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2022/11/21
Recent observations by market intelligence firm TrendForce suggests that the ongoing expansion of the US semiconductor trade restrictions against China could eventually spread to the display panel industry Agencies within the US government are taking notice of China’s certain advantages in the development of display technologies and build-up of panel production capacity However, the US will unlikely attempt to directly impose control over panel supply with new trade restrictions in the short term On the other hand, the upstream portion of the supply chain, especially the sections concerning driver ICs and other related semiconductor chips, are starting to react to the tightening of the US sanctions against Chinese semiconductor companies Furthermore, some electronics OEMs have recently been re-examining their panel supply chains to evaluate the sourcing of semiconductor components While OEMs have yet to explicitly ban the use of panel-related chips from Chinese suppliers, they are actively developing backup plans that would seek alternative supply sources in case the US further broadens the scope its technology export rules on Chinese companies
The continuation and strengthening of the restrictions on semiconductor trade is starting to have an effect on the supply chain related to driver ICs TrendForce’s latest investigation finds signs of decoupling or bifurcation Specifically, there is a divergence towards both extremes: a supply chain that totally excludes Chinese content versus a counterpart that is “de-Americanized” Again, looking at OEMs, they have not rejected panels from certain suppliers for now, but they might start to prefer or exclude particular IC design houses that offer driver chips As for foundries and OSAT providers, decoupling has begun in accordance with the decisions of some downstream customers In the future, there is a distinct possibility that Chinese IC design houses, foundries and OSAT providers could be barred from participating in the supply chains for the product models targeting the US market
Conversely, the ban on Chinese suppliers will not apply to product models targeting the Chinese market Instead, OEMs might actually increase Chinese suppliers’ participation in order to raise the chance of a successfully entry into this region Component suppliers such as IC design houses, too, could adopt a similar strategy so as to insert themselves into the Chinese market To comply with and support the localization policy of the Chinese government, component suppliers could increase the portion of partners or clients from China and establish a separate local supply chain
Presently, Chinese foundries have steadily raised their collective market share for large-sized driver ICs to around 25% They still have much ground to catch up when compared with the 40% held by Taiwan-based foundries, but this share figure is still significant If the US government imposes new restrictions seeking to prevent Chinese foundries from using mature semiconductor process technologies to manufacture chips such as driver ICs, then the supply chains for panels and related ICs will likely face another huge wave of capacity crunch and supply shortage
Nevertheless, since there are no direct orders from the US government targeting panel supply and related components at this moment, TrendForce believes the decoupling process in the supply chain for driver ICs is going to be a slow and drawn-out process In the long run, decoupling as an overarching trend will make the supply chain more fragmented and inefficient This development, in turn, will increase the overall cost for all parties involved Furthermore, due to the need to mitigate the potential risks resulting from the decoupling process, the supply chain could even see an elevation of minimum inventory level and a prolonging of order lead time
TrendForce holds the view that both risks and opportunities exist in the decoupling and rearrangement of the supply chain Some IC design houses could gradually redirect wafer input to fabs outside China for some of their offerings in order to eliminate the possible risks associated with the US sanctions or satisfy some customers’ demand for non-Chinese components Thus, IC design houses and foundries that operate in Taiwan could gain new orders as the supply chain undergoes an internal shakeup On the other hand, their counterparts in Mainland China could have more opportunities to rise as major players thanks to their government’s strategy for localizing supply chains
For more information on reports and market data from TrendForce’s Department of Display Research, please click here, or email Ms Vivie Liu from the Sales Department at vivieliu@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/10/24
TrendForce indicates that the rapid rise in the penetration rate of the global new energy vehicle (NEV) market has stimulated an increase in the installed capacity of power batteries on a yearly basis At the same time, the technological path of lithium iron phosphate batteries in the field of electrochemical energy storage has become the mainstream solution for new installed capacity in recent years and its market share is rising rapidly As EV and energy storage batteries are retired on a large-scale in the future, TrendForce estimates that the global market for EV and energy storage battery recycling will exceed 1TWh by 2030, of which the scope of lithium iron phosphate battery recycling will account for more than a 58% share
A plethora of competitors, but actual scale of retired power battery recycling is limited
