Weekly News

①Power semiconductor market size will reach $30.6 billion in 2027.

In the new energy system change, power semiconductor market size will significantly benefit from trends?of electric vehicles and new energy generation, from 2021 20.4 billion U.S. dollars at a compound annual growth rate (CAGR) 6.9% of which, with industrial automation, non-stop power system, high-voltage DC power grid and energy storage systems and other applications booming, to promote the growth of power semiconductor demand.?

Power semiconductor in the semiconductor field has long been in the fringe, compared to other semiconductor industry, power semiconductor industry by the relatively weak attention, but power semiconductor in the actual application still has a strong importance, the future with new energy vehicles, electrical electronics and other downstream demand industry development, power semiconductor industry volume or will continue to increase.?

Based on this, the foresight is expected to 2027 global power semiconductor industry market size or more than 50 billion U.S. dollars, 2022-2027 compound growth rate or reach 3%.

（Comment：Power semiconductors in electronic circuits can achieve power conversion, power switching, power amplification, line protection and rectification, etc. It is the core of electronic devices to achieve electrical energy conversion and circuit control, the role is to change the voltage and frequency in electronic devices, DC-AC conversion, etc. Application areas are as follows, diodes: electronics, industrial; thyristor: industrial, inverter; MOSFET: consumer electronics, communications, industrial control, automotive electronics, etc.; IGBT: rail, industrial control, new energy, white goods, etc.; power IC: computers, network communications, consumer electronics and industrial control.）

②TrendForce: Estimated annual growth of server machine shipments to converge to 3.7% in 2023.

According to the latest survey by TrendForce, the annual growth of server shipments in 2023 is estimated to be only 3.7%, down from 5.1% in 2022. But for the time being, it will not affect the total server shipments in 2022. Second, high inflation and economic turn to weakness, corporate capital expenditure fears more conservative, IT-related investment will be more flexible, such as the use of cloud services to replace part of the ground server. Third, the international situation has changed so that the demand for small-scale data centers continues to emerge, and the construction of super large-scale data centers will slow down.

From the perspective of server DRAM capacity on the whole machine, as the buyer will import new CPU intel Sapphire Rapids and AMD Genoa in 2023, and the price of DDR5 DRAM is 30~40% higher than DDR4, the cost of CPU, memory and related parts of the new machine will increase significantly. As the demand for server terminals will be more focused on hardware cost, the average DRAM capacity of the whole machine will be limited.?

Therefore, it is expected that the average server DRAM capacity will only increase by 7% annually in 2023, decreasing to below 10% for the first time since 2016.

（Comment：The average carrying capacity of server DRAM in 2023 is still likely to rise to 12%, as the price of server DRAM in 2022, the price received by Tier 1 customers in the third quarter has fallen to a new record bottom, and the price trend in 2023 will continue to be downward. If the original manufacturer is also willing to release a greater price discount for high-capacity 64GB modules, there is an opportunity to stimulate buyers to increase the purchasing power.）

③ASML backlog of orders over $38 billion: more than 600 DUV, more than 100 EUV; and reiterated that the impact of exports to China is not significant.

ASML has reported record revenues and profits, with record demand for chip production equipment despite a slowdown in sales of personal computers and smartphones. As chipmakers continue to invest in wafer fab equipment (WFE), the company's backlog - including deep ultraviolet (DUV) lithography scanners and extreme ultraviolet (EUV) lithography tools - now exceeds $38 billion. ASML continues to sell its DUV tools to customers in China. In addition, all current EUV customers are committed to using High NA EUV tools.

ASML sold 80 new lithography systems and six used scanners, including 12 EUV tools (consistent with the second quarter) and 74 DUV machines (down from 79 in the second quarter), on sales of €5.8 billion in the third quarter.

Despite weakening demand for PC, smartphone and consumer electronics chips, chipmakers expect sales of their products to start growing from 2024 to 2025, when they will need to install new capacity for tools. Leading companies such as Intel, Micron, Samsung and SK Hynix are currently building multiple fabs that will need equipment in the coming years. For ASML, this means record bookings of approximately €8.9 billion in the third quarter, of which €3.8 billion is for EUV lithography tools, including tools with a 0.33 numerical aperture and High-NA systems with a 0.55 numerical aperture.

