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Market News(April 17)

The semiconductor packaging materials market is expected to recover in the second half of 2023

Research firm TECHCET recently updated its outlook. According to it, the overall size of the semiconductor packaging materials market is forecast to be US$26.1 billion in 2022 and close to US$30 billion by 2027. The firm indicated that for 2023, packaging materials were expected to decline about 0.6%, given the slowdown in packaging and testing demands. However, recovery is expected in the second half of 2023, pointing to growth in 2024 that should increase packaging revenues by 5% that year.

Their further analysis shows that the packaging materials market has experienced strong shipment and revenue growth since 2020. Changes in end market demand combined with strained supply chains and logistical constraints drove up material prices. Higher raw material costs and other pressures pushed material suppliers to raise prices, which were passed on to customers. In addition, many material segments were constrained in terms of available production capacity.

The upward trend in material prices was the complete opposite of the downward trend for more than a decade, primarily due to pressure from device makers and OSATs. The long-standing need to “cut costs” limited material suppliers in terms of investments in capacity. The demand-driven price increases boosted growth by more than 15% in the packaging materials market in 2020 and over 20% in 2021. As long as raw material and energy costs remain high, and the suppliers can stay prudent in their capacity expansion plans, current prices are expected to hold.

Furthermore, wafer-level packaging, flip chip packaging, and heterogeneous integration, including System-in-Package (SIP) form factors, are main drivers in new materials development. The primary application for wafer-level packaging remains mobile electronics, while applications in other scenarios are also growing fast, including automotive. Flip chip interconnection keeps growing strong in high-performance computing, high-frequency communication, and other applications, with copper pillar interconnect technology increasingly used.

Opinions:

As the global semiconductor packaging industry develops quickly, a continuing upward trend also appears in demand for lead frames, the major packaging material except for IC substrates. Packaging and testing, more sensitive to the industrial cycle than other semiconductor sectors, is expected to be the first to reflect the bottoming out and rebounding in the semiconductor industry. In addition, advanced packaging is bringing core increment to the packaging and testing market. While the increasing difficulty in improving chip performance created a wider computing power gap, Chiplet has contributed to the multiplied and exponential increase in computing power to meet the demand. As the foundation and premise of Chiplet’s implementation, the advanced packaging technology will become a primary increment in the packaging and testing industry and help the packaging industry develop into an independent track with room to grow.

Market News(April 18)

RISC-V market greets a chip giant

News of Apple embracing RISC-V came into the market as early as 2021. According to the job posts published by Apple then, its core OS team was recruiting experienced developers familiar with the RISC-V Instruction Set Architecture (ISA) and ARM’s Neon vector ISA and would apply innovative RISC-V solutions and the most advanced programs to Apple products.

A SemiAnalysis analyst wrote last September that Apple was fully moving its embedded cores to the RISC-V architecture. Although many people think RISC-V lacks software ecosystems, it is rapidly becoming a new processor standard, as he pointed out. Apple’s A15 chip is reportedly distributed with more than ten ARM-based CPU cores for various non-user-oriented functions. These cores are being actively converted to RISC-V in future generations of hardware.

As one of the most trending architectures in recent years, RISC-V has been soaring in global popularity. CEO of RISC-V International said at the end of last year that there were billions of RISC-V cores on the market by then, and billions more were expected by 2023 as companies and countries all over the world were embracing RISC-V. Specific to the application, RISC-V is moving from the embedded market to data centers. Apple also finally "officially" announced its entry into RISC-V in a recent recruitment.

Opinions:

As a company with a broad portfolio of product lines, Apple, besides the A series mobile phone chips, which it prides itself in, also has the M series, which has been very popular in recent years. The company is also planning more Wi-Fi and Bluetooth chips, two fields currently widely invaded by RISC-V and believed to be Apple’s primary focus.

Coprocessors in large-scale designs will be another direction for Apple to apply RISC-V. Apple’s core processors, including A16 and M1 chips, and most embedded cores are based on ARM’s Cortex-M series or low-end Cortex-A series cores, for which the company has to pay a lot of licensing fees. In this case, RISC-V is expected to become one of the future alternatives.

Enterprise News(April 19)

Intel discontinued production of its mining chips

Semiconductor giant Intel announced officially on April 19 to end-of-life its Bitcoin mining chip series. According to an Intel spokesperson, due to the priority given to investments in IDM 2.0, the company had ended production of Intel Blockscale 1000 Series ASIC (with four models) while continuing to support their Blockscale customers.

As reported, Intel announced its entry into the Bitcoin mining field in 2022 and launched Blocksale chips, whose first customers included blockchain tech companies such as Argo Blockchain, Block, Griid Infrastructure, and Hive Blockchain. Intel said it would continue to provide services to its current Blockscale customers, which means it will satisfy current long-term contracts. Intel’s customers have to place orders for the new chips before October 20, 2023, and shipping will end by April 20, 2024, according to a document on the company’s website. Despite withdrawing from the Bitcoin mining chip market, Intel remains committed to innovative development in other areas.

In addition, Intel deleted almost all landing pages and product pages of Blockscale chips from its website without announcing any next-generation Bitcoin mining products. As reported by Tom’s Hardware, Intel vaguely answered that it would keep monitoring market opportunities when asked whether to completely withdraw from Bitcoin ASIC businesses.

Opinions:

Intel’s entry into the Bitcoin mining chip market was poorly timed, with its chips launched when Bitcoin valuation experienced a sharp drop. At the same time, its exit from the market apparently coincided with the rise of Bitcoins. The Bitcoin market entered a downturn in 2022 when Intel released its chip, affecting the mining industry substantially. The plummet in Bitcoin prices forced the shutdown of many mining machines and resulted in a considerable fall in Intel’s sales at the same time. The cryptocurrency market as whole has been experiencing a price rebound since the start of the year. However, overall, the enthusiasm for mining is still drastically lower than before.

