Weekly News

Contents:

1. Samsung Electronics Q2 Operating Profit Expected to Exceed 10 Trillion Won, a 14.5x Year-on-Year Increase.

2. DIGITIMES: AI will boost the global server GPU market value beyond 100 billion USD this year.? ?

3. SK Hynix: HBM CAGR Could Reach 70%, Expanding HBM Production Capacity.? ?

4. Japan's Chip Equipment Sales Expected to Grow by 15% in FY 2024.? ?

5. UMC: June Revenue Down YoY and MoM; Second Half of the Year Looks Better for?Communications and Consumer Electronics.? ??

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1. Samsung Electronics Q2 Operating Profit Expected to Exceed 10 Trillion Won, a 14.5x Year-on-Year Increase.

Samsung Electronics has revealed its earnings forecast for the second quarter of 2024. The company expects consolidated sales of approximately 74 trillion won (around 53.67 billion USD), marking a quarter-on-quarter increase of 2.89% and a year-on-year increase of 23.3%. Consolidated operating profit is projected to be around 10.4 trillion won (approximately 7.54 billion USD), showing a quarter-on-quarter growth of 57.3% and a year-on-year surge of 14.5 times.

The significant profit growth is attributed to the recovery in the memory semiconductor industry. Recently, driven by the AI boom, memory semiconductor prices have risen rapidly. Analysts estimate that Samsung Electronics' semiconductor (DS) division will report an operating profit of around 5 trillion won in the second quarter, more than double the 1.91 trillion won reported in the first quarter of this year. However, other semiconductor sectors, such as foundry and system LSI, are expected to continue incurring losses.

Comment:?

Samsung Electronics' operating profit for the quarter has substantially increased, highlighting a robust recovery in the memory semiconductor market. The rapid development and application of AI technology have driven demand for high-performance memory chips, which is a positive signal for the entire semiconductor industry. It indicates a close alignment between technological advancements and market demand.

This month, the price of Samsung's DDR5 RDIMM has already increased and is expected to rise by another 10% to 15% in the coming weeks. ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

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2. DIGITIMES: AI will boost the global server GPU market value beyond 100 billion USD this year.?

On June 25, DIGITIMES Research Center released a report stating that the global server GPU market value, including boards and subsystems with memory chips, will exceed 100 billion USD for the first time in 2024, reaching 121.9 billion USD. High-end server GPUs will account for over 80% of this value, totaling 102.2 billion USD, with shipments expected to reach 4.82 million units. NVIDIA is projected to hold a 92.5% market share, while AMD's share could get 7.3%.

DIGITIMES analysts highlight that generative AI is still in its early stages, and cloud service providers (CSPs) are actively accumulating computing power. In addition to developing their server ASIC accelerators, CSPs also purchase large quantities of high-end server GPUs to capitalize on market opportunities. Besides CSPs, large enterprises worldwide are also investing in generative AI services. Although these enterprises may not place large individual orders, their sheer number will boost NVIDIA's high-end AI server shipments in 2024. Moreover, governments globally are actively building computational infrastructure.

The report notes that NVIDIA's Max GPUs for data centers are less competitive than their rivals, resulting in fewer orders. Intel has shifted its focus to promoting its Gaudi accelerator chips. Additionally, NVIDIA's China-specific AI GPU, the H20, is expected to receive export approval from the US Department of Commerce. The H20 will capture 97.9% of China's high-end server GPU market.

Comment:

As AI advances, the demand for computing power is increasing rapidly. A DIGITIMES report predicts significant growth in the global server GPU market value, highlighting AI's role in driving technological innovation and the intense competition among cloud services and large enterprises in the AI service sector. The expected market shares of NVIDIA and AMD reflect the leadership status of these industry giants and the market's preference for high-end GPUs.

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3. SK Hynix: HBM CAGR Could Reach 70%, Expanding HBM Production Capacity.?

According to South Korean media reports, Moon Ki-il, Vice President of PKG Technology Development at SK Hynix, recently stated that the HBM market is experiencing explosive growth with the emergence of ChatGPT. The Compound Annual Growth Rate (CAGR) for HBM is expected to reach 70%. SK Hynix has already signed supply contracts for HBM production with customers for this year and next year.

