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Enterprise News（July 2）

Samsung teams up with LG to develop next-generation chips.

July 2 - LX Semicon has chosen Samsung Electronics as its foundry partner responsible for developing and mass-producing next-generation chips. LX Semicon is a fabless semiconductor subsidiary company of LX Group, specializing in producing DDIs that control the pixels of smartphone and TV displays. Its major clients include LG Display and Chinese manufacturers such as BOE Technology Group and China Star Optoelectronics Technology. The company has been expanding its business portfolio into display power semiconductors and automotive MCUs while increasing the proportion of products for OLED panels, which have a higher unit price.

LX Group is considering consigning the production of next-generation display driver ICs (DDIs) to Samsung Foundry. The partnership between Samsung and LX is expected to positively influence South Korea’s domestic semiconductor ecosystem and diversify the supply chain. Besides DDIs, LX Semicon and Samsung Foundry are expected to continue collaborating to develop various next-generation chips.

Comment:

South Korea expects to become a crucial player that satisfies the new global demand for next-generation AI chips. Its macroeconomic potential and larger digital strategic plan constitute its strength. Besides being home to a few iconic mobile brands and services, it is also a major component supplier for more players. The partnership between LX Semicon and Samsung Foundry is deemed a significant move to strengthen South Korea’s local semiconductor ecosystem, creating a virtuous circle in which next-generation display chips developed by a South Korean fabless company are mass-produced by a South Korean foundry and supplied to a South Korean display company.

Market News（July 3）

Global chip giants queue up to purchase SK Hynix’s HBM.

July 3 - Following Nvidia, global tech giants are pre-ordering the fifth generation of high bandwidth memory (HBM) HBM3E by requesting samples from SK Hynix, including AMD, Microsoft, and Amazon.

Sample request is a mandatory process before order placement to prove the compatibility between their GPUs, other semiconductor chips or cloud systems, and memory semiconductors, which indicates the product yields are stable enough for mass production and marks the final stage before delivery. HBM3E is the next generation of the current HBM3, the top-of-the-line fourth generation. SK Hynix is currently the only company in the world mass-producing HBM3 chips.

The company is busy processing a large number of HBM3E sample requests from its clients, which might receive the samples by the end of this year. The output of HBM3E is increasing significantly with the explosive growth in demand for it. SK Hynix decided to use the latest cutting-edge 10nm-class fifth-generation (1b) technique to drastically increase next year’s production. Most of this increase will be filled with HBM3E.

Comment:

All companies requesting HBM3E samples from SK Hynix are major participants in the AI industry. GPUs, critical for processing large amounts of data, are the brains behind generative AI such as ChatGPT. For this reason, high-performance, high-capacity memories such as HBM are crucial. Both Nvidia and AMD, which are splitting the GPU market, have reached out to SK Hynix, while major cloud services companies like Amazon AWS and Google are developing their own ASICs and AI servers with Nvidia GPUs, which are the main drivers of the current surge in demand for HBM. SK Hynix makes about 40% of its profits from HBM, which indicates the company is actively overcoming the semiconductor downturn with HBM as its primary business strategy.

Market News（July 4）

Mergers and acquisitions are reshaping the third-generation semiconductor market.

Recently, several SiC suppliers announced their capacity expansion plans to meet the end system demand (particularly in the automotive field) in the coming years. Leading device makers such as STMicroelectronics, Infineon, Wolfspeed, Onsemi, and ROHM are building facilities in various locations.

More projects are underway at the SiC wafer level. As new players inject significant resources, SiC is gaining strong growth momentum. Wolfspeed’s MHV wafer fab is the only 8-inch wafer fab, while its SiC wafer fab will put into operation in 2023. Wolfspeed also announced the construction of another 8-inch wafer fab in Germany. At the same time, Tesla, as a major SiC user, announced a 75% reduction in SiC use in its future powertrain, which will undoubtedly bring new uncertainties to the industry.

In the power GaN market, Infineon’s acquisition of GaN Systems is significant for the power electronics industry. It is the largest deal to date in the power GaN sector. The purchase price of US$830 million accounts for about 18% of Infineon’s total annual power electronics revenue, which will be four times higher than the value of the entire power GaN market.

Comment:

SiC and GaN have become critical fields of the power semiconductor industry. They are continuing the rapid market evolution that began in 2018-2019, but now there are different drivers behind their growth. Tesla, the initially disruptive car maker, used SiC in its inverters, but now, a new trend, 800V EV fast charging, is reshaping the electric vehicle market to reduce charging time. In addition to vehicles, industry, energy, and rail applications are providing extra growth drivers. Capacity building, business integration, and new business models will enhance SiC to a new level in the next few years. In the meantime, GaN is still making progress in consumer applications, mainly in fast chargers for smartphones.

Enterprise News（July 5）

Nvidia considers outsourcing some of its AI GPUs to Samsung.