Moreover, Intel’s phasing out of the mining chip business is evidently related to its cost-cutting plan. The company has constantly adjusted its non-core businesses over the past two years. As demand for PC and servers keeps declining, Intel’s revenues have taken a hit.

Supply-and-demand News(April 19)

ASML: Demand for the mask aligner market will exceed its production capacity in 2023

ASML announced its 2023 first-quarter financial results on April 19. In Q1, the company achieved net sales of €6.7 billion, with a gross margin of 50.6% and a net income of €2.0 billion. Quarterly net bookings in Q1 2023 were at €3.8 billion of which €1.6 billion is EUV.

According to ASML President, both net sales and the gross margin exceeded expectations in Q1, mainly benefiting from faster installation and earlier acceptance of systems in the quarter, bringing higher-than-expected revenue increases in EUV and DUV. The overall demand will still exceed ASML’s capacity for this year. The company is currently having a backlog of over €38.9 billion. It will continue to focus on maximizing system output.

ASML expects its net sales to achieve between €6.5 and €7.0 billion with a gross margin between 50% and 51% in the second quarter. R&D costs are expected to be around €990 million, and SG&A costs around €275 million. For 2023, ASML expects continued strong growth, with an over 25% net sales expansion and a slight increase in gross margin compared to 2022. Regarding the Chinese mainland market, ASML CFO said it accounted for about 8% of the company’s Q1 sales and about 20% in its backlog, which means sales in Chinese mainland will rebound sharply in subsequent quarters this year.

Opinions:

ASML is one of the few manufacturers worldwide that can offer mask aligners for chips and the only supplier of DUV mask aligners for 7nm and below advanced processes. In addition, ASML also provides the market with DUVs of various process levels for the production of different chips at mature nodes.

Reducing capital expenditures has become the norm in a sluggish market environment. As the entire industry works toward healthy inventory levels, ASML continues to see mixed signals on demand from different end markets. Some primary customers are further adjusting to demand timing, while others are absorbing this demand change, particularly in DUV at more mature nodes, which guarantees ASML’s capacity and profits.

Some Chinese Industrial News

1.CETC: breakthroughs in Chinese SiC devices and equipment

China Electronic Technology Group Corporation (CETC) announced on April 17 that the tape-out of its first 750V silicon carbide (SiC) power chip, jointly developed by its subsidiary 55th Institute and the First Automobile Works (FAW), had been completed, and the trial production of the sample A of its first 1200V plastic-packaged 2in1 SiC power module entirely Chinese-made had also been completed. As reported, the 750V SiC power chip technology has achieved a world-class level and has officially entered the product-level testing phase.

By carrying out independent technology research with a focus on new structures, new processes, and new materials in the 2in1 SiC power module project, the two technical teams achieved independent innovations throughout the process over crucial links such as chip substrate and epitaxial material preparation, chip wafer design and production, packaging structure design, plastic packaging process, and module trial production.

As reported by CCTV, the 55th Institute is the first in China to make breakthroughs in the batch manufacturing technology of 6-inch SiC MOSFETs. Its SiC MOSFET devices, batch applied to new energy vehicles and installed on one million cars, are leading in China. The performance and reliability of their series products, such as gallium nitride power transistors and high-linearity diodes for 5G base stations, are also leading in China. In the equipment end, which is more difficult for SiC customization and R&D, the shipping volume of the SiC epitaxy reactors developed by CETC’s 48th Institute increased sharply year-on-year.

2.Loongson IoT’s control equipment and servers entered the National Communication Center for Science and Technology (NCCST)

The Loongson-3C5000-server-based smart platform for the operation and maintenance of BIM Digital Twin was adopted to construct an NCCST project. The project has realized smart management via IoT sensor technology and mobilizes 450 control components of air conditioning terminal units and 50 multi-parameter environmental sensors.

The smart IoT control system solution jointly launched by Loongson and Xiaowu Technology mainly comprises the product end, the service end, and the basic data management platform for IoT. By reducing the pipeline construction volume in the project’s construction space and removing thermostats and switch panels, it achieved agile construction, energy conservation, and carbon emission reduction in the construction. It is a new-generation IoT control system solution that has realized chip-to-cloud full-stack Chinese production. As chips with a higher independence level, the application of Loongson chips in NCCST represents the service-supporting ability of high-level chips developed independently by China and their successful exploration in the new field of smart IoT.

3.ChangXin Memory Technologies (CXMT) planning for a Sci-Tech Innovation Board IPO at RMB100 billion valuation

As reported by Bloomberg on April 20, Chinese chip maker CXMT plans to file for a Sci-Tech Innovation Board IPO this year at a valuation of no less than RMB100 billion, according to informed sources. CXMT is reportedly picking underwriters and has not yet finalized the size of the IPO.

CXMT, currently the largest DRAM maker in China, mainly produces DRAM chips for devices such as PCs, servers, and smartphones. Its competitors include world-leading memory chip makers such as Samsung, SK Hynix, and Micron. CXMT’s IPO will provide it with more funds to expand its capacity and R&D investments to narrow the gap between it and international giants.

China has always been trying to develop its local semiconductor industry to reduce independence on imported chips. Due to the China-US trade frictions and the U.S.’s sanctions against Huawei and other Chinese sci-tech companies in recent years, the country has been more eagerly demanding independent chips. CXMT’s listing will help to boost China’s position and confidence in memory chips.