Company Trend(September 11)
Apple and Qualcomm signed 3-year orders
On September 11, Qualcomm announced it had concluded a deal with Apple, under which Qualcomm will continue to provide 5G baseband chips for smartphones to be launched by the latter in 2024, 2025 and 2026. According to Qualcomm, it will continue to collect the patent royalties from Apple in the coming 3 years under this agreement. It is noted that this will thicken Qualcomms profit. Data compiled by Bloomberg reveal that Apple is Qualcomms single largest customer, which contributed nearly a quarter of Qualcomms revenue. Qualcomm said that this agreement would consolidate its continual leadership in 5G technology and products. Although the financial terms of the new agreement were not disclosed, Qualcomm stated that such financial terms were similar to those of an agreement signed in 2019. Despite continued cooperation, the relationship between Qualcomm and Apple remained unstable over the years. They used to be involved in a dispute. Apple sued Qualcomm for the latters business model of charging a license fee for the patent managing the basic elements of the operation of wireless telephone networks. However, Apple lost the case. Like other major handset makers, it consented to licensed use of Qualcomms technology.
Due to the use of various devices and standards by wireless operators around the world, it is difficult to design the technology of seamless connection. Baseband chips must be able to quickly connect to outdated 3G and 4G networks, as well as faster 5G systems. Since the emergence of data-centric mobile phones, Qualcomm has been leading the development of this field. Through the new contract will continue into 2026, but Apple may still start using its own self-developed baseband chips before that time. It is learned that Apple has been working hard to develop its own 5G baseband chips to break away from its dependence on Qualcomm products. But its research and development efforts have progressed slowly. However, based on the information released by Qualcomm this time, Apples full use of its self-developed products may be delayed. In addition, the downturn of the consumer electronics industry, coupled with lower-than-expected returns on high R&D investment, is also another important reason for the renewed cooperation between Apple and Qualcomm.
Market Trend(September 12)
Chip prices increase at most 20% and Samsung hikes its chip prices
On September 12, according to the Korean Economic Daily, Samsung Electronics recently signed a memory chip supply agreement with customers (mobile phone manufacturers like Google), under which DRAM and NAND flash chip prices shall increase by 10% -20% compared to existing contract prices. Samsung Electronics predicts that the memory chip market may be in short supply from Q4 onwards. At the same time, Samsung also plans to supply memory chips at higher prices to its mobile business unit producing Galaxy phone series, in response to the trend of rising mobile chip prices. The head of Samsung DRAM development recently stated that the supply and demand of the memory market is reaching a balance starting from Q3, and huge demand will emerge from Q4 onwards. Next year, it will be generally a "demand driven" market. In addition, major smartphone companies such as Samsung and Apple have launched new products for innovation competition. This is also considered a major plus for the memory industry, as bigger memory is required to improve the performance of smartphones. The industry believes that the DRAM capacity needed for smartphones has grown at an annual rate of over 5%.
The price increase of upstream enterprises has driven a series of actions by intermediate channels and downstream enterprises. As upstream NAND Flash manufacturers like Samsung, KIOXIA and SK Hynix begin to raise wafer contract prices, the inventory levels of intermediate channels and downstream system module manufacturers are lower than normal seasonal levels, triggering the buying frenzy among end. This will further drive up the overall prices of memory modules in Q4. Previously, due to poor market conditions and expected further price declines, channel companies and downstream system module manufacturers tried to reduce their memory inventory. Later, as memory suppliers begin to increase their asking prices, end users who previously lack relevant inventory do all they can to secure the relatively low priced inventories still held in small quantities by intermediate channels and downstream system module manufacturers.
Company Trend(September 12)
TSMC announces its plan to buy Arms stake with USD 100mn
On September 12, TSMC, a leading wafer foundry, convened an interim board meeting, which decided to subscribe to the common shares of Arm, a leading provider of SIP (Silicon Intellectual Property) under Softbank Corporation, with no more than USD100mn. As for the subscription price, TSMC stated that it will be based on Arms final IPO price. Arm is expected to go public on NASDAQ this week. In addition, the interim board meeting also approved the acquisition of a 10% stake in Austrian semiconductor equipment manufacturer IMS from Intel within a limit of USD 432.8mn (approximately TWD 13.85bn) IMS Nanofabrication is a leading manufacturer of MBMW (MultibeamMask Writer) required for the development of EUV (extreme ultraviolet lithography). This technology is vital to High-NV EUV (high numeric aperture EUV) as a next-generation EUV product. IMS Nanofabrications majority interests are held by Intel. Through this dilution, Intel agrees to sell IMSs ~10% equity to TSMC, whose investment in IMS is valuated at ~ USD 4.3bn. After the dilution, Intel will remain IMS largest shareholder. The whole deal is expected to be completed by Q4 2023.
In view of Arms public offering, the shares currently subscribed on the market far exceed those of public issuance. As such, Arm has emerged as the largest IPO plan in the United States over the past two years, and TSMC, Apple, NVIDIA, Samsung, Supermicro and more technological manufacturers are vying for investment and proactively partnering with Arm. Since Arm plays a crucial part in TSMCs semiconductor ecosystem, TSMC also expects successful IPO of Arm. In response to TSMCs purchase of IMS equity from Intels hands, Intel has recently continued to dispose of IMS equity in its hands. Apart from corporate cash needs, from the TSMCs perspective, it also helps ensure the management right of officially built supply chain and operation stability.
