Weekly News

①Automotive chip customers consider renegotiating prices with TSMC.

On September 23, it was reported that wafer foundries were faced with customers cutting orders, and the capacity utilization rate had dropped significantly. Previously, due to the shortage of chips, car factories and chip factories that only sought production capacity without asking about prices seized the opportunity and planned to cooperate with wafer manufacturers in the fourth quarter. The foundry renegotiates the price. There is uncertainty about the price increase of the foundry leader TSMC next year, and some automotive chip customers have considered renegotiating prices.

Automotive original equipment manufacturers (OEMs) and Tier 1 suppliers are looking to restore foundry quotes to pre-pandemic levels next year as they already see the pressure on supply chain shortages starting to ease, sources said.

The sources also said that many automotive chip categories have been lifted from supply crises, and some chip inventories have even approached pre-pandemic levels. This situation will put foundries at a disadvantage in price negotiations. In addition, foundries will be negotiating their near-term orders with automotive IDMs, with suppliers including Infineon and STMicroelectronics outsourcing about 20% of production.

（Comment: Foundry quotations for automotive chips have skyrocketed in the past few years due to the shortage of supply. But current inflationary pressures and other conditions are clouding the outlook for demand next year, making it imperative for automakers to re-examine risks and costs. If supply can keep up with demand, TSMC's voice will be further reduced.)

②Huawei: 5.5G is a key milestone on the path to an intelligent world.

The Striding Towards the Intelligent World Summit at HUAWEI CONNECT 2022 successfully concluded today. David Wang, Huawei's Executive Director of the Board and Chairman of the ICT Infrastructure Managing Board delivered a keynote speech titled Embracing the 5.5G Era: Striding Towards the Intelligent World at this summit.

In this speech, he stressed that 5.5G is a key milestone on our path to an intelligent world and released Huawei's latest series of white papers on the intelligent world. Wang also called upon the ICT industry to coordinate efforts around eight facets of this vision. By working together to further define and refine the industry vision and standards for the 5.5G era, the industry will move ever faster towards the 5.5G era and the intelligent world.

In the future, individuals, households, and industries will have higher requirements for digital infrastructure.

For individuals, immersive services like XR and holographic communication are maturing, and the connectivity experience is set to increase from 1 Gbit/s to 10 Gbit/s. Mobile DOU will surge from today's 15 GB to 100 GB. Requirements for latency and ubiquitous connectivity will also increase.

For households, the demands generated by advanced services like 24K 3D VR games and holographic education and meetings are creating a full-fiber, 10 Gbit/s era.

For industries, digital transformation has now entered the fast lane. Industrial-grade applications such as smart manufacturing and power grid dispatching are raising diversified requirements for connections, quality, and sense, while also triggering explosive growth in demand for computing power and storage.

Wang noted, "We must continue to work hard if we hope to reach an intelligent world. The 5.5G era is an important milestone on this path – one we cannot miss. In the 5.5G era, we will need ubiquitous 10 Gbit/s experience; intelligent and high-quality compute scheduling; highly autonomous L4 networks; Cloud Native 2.0 services for enterprises, and a 10-fold increase of computing effectiveness, storage, and infrastructure energy efficiency."

He went on to highlight Huawei's belief that it will need the support of customers, ecosystem partners, industry organizations, and academic institutions to continue evolving and reinforcing digital infrastructure, thereby accelerating the advent of the 5.5G era and intelligent world.

（Comment：5.5G is essentially a transition stage between 5G and 6G. Mobile communication technology is about every tenth generation. However, because technology is developing so fast, the technology difference between integer generation and integer generation is too big. At this time, it is necessary to name the technology in the intermediate stage to show the difference between the previous generation and the offspring.

Before 5G was born, the industry had also called 4.5G and pre5G, but the time was short and short-lived. This time, based on the evolution of 5G, people have followed past habits, so it is named 5.5G. The essence of 5.5G is 5G-Advanced. 3GPP, the international standard organization, promotes technology evolution research by continuously releasing Releases.

The emergence of 5.5G this time is actually to use R15-R17 as the first stage of the 5G standard, while R18-R20 is subdivided as the second stage of the 5G standard. After the end of R20, almost 6G will appear (around 2028-2030). Therefore, 5.5G (5G-Advanced) is the transition and connection between 5G and 6G, which will probably last for more than 5 years.

5G-Advanced has officially named the 5G evolution in April 2021. In December 2021, the 3GPP SA2 plenary passed a vote to determine 28 research topics in the R18 version, which is equivalent to determining the first wave of key technologies for 5G-Advanced.

5G-Advanced was officially named the 5G evolution in April 2021. In December 2021, the 3GPP SA2 plenary passed a vote to determine 28 research topics in the R18 version, which is equivalent to determining the first wave of key technologies for 5G-Advanced.

As?a?pioneer?of?5G,?Huawei?is?still?at?the?forefront?of?the?exploration?of?5.5G?technology.?It?is?a?new?technological?change?for?Huawei?and?other?similar?manufacturers.?We?also?expect?to?see?Huawei's?breakthroughs?in?cutting-edge?technology?for?consumers?and?technology.?The?industry?brings?more?new?products.）

③Volkswagen expects chip shortage to continue into 2024.

Volkswagen expects semiconductor shortages to continue into 2023 and says the supply chain disruptions experienced over the past two years will become the “new normal.”

Volkswagen head of procurement Murat Aksel noted that geopolitical concerns with leading chip manufacturers have created new and challenging issues.

“With the new geopolitical issues, if anything, it’s going to get even more complex and challenging,” Aksel said. “Investments for new capacity are now on track, but there will probably still be a structural shortfall in semiconductors up to and including 2023.”