Until now, ASML has a backlog of more than $38 billion (up from $33 billion in the second quarter), including more than 600 DUV scanners and more than 100 EUV lithography machines. It will take several years for the company to deliver these tools, as its 2023 target capacity is more than 375 DUV machines and more than 60 EUV machines.

Unlike U.S. WFE suppliers, ASML did not lower its fourth-quarter guidance due to U.S. sanctions on the Chinese semiconductor industry that prohibit U.S. chip production technology from being shipped to China without a special export license from the U.S. Department of Commerce. based in the Netherlands, ASML does not use many parts designed or manufactured in the U.S. in its DUV tools - - so it can deliver the majority of them (if they are not designed or manufactured in the U.S.) to China. -so it can ship most, if not all, of its DUV tools to mid-over companies, according to Roger Dassen, its chief financial officer.

Because of the Wassenaar agreement, ASML couldn't ship EUV lithography to its Chinese customers and now can't ship them to China because they use Cymer light sources designed and manufactured in the United States. Because ASML never expected to send its Twinscan NXE lithography to their customers in China (which is why potential EUV shipments were never factored into any guidance) and the impact of the U.S. crackdown on the Chinese semiconductor industry is expected to be limited for ASML, the company did not update its expectations for the fourth quarter and 2022.

（Comment：While the U.S. company currently requires a special export license from the U.S. DoC to sell its fab equipment to customers in China, ASML believes it can export its DUV lithography to China without any restrictions. While it remains to be seen whether U.S. sanctions against China's semiconductor industry will indirectly hit ASML, demand for the company's tools is sufficiently strong that Chinese customers probably won't be completely lost for at least a few years.）

④Samsung: Wafer foundry customers expected to increase to 5 times in 2027 to 2019; equipment spending to increase to 10 times in 8 years.

Wafer Foundry Division Vice President Choi Si-Young said that since 2019, Samsung Electronics foundry customers have increased to more than two times the original, is expected to expand to five times in 2027. In addition, Samsung wafer foundry business equipment spending will increase to 10 times in 8 years; and plans to expand advanced process capacity to 3 times the current capacity by 2027, mature process capacity will also increase to 2.5 times.

According to the analysis, Samsung further increased the importance of the Japanese foundry market, seems to be stimulated by TSMC's layout in Japan. TSMC and Sony Semiconductor Solutions, Japan Denso jointly invested in the operation of the Kumamoto fab (JASM) has opened in Japan in April this year, the total investment is expected to be $ 8.6 billion, the goal is to start mass production of 22 ~ 28nm process at the end of 2024, with a monthly capacity of 55,000 pieces of 12-inch wafers. The future will also be upgraded to a higher performance 12 ~ 16nm process, the follow-up does not rule out the process to upgrade again. Sources said that with the geopolitical risks climbing, the procurement strategy of foundry customers have also changed. According to Samsung's Japanese subsidiary, "from Japanese customers for the BCP (Business Continuity Plan) inquiries than the original become more". In addition, Samsung's president in charge of foundry business, Choi Si-wing, also reiterated at the briefing that Samsung "plans to start mass production of 2nm process technology in 2025 and 1.4nm in 2027". In addition, Samsung is actively investing in its foundry business and will increase its investment in equipment to 10 times in 8 years, and plans to increase its advanced process capacity to 3 times its current capacity and mature process capacity to 2.5 times its current capacity by 2027. At the meeting, Samsung Electronics also announced plans to expand multi-project wafer (MPW) services in 2023, and process technology will be expanded to 4nm.

（Comment：According to the analysis, with the geopolitical risks climbing, the procurement strategy of chip foundry customers has also changed. According to Samsung Japan,"inquiries from Japanese customers for BCP (Business Continuity Plan) have become more frequent than before. Samsung will focus its resources on competing with TSMC for the advanced process foundry market, TSMC may face more challenges in the future.）

⑤Intel Mobileye IPO valuation significantly decreased.

The Wall Street Journal reported Oct. 17 that Intel Corp.'s self-driving car unit Mobileye initial public offering was valued much lower than previously expected, according to people familiar with the matter. Mobileye, which was initially expected to be valued at about $50 billion, is now targeting less than $20 billion and selling fewer shares than originally planned, the report said. Less than a year, Intel's self-driving company Mobileye IPO valuation from over $50 billion, down left to one-third.