Supply&Demand Trend(September 13)
Surging CoWoS leads to TSMCs third addition of equipment order
ChatGPTs popularity has fueled the demand for AI servers, especially for NVIDIAs AI GPU. To address the surging demand on CoWoS market and intensify competition, according to industrial news, from Q2 onwards, TSMC has added equipment orders for the third time. Industrial insiders reveal that TSMC currently extends order visibility from Q2 2024 till the end of year. Some exclusive suppliers have even received orders up to 2025. International equipment giants such as Rudolph, Disco, SUS and ASMPT continually benefit from new orders, and beyond that, Scientech, GPTC and more Chinese Taiwan equipment manufacturers have also received the third wave of orders. As estimated by equipment manufacturers, TSMCs total CoWoS production capacity will surpass 120,000 pieces in 2023, and skyrocket to 240,000 pieces in 2024, of which NVIDIA will take 144,000~150,000 pieces. At the online investor meeting in Q2 this year, TSMC said due to inadequate capacity and supply of CoWos, the demand might remain exceeding supply for a long time, it would keep scaling up production, and CoWos capacity would be doubled or more by 2024.
Amidst the tight advanced packaging test capacity, industry news broke that NVIDIA was considering adding new suppliers to disperse HBM3 and 2.5D packaging orders. Under the strong demand for high-end AI chips and HBM, TSMCs CoWoS monthly production capacity is forecast to reach 12,000 by the end of 2023, of which NVIDIAs CoWoS production capacity is forecast to soar by nearly 50% compared with the demand early this year, driven by the demand for A100, H100 and other related AI servers; coupled with the growing demand of AMD, Google and other high-end AI chips, CoWoS production capacity will be more urgent in the second half year, and this robust demand will keep its momentum till 2024. If relevant equipment is complete, it is estimated that advanced packaging capacity will further grow by 30-40%. Advanced packaging capacity is tight, and industry news broke that NVIDIA was considering adding new suppliers to disperse HBM3 and 2.5D packaging orders.
Trends of some domestic industries
1.Forehope Electronic completed the Integrated Circuit IC Chip Packaging Test Phase II Project(September 11)
According to official WeChat of Forehope Electronic, Forehope Electronic (Ningbo) Co., Ltd held its Integrated Circuit IC Chip Packaging Test Phase II Project Inauguration Ceremony in Yuyao Ningbo. It is reported that Forehope Phase II Project covers a total area of 500 mu, and the construction of 300 mu has completed in the first stage, with a total investment of 11.1bn, and an annual output of 13bn chips after ramping up production to full capacity. Phase II product line will complement with phase I, including mature packaging QFN product line, QFP product line widely applied in automotive electronics and industrial-grade products, large FCBGA product line applied in network servers, CPU processors and AI intelligent products, as well as Bumping, WLCSP, Fan-In/Out product lines representing the advanced packaging development direction. The Chairman of Forehope Electronic summarizes the advantages of Forehope Phase II Project by three words of "fast, complete and saving": "fast" indicates one-stop service for fast delivery as a whole with sufficient capacity channels and scale effects; "complete" indicates complete technologies for all advanced packaging tests; "saving" indicates saving management and saving cost, eliminating the operation in between.
2.Chinas first self-developed automotive-grade 7nm chips kicked off mass production on board(September 11)
According to September 11 news, Geelys Lynk & Co brand released new energy SUV product "Lynk & Co 08", priced at RMB 208,800 or above. This model is not only a debut of Meizu Flyme Auto vehicle system, but it also comes with Chinas first self-developed automotive-grade 7 nm mass-produced chip "Dragon Eagle No.1". "Dragon Eagle No.1" is developed independently by Siengine Technology, a subsidiary of Geely. This chip comprises 87 layers of circuits and 8.8bn transistors using 7nm technique, with a chip area of merely 83 mm2, 8-core CPU and 14-core GPU, integrating with Arm Chinas self-developed programmable NPU "Zhouyi", and INT8 computing power is up to 8TOPS. The Lynk & Co 08 model is equipped with two "Dragon Eagle No. 1". The official introduced that the two " Dragon Eagle No. 1" were integrated in the Antora 1000Pro computing platform, with NPU computing power up to 16TOPS, and processing capacities leading the industry, thus fully fitting intelligent needs of the cabin.
3.Attack of Inuchip(September 12)
According to 2023 Machine Vision Industry Development Bluebook published by Gaogong Robot recently, the scale of Chinas machine vision market hit RMB 17.065bn in 2022 (excluding the scale of automatic integrated equipment), a YoY increase of 23.51%, of which 3D vision market amounted to approximately RMB 1.84bn, a YoY increase of 59.90%. Inuchip keeps abreast with industrial growth trend, penetrates in highly integrated single-chip solution of 3D algorithm chip, and seeks to rise as the worlds leading semiconductor enterprise in the era of 3D vision. "Our self-developed serial chip is the worlds only mass-produced single chip and systematic chip integrating 3D visual perception, AI (artificial intelligence) and SLAM (simultaneous localization andmapping)", Inuchip Chief Product Officer told the author at the CIOE recently. He stressed that Inuchip was the only enterprise in China fulfilling chip-based 3D binocular stereo vision algorithm, and one of the two in the world as well. "We are actually integrating a heterogeneous platform of spatial computing and point cloud on the edge end, and creating a series of 3D vision chips integrating sensing and computing." Nowadays, Inuchip has launched two 3D vision chips NU4000 and NU4100, based on 12nm advanced technology.