Weekly News 14 | Please check it！

Catalog

1.Infineon acquires GaN Systems

2.DRAM and NAND prices keep decline

3.Toyota sold over 850,000 vehicles worldwide in February, up 10% YoY

4.U.S. Chip Act Guidelines cause panic in South Korean chip manufacturing industry

5.SMIC posts record high revenue and profits for 2022

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01

Infineon acquires GaN Systems

Infineon announced the acquisition of GaN Systems, a global technology leader in gallium nitride, for $830 million in cash (approximately RMB 5.7 billion) (GaN Systems held the second-largest market share in the gallium nitride market in 2021). Gallium nitride is a wide-bandgap material with higher power density, efficiency, and smaller size, especially in high-frequency switching applications. With its advantages of low energy consumption and miniaturization, gallium nitride devices own a wide range of applications. According to market analysis, the revenue created by power applications of gallium nitride devices is expected to grow at a compound annual growth rate (CAGR) of 56%, reaching around $2 billion by 2027 (source: Yole, "Compound Semiconductor Market Monitor I 2022 Q4"). Infineon believes that the wide-bandgap semiconductor market has already entered a turning point in its development and will experience rapid growth. There are currently three main types of wide-bandgap semiconductor materials: silicon, silicon carbide(SiC), and gallium nitride (GaN).

Comment

Silicon carbide has significant advantages in high-power and power density. As a new material and technology, it possesses enormous market potential, especially given the strong demand for silicon carbide in new energy vehicles. Silicon carbide can apparently enhance the cruising range of new energy vehicles or considerably slip the battery volume and cost for the same mileage. Hence, silicon carbide is being applied increasingly in traction main inverters, on-board chargers (OBCs), and high-low voltage DC-DC converters.

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02

DRAM and NAND prices keep decline

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The storage market has been hit hard due to the reduction in demand for storage chips and end-markets like computers, smart phones and cloud computing servers. During the early stages of the pandemic, consumers and businesses hoarded electronic products, sparkling an surging in memory demand. Procurement at a slow pace, However, led to overstock and memory chip prices rapidly sliding.

"The semiconductor memory and storage industry are facing the most severe slump in the past 13 years, and the prices sink into a extremely downward trend, which heavily hit our financial performance," said Micron CEO in a conference call.

According to research data released by TrendForce on March 28, 2023, owing to the fact that some suppliers such as Micron and SK Hynix have already started to cut DRAM production, the average DRAM price in the first quarter has dropped by nearly 20% compared to the previous quarter, and the estimated decline in the second quarter will contract to 10-15%. However, it is still unclear whether the demand for the storage chips recovers in the second half of 2023 and when the prices of DRAM see the resumption, since the inventories stay high level as before. Unless there is a larger scale of production cuts, the follow-up contract prices are unlikely to reverse.

Comment

TrendForce also shared their analysis report on NAND Flash, stating that most suppliers have begun to slash production. The overall quarter-on-quarter in NAND Flash ASP in the first quarter of 2023 is currently estimated to sink 10-15%, which is less than the quarter-on-quarter decline in the fourth quarter of 2022.

03

Toyota sold over 850,000 vehicles worldwide in February, up 10% YoY

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According to foreign media reports, Toyota Motor said that its global vehicle output in February rose 1.4% from a year earlier to 896,712 units as it recovered from the shortage of automotive semiconductors and disruptions caused by the COVID-19.

Global sales, including Daihatsu Motor Co. and Hino Motors Ltd., rose 10.5% to 856,376 units, Toyota said in a statement Thursday. Domestic sales and production rose year-on-year for the second month in a row, with production and sales in Japan seeing a 5.5% increase to 372,932 vehicles and a 38% increase to 213,698 vehicles respectively, Toyota said.

Toyota maintained its forecast for output at 10.4 million units for the fiscal year ending March 2023. The figures highlight Toyota's global leadership in sales of traditional gasoline engine vehicles. In a few days, Lexus chief Koji Sato will become the chief executive officer, leading the Japanese carmaker toward a future of electric vehicles and renewable energy sources.

Comment

In addition to Toyota, Nissan Motor Co. said its global output rose 9.2% to 300,734 vehicles, while sales climbed 1.2% to 265,101 units. However, Honda Motor Co.’s global production dipped 1.2% to 340,574 vehicles, declining for the fourth straight month, the company said.

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04

U.S. Chip Act Guidelines cause panic in South Korean chip manufacturing industry

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The U.S. Department of Commerce recently stated that it would require semiconductor companies seeking US subsidies under the Chip Act to provide detailed forecasts of their new chip manufacturing facilities' revenue and profits to assist in evaluating their applications. Industry insiders in South Korea's semiconductor industry believe that metrics such as output and utilization rate are key indicators of a company's competitiveness, so they are company trade secrets. Additionally, the percentage of single wafer pass-through products can determine the unit cost and technological strength of the product. If these key trade secrets are leaked to US companies such as Intel or its competitors, it will cause devastating damage to Samsung Electronics and SK Hynix. This has made qualified Korean companies eligible for subsidies think twice before applying for them. Another industry insider said, "In addition to subsidy applications, the US government often requires other companies to disclose their business to develop the companies and expand job opportunities for Americans. Considering the supply chain crisis of 2021 and the recent relaxation of fence regulations, individual companies will also have negotiating room with the US government."

Comment

Sung Tae-yoon, an economics professor at Yonsei University in South Korea, believes that the South Korean government and companies need to make a consistent response, indicating that Korean companies cannot provide information that constitutes trade secrets while continuing to work with the United States. South Korea should also develop a plan to cooperate with US companies so that we can negotiate with the US government.

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05

SMIC posts record high revenue and profits for 2022

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On March 29th, SMIC disclosed its audited financial report for the full year of 2022. The report shows that the company achieved historic highs in revenue and net profit. In 2022, SMIC's operating income was CNY 49.516 billion, an increase of 39% YoY; net profit was CNY 12.133 billion, an increase of 13% YoY; non-GAAP net profit was CNY 9.764 billion, an increase of 83.4% YoY; and basic earnings per share were CNY 1.53.

For the counter-trend increase in revenue and net profit of the company, SMIC stated that it was mainly due to the increase in the number of wafers sold and the rise in average selling price. Meanwhile, in 2022, SMIC's gross profit margin was 38.3%, an increase of 9.0% from the previous year.

SMIC believes that the recovery of the smartphone and consumer electronics industries will take time, while the industrial sector remains relatively stable, and the incremental demand in the automotive electronics industry can only partially offset the negative impact of weak smartphones and consumer electronics. In the first half of 2023, the industry cycle is still at the bottom, and the impact of external uncertainties remains complex. Although the visibility for the second half of the year is still not high, the company has felt a slight recovery in customer confidence, and the reserve of new product tape-outs is relatively sufficient.????????????????

Comment

SMIC expects its capital expenditures in 2023 to be roughly the same as in 2022 (about RMB 43.24 billion), exceeding 10% of the company's most recent audited net assets.

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