The German car manufacturer has been doing what it can to reduce the impact of the shortage throughout the year. In early 2022, it had to cut output at its Wolfsburg plant and introduced an early warning system designed to detect supply shortfalls which had helped it identify 150 technical alternatives to semiconductor chips, Fortune reports.

Furthermore, Volkswagen has moved to reduce its reliance on semiconductors from leading South Korean manufacturers. Its Cariad software division recently agreed with both European semiconductor supplier STMicroelectronics and Taiwan’s TSMC to create a more stable supply of chips.

Research reveals that car manufacturers have had to cull 3.23 million vehicles from production due to chip shortages this year. This comes on the back of more than 10 million units being lost in 2021. North America and Europe have been hit particularly hard with production decreasing by 1,147,000 units in North America and 1,089,000 in Europe. Analysts expect 2022 to end with 4,071,200 vehicles lost due to the shortage, Auto News reports.

（Comment: The global semiconductor industry has entered a stage of more orderly growth, shifting from a comprehensive shortage to a structural imbalance. At present, the supply of panel driver ICs, consumer-grade MCUs, memory chips, and other products has begun to loosen, and prices have begun to fall.?

However, some power semiconductors, especially chips in automotive, industrial control, Internet of Things, and other fields are still tight. Growth in automotive MCUs will outpace most other end markets this year, according to the McClean report from IC Insights.?

Over the next five years, automotive MCU sales are expected to grow at a CAGR of 7.7%. Although some IDM manufacturers have especially increased automotive-grade chip manufacturing or packaging production lines for this purpose, they still need some time to adjust, and it is expected that the supply of automotive MCUs will remain tight by the second half of 2023.）

④TSMC's?new 28nm?factory has made new progress in Kaohsiung

Recently, the building license of the TSMC Kaohsiung plant has been approved. TSMC said that the Kaohsiung plant will start construction this year as scheduled, and mass production will begin in 2024, mainly on 7-nanometer and 28-nanometer processes.

For the 7-nanometer and 28-nanometer plant areas of TSMC's Kaohsiung plant, industry sources revealed that they were specially set up for Apple. It is reported that. Apple has been investing in the development of its own 5G Modem modem chip for some time.?

It is expected that the chip will be officially mass-produced from 2025 and built into Apple's mobile phones and other products. The matching RF chip will be commissioned by TSMC. Kaohsiung's 7-nanometer process is produced. Peripheral chips such as amplifiers in the front-end RF module, it is produced by another 28-nanometer factory of TSMC in Kaohsiung.

According to industry data, wafer foundries including TSMC, UMC, and SMIC are all supporting mature nodes. It is reported that about 25% of TSMC's revenue comes from manufacturing hundreds of millions of chips using 40nm and more "older" nodes, 80% of UMC's revenue comes from higher 40nm nodes, and 81.4% of SMIC's revenue comes from mature nodes.

The cheap price and high yield of mature nodes make them the hard currency of semiconductors, but not all mature nodes are respected. Currently, TSMC is calling on the industry to shift some mature designs from 40nm to 28nm. Because the 40nm production line has been used for too long, and there is no new power set supporting equipment to support its new production line, it may face the risk of being eliminated in the future.

（Comment: Since TSMC first started mass production of 28nm in 2011, the 28nm process has existed in the market for ten years. From the perspective of market demand for 28nm, although the application in the field of mobile phones has declined, the application in other fields has increased rapidly, such as OTT boxes and smart TVs, and other applications fields. And from the perspective of terminal products, the demand for mature processes is still quite large, such as refrigerators, TVs, stereos, and other household appliances and consumer electronic products, which will only become more and more intelligent in the future; coupled with the trend of the Internet of Everything, IC The demand will only be more, and 28nm and other mature processes can meet most of the needs.）

⑤Samsung Display and LG Display are developing 8.7-generation substrates to improve IT OLED panel production efficiency.

According to foreign media reports, Samsung Display and LG Display, which are strong in OLED panels, are considering using larger-sized substrates to produce OLED panels for other IT equipment other than smartphones.

According to foreign media reports, Samsung Display and LG Display are considering using the 8.7-generation substrate, and the two companies are conducting research and development.

Compared with the 8.5-generation commonly used in the 8-generation substrates of these two companies, the 8.7-generation is larger in size, and a single substrate can cut more OLED panels required by IT equipment, saving time and cost, and waste glass will also be less and increase production efficiency.

Specifically, the size of the 8.7-generation substrate is 2290x2620mm, and the 8.5-generation is 2200x2500mm, which is an increase of nearly 10cm in both vertical and horizontal directions.

Although the use of 8.7-generation substrates can improve production efficiency, new equipment may be required. Due to the increase in size, Samsung Display and LG Display will not be able to use the equipment on the 8.5-generation LCD production line. The two companies had considered reusing the equipment through Gen 8.5 OLED panel production lines, the sources said.

It is worth noting that foreign media mentioned in the report that domestic panel manufacturer BOE may also use 8.7-generation substrates to produce OLED panels. They have LCD panel production lines with 8.7-generation substrates. If they plan to have 8.7-generation OLED panel production lines , the related equipment can be used.

(Comment：According to the latest report of research institute TrendForce, the proportion of OLED in the mobile phone market will increase from 42% in 2021 to 50% in 2023.?

The next few years will be a critical period for the increase of OLED penetration rate. The market penetration is gradually expanding, and IT products will be the next key battlefield for OLED development. Apple's iPad and MacBook and other IT products are its main goals.?If?it?can?be?launched?as?planned,?it?will?bring?extremely?positive?benefits?to?the?development?of?OLED?panels?in?IT?products.）