Weekly News 043

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1. Europe's semiconductor hubs attract global giants with €50 billion in investments.

2. The AI IC market is expected to reach $110 billion by 2024.

3. The capacity for mature process nodes is projected to grow by 6% annually by 2025, with domestic foundries contributing the most.

4. Photovoltaic Weekly Prices: Prices across the entire industry chain have stabilized after a decline, with production cuts and inventory clearance still underway.

5. Oversupply leads to falling prices for memory products.

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1. Europe's semiconductor hubs attract global giants with €50 billion in investments.

As TSMC expands its operations in Europe, the German state of Saxony has emerged as a key player in the European semiconductor industry, strengthening its ties with Taiwan. This decades-long partnership is backed by a total investment of €50 billion, aimed at positioning Saxony as a global semiconductor hub centered around "Silicon Saxony" in Dresden. Beyond chips, this strategic initiative also paves the way for collaboration in electric vehicles (EVs), robotics, and hydrogen energy, further cementing Europe's technological leadership.

On August 20, 2024, TSMC officially held the groundbreaking ceremony for its European Semiconductor Manufacturing Company (ESMC). This wafer plant is a joint investment with Bosch, Infineon, and NXP, with an estimated total investment exceeding €10 billion. Construction of the plant is expected to begin by the end of 2024, with mass production starting as early as the fourth quarter of 2027.

ESMC will be TSMC's first 12-inch wafer fab in Europe. It will focus on automotive chips using 28nm/22nm CMOS and 16nm/12nm FinFET technologies, with a monthly capacity of approximately 40,000 wafers. ESMC is expected to directly create 2,000 high-tech jobs. According to the European Chips Act, the EU will subsidize €5 billion for ESMC.

Comment:?Saxony’s growing role as an electric vehicle production hub complements its semiconductor industry. "One in every four electric vehicles in Europe is produced in Saxony," said Thomas Kralinski, noting that major manufacturers like Volkswagen, BMW, and Porsche are based there. The region's focus on battery production and hydrogen energy further strengthens its leadership in the green transition, providing more opportunities for cooperation between Germany and Taiwan.

The semiconductor push is part of Saxony's broader strategy to diversify its economy, proving resilient amid global changes. The region is also positioning itself as an innovation center for emerging technologies such as organic and flexible electronics, 5G/6G communications, MEMS, sensors, automation, and artificial intelligence (AI).

According to the European Chips Act, Saxony's semiconductor industry development is expected to enhance the EU's competitiveness in the semiconductor market. However, questions remain about how Europe’s chip manufacturing will fare against established Asian strongholds. As these multi-billion-euro projects move from planning to production, the global semiconductor industry will be watching closely to see if Saxony's bold investments can reshape Europe's tech landscape and secure a larger share of the global market.

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2. The AI IC market is expected to reach $110 billion by 2024.

In the United States, many consumers are wary of artificial intelligence. A 2023 Pew Research survey found that 52% of respondents expressed more concern than excitement about AI, with only 10% feeling more excited. Additionally, 60% were uncomfortable with using AI in healthcare. A 2024 survey by AAA revealed that 66% of Americans were concerned about self-driving cars, and just 9% would trust them.

Nevertheless, AI's impact on the global economy will be significant, particularly in the semiconductor industry. A May 2024 Gartner report projected global AI integrated circuit (IC) revenue to grow from $54 billion in 2023 to $92 billion in 2025. Forecasts for the compound annual growth rate (CAGR) in the AI IC market range from 20% (MarketsandMarkets) to 41% (DataHorizzon Research).

The AI IC market has seen rapid expansion in recent years, dominated by Nvidia, whose data center revenue surged from $15 billion in fiscal 2023 to $48 billion in fiscal 2024, with projections to surpass $100 billion in fiscal 2025. Nvidia's AI IC revenue is estimated to reach $96 billion, primarily driven by data center sales. The company's latest AI GPUs are priced between $30,000 and $40,000.

Nvidia's AI revenue includes AI processors and memory modules, with SK Hynix as the main supplier of high-bandwidth memory (HBM). Micron and Samsung also supply HBM, and Nvidia's memory costs are expected to reach billions of dollars by 2024.