However, several major problems remain to be solved in the battery recycling industry at this stage First, it is still early in the development of the lithium-ion battery recycling industry and approximately 70% of used batteries come from defective products and waste from battery factories The actual scale of recycling remains small Second, the number of participants in the battery recycling industry continues to rise and overall industry standardization still needs to be improved
Taking the Chinese market as an example, China has continued to introduce power battery recycling policies since 2020 More than 10,000 new battery recycling-related companies were registered in just the year 2021, an approximate 4-fold increase compared to 2020 However, there were only 45 companies (hereinafter referred to as white-listed companies) meeting the “Industry Standard Conditions for Comprehensive Utilization of Waste Power Batteries for New Energy Vehicles” issued by the Ministry of Industry and Information Technology of the PRC as of the end of 2021 It is worth noting, according to TrendForce research, the current annual production capacity of comprehensive waste battery treatment originating from white-listed companies has exceeded 101 million tons and the planned processing capacity of these companies exceeds 425 million tons However, the actual recycled volume of lithium-ion batteries in China in 2021 was less than 300,000 tons, demonstrating the obvious idling capacity of the battery recycling industry
Cascade utilization and recycling go hand in hand to create a recycling economy for the battery industry
From the perspective of China, one of the world's largest NEV markets, installed capacity in the global power battery market will exceed 3TWh by 2030 and China’s power battery installed capacity is expected to account for approximately 45% of the world's total Therefore, the effective use of a battery’s full life cycle will be an important way to create an eventual low-carbon economy and battery recycling not only makes up for a shortage of resources, but also reduces stress on the environment and resources compared with the exploitation, production, and use of primary mine materials
According to TrendForce research, the current recycling of waste lithium-ion batteries in China is mainly divided into cascade utilization and recycling and reconstruction Cascade utilization is employed in fields such as backup power, small-scale energy storage, and micro vehicles (such as low-speed electric vehicles) when power battery storage capacity is attenuated to less than 80% but most cascade utilization in the energy storage field remains at an experimental demonstration stage and is excluded from large-scale energy storage projects by the National Energy Administration of the PRC Recycling and reconstruction mainly involves dismantling retired power batteries to recover valuable metals such as lithium, cobalt, and nickel, and reuse them in the regenerative manufacturing of battery materials
For more information on reports and market data from TrendForce’s Department of Green Energy Research, please click here, or email Ms Grace Li from the Sales Department at graceli@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/10/11
In this press release, TrendForce details 10 major trends that are expected to take place across various segments in the tech industry, as follows:
Advanced Foundry Processes Reach Transistor Structure Transition Period, Mature Processes Focus on Diversified Specialized Development
Pure foundry processes transitioned from Planar Transistor to the FinFET generation starting from the 16nm node After the development of the 7nm process and the introduction of EUV lithography technology, FinFET structure encountered physical limits at the 3nm node Since then, the two leaders in advanced manufacturing processes have diverged TSMC continues utilizing FinFET structure in mass-produced 3nm products in 2H22, which will be officially released in 1H23, with the scale of mass production increasing quarter by quarter In 2023, TSMC 3nm products will include PC CPU and smartphone SoC Samsung began introducing the GAAFET-based MBCFET architecture (Multi-Bridge Channel Field-Effect Transistor) at 3nm and this process will begin mass-production in 2022 Its first-generation product is a cryptocurrency mining chip In 2023, Samsung will focus on second generation 3nm processes, with a goal of mass-producing smartphone SoCs Both companies remain focused on high-performance computing and smart phone platforms in the initial stage of 3nm mass production as these products have higher requirements for improving performance, lowering power consumption, and reducing chip area
For mature processes above 28nm, foundries are focused on diversifying development of special processes and have develop technology platforms including HV (High Voltage), Analog, Mix-signal, eNVM, BCD, and RF from logic processes These are used to professionally produce peripheral ICs such as power management ICs, driver ICs, microcontrollers (MCU), and RF (Radio Frequency) required in the fields of smart phones, consumer electronics, high-performance computing, automotive, and industrial computing As 5G communication, high-performance computing, new energy vehicles, and automotive electronics usher in a trend of increased special semiconductor component consumption, it is imperative for these applications to rely on support from diverse specialized processes to achieve the special purposes required in various fields