According to foreign media reports on Oct. 18, Mobileye has determined the terms of the IPO: it plans to issue 41 million Class A shares at a price between $18-20 per share, raising up to $820 million and valuing the company at a maximum of $15.93 billion. But last December, when Intel announced that Mobileye would go public in the U.S. stock market, it said its market value was expected to exceed $50 billion. In a roundabout way, Mobileye'?latest IPO valuation is not much different from when it was privatized by Intel five years ago.

As a global leader in assisted driving, Mobileye growth rate in recent years is considered bright: with its algorithm + EyeQ series chips, Mobileye revenue reached $1.4 billion in 2021, up 43% year-on-year; the company's revenue reached $854 million in the first half of this year, making it the fastest growing division within Intel. Its IPO listing is also highly expected, and is regarded as "the most noteworthy technology stocks this year". This year, the U.S. secondary market has changed dramatically and the market winter has come, which really caught Intel and Mobileye off guard.

This is Mobileye second IPO.

The Israeli company, founded in 1999, went public in 2014 with a market value of $8 billion, once breaking the record for Israeli companies listed in the U.S. In 2017, Intel took it private with $15 billion.

The accumulation of the past 20 years has made Mobileye a global smart driving juggernaut. It is understood that as of October 1,2022, Mobileye's assisted driving solutions have landed in about 800 models, and its EyeQ series chips have shipped more than 125 million units.

According to Mobileye's prospectus,13of the world's 15 largest automakers are its customers, and more than 50 OEMs worldwide have partnered with it on ADAS (Advanced Assisted Driving Systems) solutions. By 2030, its ADAS solutions will be deployed in more than 270 million vehicles.

Mobileye has about 80% of the global market for assisted driving vision systems, according to U.S. energy consulting firm Guidehouse insights.

Its revenue and loss figures are also getting better year by year. 2019-2021, Mobileye revenue is $879 million,$967 million and $1.386 billion, respectively;2019-2021 net loss is $328 million,$196 million and $75 million, respectively.

Mobileye's profitability has been quite bright compared to many of the rather inexpensive self-driving companies on the U.S. stock secondary market.

Recently the enterprise service database company Crunchbase combed through the performance of 14 self-driving-related companies listed in recent years so far, and the valuation of these companies fell by more than 80% on average after listing, with the largest drop of 99%.

Among them, autonomous driving company Aurora fell 81%, Tucson Future fell 82%, Embark fell 97%; LIDAR company Luminar died 65%, Velodyne fell 95%, Quanergy fell 99%.

This company's technology products have been subject to criticism: although it provides assisted driving algorithms + EyeQ series chips for car companies, the ecology is relatively closed, making it difficult to meet the flexible needs of car companies, while the arithmetic power of self-driving chips is not high enough, and it was once grabbed by Nvidia, Qualcomm, Huawei and Horizon.

It is true that as the wave of car intelligence sweeps to every car in the world, Mobileye's accumulated years of mass production experience and market position will still help push Mobileye forward. In addition, Mobileye is also gradually liberalizing its ecology, developing large computing power autonomous driving chips, LIDAR chips, etc., and continuously expanding its strength map.

But in the Chinese market: Nvidia and Qualcomm's chips firmly grasp most of the advanced autonomous driving vehicle market, and domestic chip players are squeezing into the track by the seams, Mobileye's advantage is still not obvious enough.

At the same time, Mobileye is also facing a shortage of chip materials due to the global semiconductor shortage. In its prospectus, it revealed that in 2021 and the first half of 2022, its sole supplier of EyeQ system chips, STMicroelectronics, was unable to meet chip production demand, resulting in a significant drop in inventory levels. This may also affect Mobileye's performance this year.

（Comment：The drop in Mobileye's valuation is also a benchmark event for the autonomous driving industry. The company, which was first established, has a high reputation worldwide and is known as the "pearl of autonomous driving", has experienced a feverish pursuit and is also experiencing an industry downturn. Zhang Xiang, an automotive expert and director of the New Energy Vehicle Technology Research Institute of Jiangxi New Energy Technology Vocational College, told the Economic Observer that Mobileye's valuation has fallen for its own reasons, but more because of the general environment. "Autonomous driving will definitely be the future development trend, only now the development path is tortuous." Zhang Xiang believes that.）