The second-largest AI IC supplier, AMD, is projected to achieve $4.5 billion in AI IC revenue in 2024, while Intel is expected to generate $500 million. According to AIMultiple Research, there are 18 other companies with AI IC products, including cloud providers (AWS, Alphabet, IBM, Alibaba), mobile AI IC suppliers (Apple, MediaTek, Qualcomm, Samsung), and startups (SambaNova Systems, Cerebras Systems, Graphcore, Grog, Mythic).

Semiconductor Intelligence forecasts that the global AI IC market will reach $110 billion in 2024, accounting for 18% of the entire semiconductor market. Nvidia will dominate with $96 billion in revenue and an 87% market share, followed by AMD at $4.5 billion, Intel at $500 million, Apple at $3 billion from AI processors in iPhone 16 models, and Qualcomm at $1 billion from the Galaxy S24. Other companies are just starting, with a total estimated revenue of $5 billion.

According to WSTS' June 2024 projections, the AI IC market will continue to grow, reaching $273 billion by 2029, with AI ICs making up 31.9% of the global semiconductor market. While AI ICs will replace many processors currently used in data centers, PCs, smartphones, and cars, they won't entirely transform the semiconductor industry.

Comment:?AI is widely seen as a growth driver in the tech sector, particularly for semiconductors. While AI is still in its early stages, opinions on its future adoption vary.?A May 2024 McKinsey study indicated that 72% of organizations have implemented AI in at least one business function, citing risks such as inaccuracy (63%), intellectual property infringement (52%), and cybersecurity (51%).

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3. The capacity for mature process nodes is projected to grow by 6% annually by 2025, with domestic foundries contributing the most.

According to the latest survey by TrendForce, influenced by the wave of localization, domestic wafer foundries are expected to become the main contributors to mature process growth by 2025. It is estimated that the capacity of the top ten global mature process foundries will increase by 6% in 2025, although price trends will face downward pressure.

Currently, demand for advanced processes and mature processes is polarized. The 5nm, 4nm, and 3nm processes are driven by AI servers, high-performance computing (HPC) chips for PCs/laptops, and new smartphone flagship chips, with capacity utilization expected to be fully loaded by the end of 2024. In contrast, mature processes of 28nm and above are only experiencing a mild recovery, with average capacity utilization in the second half of this year expected to increase by 5% to 10% compared to the first half.

Most end products and applications still require mature processes to produce peripheral ICs. Additionally, the international situation has led to supply chain diversification, making it important to ensure regional capacity, which further catalyzes the expansion of global mature processes. Major expansion plans for wafer foundries in 2025 include TSMC’s JASM project in Kumamoto, Japan, as well as SMIC’s operations in Shanghai and Beijing, HuaHong Group's Fab9 and Fab10, and Nexchip’s N1A3.

From the demand perspective, it is anticipated that shipments in the smartphone, PC/laptop, and server (including general-purpose and AI servers) markets will see year-over-year growth in 2025. Additionally, markets such as automotive and industrial control, after undergoing inventory adjustments throughout 2024, will also experience replenishment demand, which will support the capacity utilization of mature processes.

However, there are still concerns about the global economic situation, and the ordering attitudes of end brands and upstream customers are not optimistic, leading to a visibility of mature process orders being maintained at around one quarter. As a result, TrendForce estimates that the capacity utilization of mature processes among the top ten global foundries will see a slight increase to over 75% in 2025.

TrendForce also notes that with the release of new capacity, it is expected that by the end of 2025, the share of domestic wafer foundries in the mature process capacity among the top ten players will exceed 25%, with the most new capacity in 28nm and 22nm processes. Moreover, the development of specialty process technologies by domestic wafer foundries is advancing fastest through the HV platform process, with mass production of 28nm expected in 2024.

Comment:??Looking ahead to the overall price trends for foundries in 2025, given that the average capacity utilization for existing mature processes is below 80% throughout the year, along with the urgent need for orders to fill new capacity, it is expected that prices for mature processes will continue to face pressure and will struggle to increase. However, within domestic wafer foundries, considering the ongoing trend of localization and the strong attitude of foundries towards pricing to meet local capacity demands from upstream customers, it is expected that this will partially offset the downward pressure on mature process prices. Thus, prices are likely to remain stable following the increases seen in the second half of 2024, resulting in a stalemate between supply and demand in pricing.