Development Trends Focus on Automotive IC Design, Third Generation Semiconductors on the Rise
The global automotive industry is trending towards C-A-S-E, driving strong demand for automotive semiconductors Automotive semiconductors are essentially divided into two categories: IDM and Fabless As traditional automotive chip suppliers, IDMs offer a fairly complete selection of various ECUs and have gradually evolved from a traditional distributed architecture to Domain Control Unit (DCU) and Zone Control Unit (ZCU) architectures Fabless, on the other hand, continue to focus on the field of high-performance computing for vehicles and develop in-vehicle telematics systems and SoCs for self-driving computing Due to the complexity of automotive functions, the 32-Bit MCU type ECU has become the mainstream specification in the market In 2023, its penetration rate will exceed 60% with a market value reaching US$74 billion and it will develop towards processes below 28nm (inclusive) In addition, self-driving cars require high-performance computing AI SoCs and continue to develop towards advanced processes below 5nm (inclusive) with computing power reaching 1,000 TOPS and, along with MCUs, these products will accelerate the upgrade of the global automotive industry
With the rapid rise of 800V automotive electric drive systems, high-voltage DC charging piles, and high-efficiency green data centers, SiC and GaN power components have entered a stage of rapid development TrendForce predicts that from 2022 to 2026, the compound annual growth rate of the SiC and GaN power device market will reach 35% and 61%, respectively As demand for rapid charging and better dynamic performance in electric vehicles becomes more pressing, additional car companies are expected to introduce SiC technology into main inverters ahead of 2023, among which highly reliable, high performance, and low cost SiC MOSFET is a competitive focal point GaN has entered a red ocean market for low-power consumer electronics applications and Samsung launched its first 45W GaN fast charger in 2022, again boosting market enthusiasm As technology and supply chains continue to mature and costs fall, GaN power components are expanding to medium and high-power energy storage, data centers, household micro-inverters, communication base stations, and automobiles Against the backdrop of the EU’s draconian energy efficiency requirements and China's East-West data center plan, data center power supply and server manufacturers have clearly grasped the importance of GaN technology GaN power components are expected to be released on a large scale in 2023
New DRAM Generation Takes Shape, Development of 200+ Layer NAND Flash Accelerates
In terms of DRAM, accompanying the pandemic-accelerated digital transformation of corporations, not only did server shipments focus more on data centers, but also allowed new types of memory modules to coalesce, especially CXL specification based modules As the number of RDIMM slots in a server system is limited, the use of CXL enables the entire device to avoid this limitation when performing high-speed computing while increasing the amount of DRAM that can be used by the system In 2023, not only will server CPUs such as Intel Sapphire Rapids and AMD Genoa support CXL 10, but DRAM modules will also employ DDR5 Furthermore, in order to run AI and ML (Machine Learning) operations effectively, certain server GPUs will introduce a new generation of HBM3 specifications Therefore, amid planning by memory manufacturers and numerous xPU providers, a new generation of memory has gradually organized and is expected to gain market share in 2023
In terms of NAND Flash, the number of stacked layers will accelerate in 2023 and four suppliers are expected to move towards 200+ layer technology Some manufacturers will even mass-produce PLC (Penta Level Cell), hoping for an opportunity to replace HDD applications on servers in the future as unit growth is further optimized In terms of SSD transfer interfaces, with the mass production of Intel Sapphire Rapids and AMD Genoa in 2023, enterprise SSDs will be further upgraded to support PCIe 50 transfer, increasing transfer rate manifold to 32GT/s to be utilized for high-speed computing needs such as AI/ML and also contributing to the rapid increase in the average capacity of enterprise SSDs
Automotive MLCC Development Accelerating Due to Rising Assisted Driving Penetration Rate
At present, advanced driver assistance systems (ADAS) are gradually becoming a standard feature on new cars L1/L2 is the primary configuration level in the market at this stage, utilizing approximately1,800~2,200 automotive MLCCs As semiconductor IDM developed ADAS-specific MCUs, Sensor ICs, etc become increasingly mature, L3-level ADAS systems will become a central upgrade sought by many luxury-manufacturers for their high-end car models starting from 2023, leading MLCC consumption to jump to 3000~3500 units Among MLCCs, the 0402 size just meets the limited space of a vehicle side monitoring module and has become the main application size specification
The electric vehicle power core has become one of the main research and development priorities of various car manufacturers in response to consumers' demand for improved battery life, as well as to optimize charging and discharging efficiency and power recovery systems The inverter, battery management system, and DC power converter are three sub-system making up the soul of the vehicle, utilizing approximately 2,000~2,500 high-capacity (above 10u) and high-temperature (X7S/R) automotive MLCCs Japanese manufacturer Murata officially mass-produced new high capacitance and high voltage 1206 size automotive products that can reach 22u 16V in early 2022 Companies including TDK, Taiyo Yuden, Samsung, and Yageo are also actively rushing to market
