Weekly News

1. Suppliers Amp Up Production, HBM Bit Supply Projected to Soar by 105% in 2024.

2. Saudi Arabia unified mobile phone and other electronic device interface: full use of USB Type-C in 2025.

3. Global cloud services market growth slows to 16% in Q2 2023.

4. Samsung and LG Electronics accelerate the push into the fast-growing EV market.

5. Alibaba's Daniel Zhang: Incremental Demand Opportunities for AI-related Cloud Services Begins to Unleash.

①Suppliers Amp Up Production, HBM Bit Supply Projected to Soar by 105% in 2024.

AI development will be pivotal from 2023 to 2024, triggering substantial demand for AI Training chips and?boosting HBM utilisation. In the face of additional orders for self-developed chips from NVIDIA and other cloud service providers (CSP), memory-chip makers are actively enlarging the production of HBM, estimated to hit an annual growth rate of 105%.

The primary demand is shifting from HBM2e to HBM3 in 2023, with an anticipated demand ratio of approximately 50% and 39%, respectively. As more chips adopting HBM3 hit the market, demand in 2024 will heavily lean toward HBM3 and eclipse HBM2e with a projected share of 60%. Owing to its significantly higher ASP compared to HBM2e and HBM2, HBM3 is poised to bolster suppliers' HBM revenue, potentially propelling total HBM revenue to a whopping US$8.9 billion in 2024—a 127% YoY increase.

SK Hynix currently leads HBM3 production, the principal supplier of NVIDIA's server GPUs. On the other hand, Samsung focuses on satisfying orders from other CSPs—Micron has focused mainly on HBM3e development.

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Due to aggressive expansion by suppliers, the HBM sufficiency ratio will rise from -2.4% to 0.6% in 2024.

We don't rule out the possibility of further price reductions for HBM2 and HBM2e products, given a significant improvement in the overall HBM supply and suppliers' endeavors to broaden their market shares. Meanwhile, HBM3 prices are forecast to stay consistent with 2023.

②Saudi Arabia unified mobile phone and other electronic device interface: full use of USB Type-C in 2025.

Saudi Arabia will start adopting USB Type-C as the charging port for all mobile phones and other electronic gadgets beginning in 2025. This move will reduce over 2.2 million units in the annual domestic consumption of charging equipment and contribute to the kingdom’s environmental goals of reducing electronic waste by nearly 15 tons annually.

This mandate will be enforced in two phases. The first stage will begin on January 1, 2025, when new smartphones and accessories like headphones, keyboards, speakers, and routers sold in the country must have USB-C.In the second stage, which begins on April 1, 2026, every laptop or other portable computer (including tablets like the iPad) must have a USB-C connector.

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In the European Union, a similar law will take effect on December 28, 2024.?

iPhone 15 is coming next month, and multiple rumors suggest Apple will finally switch from its proprietary Lightning connector to USB-C. The iPhone 15 models are expected to be the first to have USB-C instead of Lightning, which will help Apple comply with laws requiring the new connector.

③Global cloud services market growth slows to 16% in Q2 2023.

Worldwide cloud infrastructure services spending increased 16% to US$72.4 billion in Q2 2023. This growth rate represents a decline against the previous quarter’s 19%, as the market feels the effect of spending pressures. However, slower growth also results from the market’s more significant size.

In Q2 2023, the top three vendors, AWS, Microsoft Azure and Google Cloud, collectively grew 20% – down from 22% in Q1 – to account for 65% of total spending. While AWS and Microsoft both saw a deceleration in growth, Google Cloud’s growth rate remained stable compared with the previous quarter, at 31%.?

So far, AI technologies and their integration into existing products have not seen widespread commercialisation, so they have not had a meaningful impact on revenue for cloud providers. But AI represents a significant driver of cloud investment in the future, and all the major cloud vendors continue to invest heavily in AI technologies.

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In this quarter, both AWS and Microsoft launched new AI-oriented partner programs. AWS is actively increasing its investments in AI. It invested US$100 million in a new generative AI program, the AWS Generative AI Innovation Center will serve as a hub for free workshops and training. AWS has established new partnerships with Omnicom and 3M Health Information Systems.?

In light of the projected surge in AI demand, it introduced the Microsoft AI Cloud Partner Program during its global partner event, Microsoft Inspire 2023.?Google Cloud’s partner ecosystem continues to support the development of its generative AI applications.

④Samsung and LG Electronics accelerate the push into the fast-growing EV market.

Samsung Electronics Co. and LG Electronics Inc. said they would attend IAA Mobility 2023, an annual global mobility show to be held in Germany, for the first time, in a step seen as an attempt to gain a more significant share in the fast-growing electric vehicle (EV) parts market.

In 2022, Samsung's sales and profit hit record highs, driven by rising demand for its high-end infotainment system.LG's EV business will contribute up to 12.3 percent of the company's operating profit next year, up from 4.6 percent in 2022.

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With the increasing demand for electric vehicles, the need for various components such as batteries and chips has also significantly increased. Relevant manufacturers have also welcomed new development opportunities and are increasing investment to obtain higher revenue.

IHS Markit projected that the global automotive semiconductor market would log an average annual growth rate of 11 percent to reach $143 billion by 2029.

⑤BABA's Daniel Zhang: Incremental Demand Opportunities for AI-related Cloud Services Begins to Unleash.

BABA-SW announced its results for the 1FQ ended June, in which Alibaba Cloud's revenue grew 4% to RMB25.123 billion and adjusted EBITA increased 106% to RMB387 million.

Thanks to the growing market demand for its AI computing products, Alibaba Cloud's financial reports show that its revenue for Q2 reached 251.23 billion yuan, a year-on-year increase of 4%.

Alibaba Cloud's Q2 revenue growth was mainly driven by storage, networking, and AI computing-related products, partially offset by the normalisation of CDN demand. The development of the new generation of artificial intelligence brings about scenarios for model training and inference, leading to a strong need for AI cloud services. However, due to the short-term shortage of GPU supply in the Chinese market, only a portion of this demand has yet to be met. The incremental opportunities brought by AI-related services are just beginning to be realised.

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With the development and promotion of large AI models, the demand for computing power will increase daily. Servers, as the core equipment of data centers, are also expected to benefit from the future surge in computing power demand.