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4. Photovoltaic Weekly Prices: Prices across the entire industry chain have stabilized after a decline, with production cuts and inventory clearance still underway.

Silicon Material Segment:

• The price of mono-crystalline refeed material is 37 CNY/kg, mono-crystalline dense material is 35 CNY/kg, and N-type material is 41 CNY/kg.
• Transaction volumes are shrinking, with upstream and downstream parties engaged in a tug-of-war, causing inventory levels to rise to 290,000–310,000 tons.
• Prices remain stable, but if supply exceeds demand, prices may be adjusted downward.

Wafer Segment:

• The price for P-type M10 wafers is 1.10 CNY/piece, P-type G12 is 1.65 CNY/piece, N-type M10 is 1.03 CNY/piece, N-type G12 is 1.45 CNY/piece, and N-type G12R is 1.20 CNY/piece.
• Manufacturers are reducing production to stabilize prices, while demand for N-type 183 is shrinking, leading to significant destocking pressure.
• Prices are temporarily stable, but there is downward pressure.

Cell Segment:

• The price for M10 solar cells is 0.270 CNY/W, G12 is 0.270 CNY/W, M10 TOPCon is 0.265 CNY/W, G12 TOPCon is 0.280 CNY/W, and G12R TOPCon is 0.270 CNY/W.
• Manufacturers are reducing production to clear inventory, alleviating supply pressure, but order demand is sluggish.
• Prices are stable; if module prices stabilize, cell prices will also remain steady.

Module Segment:

• The price for 182 monofacial mono-crystalline PERC modules is 0.69 CNY/W, 210 monofacial is 0.70 CNY/W, 182 bifacial dual-glass is 0.70 CNY/W, 210 bifacial dual-glass is 0.71 CNY/W, 182 bifacial dual-glass TOPCon is 0.72 CNY/W, and 210 bifacial dual-glass HJT is 0.86 CNY/W.
• Module orders are stable, contributing to price stabilization, but a more detailed cost line is needed.
• Prices are holding steady, but mid-to-late-stage manufacturers may resort to low-price sales.

Comment:?This week, prices across various segments of the photovoltaic industry chain remain generally stable; however, there are supply-demand pressures and inventory issues. The silicon material and wafer segments face risks of supply-demand excess, while the cell and module segments are impacted by sluggish demand. Manufacturers are responding to market changes through production cuts and pricing strategies, but long-term price stability still needs to be monitored.

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5.?Oversupply leads to falling prices for memory products.

This week, prices for most products in the storage spot market continued to decline, primarily due to increased upstream capacity leading to a surplus of certain resources, while overall demand remains weak. Although there is some seasonal demand recovery in the channel, customers have a low acceptance of prices and generally maintain a bearish outlook for the future, resulting in a slight decrease in SSD product prices. In the embedded storage sector, as supply resources increase, LPDDR product prices have been adjusted downward. The industry market continues to be affected by persistently weak PC demand, prompting storage manufacturers to accelerate shipments and alleviate inventory pressure, leading to a comprehensive price reduction for SSDs and memory modules.

Regarding upstream resource prices, most prices for NAND Flash wafers and DDR resources have decreased. The prices for 1Tb QLC, 1Tb TLC, and 512Gb TLC Flash wafers have been adjusted to $5.20, $6.20, and $3.30, respectively. The prices for DDR4 16Gb 3200, 16Gb eTT, 8Gb 3200, and 8Gb eTT have been adjusted to $2.80, $2.38, $1.20, and $0.95, respectively.

Comment:?This week, prices across various segments of the photovoltaic industry chain remain generally stable; however, there are supply-demand pressures and inventory issues. The silicon material and wafer segments face risks of supply-demand excess, while the cell and module segments are impacted by sluggish demand. Manufacturers are responding to market changes through production cuts and pricing strategies, but long-term price stability still needs to be monitored.