Carbon Neutrality Accelerates EV Transition, Battery Battle Rages as Reduced Subsidies Resurface Cost Issues
The cost of a variety of raw materials required for automotive manufacturing have risen after the start of the Russian-Ukrainian war In particular, battery-related material costs have increased dramatically and were quickly passed through to automobile list prices Coupled with the two-year long shortage of automotive semiconductors, strengthening the toughness, elasticity, and stability of the supply chain has become a top priority for car manufacturers Automakers hope to shorten the battery supply chain to avoid supply chain dissociations Countries are actively promoting the localization of battery supply chains due to political considerations On the one hand, they propose preferential investment conditions and, at the same time, they also require localization of a proportion of vehicle components, as a form of carrot and stick in attracting battery plants to invest worldwide As a number of countries begin to reduce or cancel car purchase subsidies for electric vehicles, the cost issue has resurfaced As it is necessary to produce cost-competitive models while taking into account safety and performance, battery development is inevitable and is expected to develop towards unity, diversification, and integration Unification of battery assembly strengthens battery production management and improves commonality Using different types of batteries according to vehicle grades diversifies supply risk and reduces cost Integrating designs through cell-to-pack (CTP), cell-to-chassis (CTC) and other highly consolidated methods improve the modularity of battery and chassis
On the other hand, driven by the global goal of net zero carbon emissions, demand for power batteries as the heart of electric vehicles has grown rapidly, inciting relevant companies to accelerate capacity expansion In 2023, global power battery production capacity will exceed the TWh (Terawatt-hour, one million megawatt-hours) threshold and output value will be close to US$120 billion At present, the rapid expansion of the power battery industry chain is constrained by the expansion cycle of vanguard mineral resources such as lithium, cobalt, and nickel, resulting in the rising cost of power battery manufacturing in recent years With its cost-effective advantage, the global market share held by lithium iron phosphate batteries is expected to exceed that of ternary batteries in 2023
Production Capacity and Technology Secured, Chinese Panel Makers Expand Influence in Small-size AMOLED Market
With the gradual expansion of China's flexible AMOLED production capacity, the development of the small-size mobile phone market has gradually increased in influence Korean panel manufacturers and brands were previously major leading companies in the flagship-oriented folding mobile phone market However, as domestic Chinese mobile phone brands began to successively launch folding mobile phones, opportunities have appeared for folding AMOLED panels produced by Chinese panel manufacturers Adopting a strategy of supply chain localization, local Chinese mobile phone brands are expected to gradually expand the use of foldable AMOLED panels sourced from Chinese panel factories In order to reduce massive flexible AMOLED production capacity, panel makers are aggressively optimizing costs AMOLED driver IC are expected to be converted to a RAM-less architecture to reduce costs As flexible AMOLED panel structure is adjusted, the cost and quotations of some flexible AMOLED panel products can be reduced to that of standard Rigid AMOLED panels, with an aim towards mid-range models which account for a greater proportion of the market
Another mid-size market is notebooks AMOLED notebooks are expected to account for approximately 12% of the overall notebook market in 2022 and approximately 17% in 2023 The decisive key to accelerated mid-size market development in terms of AMOLED panels revolves around Apple's future plans for iPad and Macbook series products, as Apple has begun to consider the use of AMOLED panels Prevailing AMOLED panels remain limited by the size of production lines, currently still in the sixth-generation, which are not very economical in terms of cutting efficiency In addition, the service life of notebook computers is longer than that of standard mobile phones Doubts regarding the lifespan of current AMOLED panel structure led to the development of Tandem (two-stack light emitting layer) architecture Panel makers are expected to continue focusing on the development of mid-size notebook products with their existing production capacity and technology in the next 1-2 years, which will serve as a basis for future larger generational capacity development At the same time, discussions and planning will be conducted related to 85-generation RGB vapor deposition AMOLED production capacity and technology
Micro LED Diversifies into More Applications, TV and Automotive Displays Drive Mini LED Backlight Penetration