Moon Ki-il also mentioned that HBM is primarily used in Artificial Intelligence (AI) systems, but the company also aims to expand its applications to mobile devices.

He stated, "If HBM prices decrease, it will not only be used for AI accelerators and servers but also for personal computers (PCs) and mobile devices," adding, "SK Hynix is preparing hybrid bonding technology, based on which we will also have competitive pricing."

According to industry sources, SK Hynix recently established a new working group to convert part of its Icheon M10 factory into HBM production lines. The renovation area is approximately 3,300 square meters, and it is expected to set up a clean room meeting HBM production standards by early 2025 and introduce various equipment. NVIDIA continues to demand expanded supply from SK Hynix, which now needs to produce not only HBM3E but also maintain existing HBM3 supply, with production capacity nearly reaching its limit.

In the domestic market, despite intense price competition, the upgrade of smart cockpits has become a new trend, benefiting products from Yili.

Comment:

As companies like SK Hynix receive new orders with lead times exceeding one year, the demand for HBM (High-Bandwidth Memory) continues to surge in the memory market. Due to this strong demand trend, manufacturers are eager to expand capacity to support the influx of orders. Companies are scheduling production shifts to enhance or relocate capacity, with a current focus on prioritizing wafer supply for HBM.

As production shifts to support HBM, delivery times for memory components such as DDR4, high-performance NAND (flash memory), automotive DRAM (Dynamic Random Access Memory), and SSDs (Solid State Drives) have been steadily increasing. Customers report that DRAM components are the most noticeably impacted by these capacity changes.

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4. Japan's Chip Equipment Sales Expected to Grow by 15% in FY 2024.? ?

A new report from the Japan Semiconductor Industry Association forecasts that, driven by the growing demand for storage capacity fueled by AI advancements, sales of Japanese chip manufacturing equipment are expected to grow by 15% in the fiscal year 2024 (ending March 2025).

The Japan Semiconductor Equipment Association has raised its annual sales forecast from 4.03 trillion yen to 4.25 trillion yen (approximately 26 billion USD). Additionally, with increased investments in logic wafer foundries, the sales of Japanese semiconductor equipment are expected to grow by another 10% in the fiscal year 2025 (ending March 2026), reaching 4.68 trillion yen. Further growth is anticipated in the fiscal year 2026 (ending March 2027), with sales projected to rise to 5.15 trillion yen.

Comment:?

The expected growth in Japan's chip equipment sales, driven by the demand for storage capacity spurred by AI technology development, indicates that the global semiconductor industry is undergoing a new expansion phase. This trend will likely foster technological innovation and enhance market competitiveness among Japanese semiconductor equipment manufacturers.

5. UMC: June Revenue Down YoY and MoM; Second Half of the Year Looks Better for?Communications and Consumer Electronics.?

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UMC Announces June Revenue of NT$17.548 Billion, Marking a 10.05% Decrease Month-on-Month and 7.91% Decrease Year-on-YearUMC reported June revenue of NT$17.548 billion, which represents a decline compared to both the previous month and the same period last year, marking a new low for the past four months. For the second quarter, UMC revenue reached NT$56.799 billion, showing a quarterly increase of 3.97% and a yearly increase of 0.89%, the second-highest for the same period in recent years. Cumulatively, the revenue for the year's first half amounted to NT$111.431 billion, up by 0.84% year-on-year.

In terms of application areas, semiconductor demand for automotive and industrial sectors is currently undergoing a correction phase, exhibiting relatively weaker short-term performance but remaining crucial for long-term growth. On the other hand, communication and consumer electronics applications are expected to perform better in the second half of the year compared to the first half.

Comment:

Despite UMC's June revenue decline compared to the previous month and the same period last year, the company has an optimistic outlook for the year's second half. The anticipated growth in communication and consumer electronics applications indicates strong semiconductor demand in these sectors. Additionally, while automotive and industrial semiconductors may face short-term corrections, their long-term growth prospects remain promising.

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