July 5 - Nvidia is considering outsourcing some of its AI GPUs to Samsung due to the increasingly tight capacity supply from TSMC. The explosion of generative AI, such as ChatGPT, pulled up the demand for Nvidia’s high-performance GPUs, including H100, A100, H800, and A800. Investment bank JP Morgan believes that with hardware products such as GPUs and networking products, Nvidia will account for up to 60% of the market share in the AI product market this year.

At the end of May, Nvidia’s CEO said that the company was actively seeking diversity in its supply chain. Besides TSMC, it will also move the currently top-end H100 GPU production to Samsung and Intel foundries. However, as South Korean media recently reported, Nvidia’s A100 and H100 GPUs will be exclusively supplied by TSMC. Samsung Electronics failed to get any orders because TSMC’s advanced packaging technology CoWoS is leading. Industry observers noted that Samsung could obtain some orders from Nvidia if its 3nm trial products pass performance validation and its 2.5D advanced packaging technology meets Nvidia’s requirements.

Comment:

Nvidia and Samsung discussed chip foundry, and their performance verification discussion is based on the most advanced processes. The chance for Samsung to take large-scale orders from Nvidia is low, but since TSMC’s capacity can hardly meet the demand, Nvidia can barely rely on it to fulfill all orders. With 3nm process yields not yet mature, the demand for AI GPUs is surging, and Nvidia may work with Samsung to mitigate the risk of short supply and even accept it as a second partner.

Noteworthily, as the chip microfabrication process gets more complex, semiconductor companies have turned to packaging technology to improve chip performance. Therefore, besides the performance validation of Samsung’s 3nm process trial products, whether the company’s cutting-edge packaging technology can meet Nvidia’s demand is also a significant concern.

Some Chinese Industrial News

1、CETC achieves full coverage of the 28nm process for Chinese-made ion implantation machines.

As reported, CETC Electronic Equipment Group Co., Ltd. (CETC-E), a CETC subsidiary company, has achieved full coverage of the 28nm process for ion implantation machines, powerfully guaranteeing the industrial security of China’s IC manufacturing industry in mature processes.

Currently, the 28nm process is the mature process with the broadest coverage in chip applications. CETC-E made continuous breakthroughs in optical path, control, software, and other critical modules of the core technology, forming a complete product lineup of ion implantation machines, including medium-current, high-current, high-energy, and third-generation semiconductor models.

As one of the earliest companies engaged in the research, manufacturing, and industrialization of ion implantation equipment, CETC-E possesses an integral research and manufacturing system from product design to mass production and applications, with products covering process devices such as logic, memory, power devices, and sensors and equipment widely used in major advanced IC production lines in China. With more than 20 million pieces taped out, the company has powerfully enhanced the resilience and security level of China’s industry and supply chains.

2、A Chinese team launches the world’s first CPU completely automatically designed by AI.

The Institute of Computing Technology of the Chinese Academy of Sciences and its partners used AI technology to design the 32-bit RISC-V CPU called Qimeng No.1, the world’s first CPU chip generated completely automatically without human intervention.

The CPU, using a 65nm manufacturing process and with a frequency of 300 MHz, can operate in Linux. It offers a performance similar to Intel 80486SX with a design cycle reduced to 1/1000. With the help of AI technology, the researchers generated four million logic gates in as few as five hours. Some industrial media noted that this was 4000 times the size of circuits the GPT-4 can currently design.

The team said the training took less than five hours to achieve >99.999999999% accuracy in validation tests. The researchers used AI technology to automatically generate the CPU design from input-output (IO) without requiring any code or natural language descriptions from engineers. By directly generating the circuit logic to meet the requirements, they eliminated the logic design and validation links in the traditional design process.

3、The Ministry of Commerce (MOFCOM) and the General Administration of Customs of China (GACC) announce to implement export control on gallium and germanium-related items.

July 3 - According to the MOFCOM website, MOFCOM and GACC issued the Announcement on Implementing Export Control on Gallium and Germanium-related Items. According to the Announcement, in accordance with the Export Control Law of the People’s Republic of China, the Foreign Trade Law of the People’s Republic of China, and the Customs Law of the People’s Republic of China, to safeguard the country’s safety and interests and with the approval of the State Council, gallium and germanium-related items will be subject to export control. Gallium-related items include gallium nitride, gallium arsenide, and indium gallium arsenide, and germanium-related items include phosphorus germanium zinc, germanium epitaxial growth substrate, and germanium dioxide. This Announcement shall come into force as of August 1, 2023.

China is a major producer of 20 critical raw materials, including gallium and germanium, and dominates in fine-tuning production and processing. Gallium and germanium are two metals extensively used in products such as solar panels, lasers, night vision goggles, and computer chips. China is the largest producer of gallium and germanium, with its gallium production accounting for over 95% and germanium production accounting for over 67% of the world.