in our aspiration to make Malaysia a major global player in accessible technology for all, powered by our semiconductor industry," he said.

Anwar also said the government will allocate 25 billion ringgit (5.3 billion U.S. dollars) to support the strategy and to train and upskill 60,000 high-skilled Malaysian engineers.