In 2022, total shipments of Mini LED backlight displays will come in at approximately 168 million units, an increase of 74% YoY, of which TV applications will account for the greatest investment by brands There are three main reason First of all, Mini LED technology is the best solution for improving LCD contrast Secondly, due to limited OLED production capacity, more than 95% of flat-screen TVs are expected to retain the use of LCD technology in 2023 Mini LED provides the best path for LCD TVs to improve specifications and rejuvenate products Finally, Chinese manufacturers are actively investing in the upstream, midstream, and downstream of Mini LED products Through a strategy of pricing by quantity, manufacturers can use a higher cost-efficacy to accelerate Mini LED backlighting penetration in the TV market Mini LED TV shipments are estimated to reach 44 million units in 2023, an annual increase of approximately 13%
Vehicle displays are another incubation hotbed for Mini LED backlight applications Compared with consumer displays, automotive displays have higher requirements for brightness, contrast, and reliability Mini LED backlights’ relevant characteristics help improve driving safety Stimulated by a dynamic pursuit of more powerful display effects in new energy vehicles (NEV) and a trend towards digital instrumentation, Mini LED backlights will also be prioritized for expanded use in NEVs In 2023, approximately 300,000 Mini LED automotive displays are estimated to be shipped, an annual increase of approximately 50%
Smart watch wearables will be the next mass-produced application of Micro LED post-large displays in 2023 with high-priced fitness trackers as a starting point In the future, design will be centered on Micro LEDs combined with flexible backplanes In terms of applying microdisplays to transparent AR smart glasses, although very small sized (below 5um) Micro LEDs must first overcome difficult challenges such as full-color solutions and external quantum efficiency of red light chips, there is an opportunity to accelerate the development of Micro LED microdisplays through the solid technical foundation laid out by the LED industry as a whole
In terms of automotive displays, in order to allow drivers to immerse themselves in a highly intelligent cabin built for interaction with a man-machine interface, the development of in-vehicle displays covers large-scale, curved, and transparent displays, high dynamic contrast, or even a combination of more sensing components to achieve intelligent functions Micro LED is very suitable for application in a high-end automotive environment In terms of heads-up display (HUD) applications, a HUD integrates and projects dashboard and navigation system information onto the front windshield, reducing the chances of drivers looking down, for the purpose of driving safety Micro LEDs with active driving solutions can also be directly displayed on the transparent glass backplane to achieve a HUD function 2023 is a key period for relevant manufacturers to begin product design and verification, establishing a long-term development foundation for Micro LED automotive smart cockpits and transparent displays
Looking Forward to 2023, Proportion of 5G Smartphones Expected to Increase to 60%
From the perspective of smartphone evolution, prior focus has been on improving hardware specifications However, as innovation fell in recent years, smartphone brands are more committed to software algorithms and the promotion of peripheral services such as partnerships with optical giants Zeiss and Leica in the field of video algorithms and providing payment and video streaming services In addition to highlighting differences between brands, this strategy also represents a win-win in terms of revenue by increasing peripheral services Looking forward to 2023, the proportion of 5G smartphones is expected to officially top 50% As display technology advances, the penetration rate of OLED folding mobile phones is estimated to reach 11% in 2022 With smartphone brands successively launching new flagship folding devices and driven by improved specifications and more competitive pricing, penetration rate is expected to reach 18% in 2023 There is an opportunity to inject a breath of fresh air into a market where inflation has led to sluggish consumer sentiment and drive folding mobile phones into the mainstream
AR/VR Products Become Cornerstone of Green Production, Accelerate Metaverse Popularization
The Metaverse will prompt branded manufacturers to accelerate investments in AR/VR product development and bring more products to marker in 2023 At the same time, manufacturers will also actively promote various Metaverse application services to drive demand in the AR/VR hardware market through platform services and then use the virtual interactive experience provided by hardware devices to enhance the benefits of Metaverse applications In the consumer market, manufacturers will focus on application such as virtual communities, games, and live streaming of virtual characters (VTubers) while commercial distance conferencing and distance education can provide more diverse communication and interaction functionality through the Metaverse platform than 2D video The demand for visual and man-machine interaction will gradually increase after users try these interactive and entertainment applications
Therefore, the Metaverse will also drive the adoption of new displays and optical components such as Micro OLED, MiniLED, and Pancake lenses Operation will also develop from the original controller configurations towards image recognition or wearable device applications, leading to the installation of more image sensing and MEMS components to achieve a natural man-machine interface through the analysis of human body data This effect has prompted many manufacturers to invest in the development of technology and patents related to operational design and analysis algorithms In addition, AR/VR applications will also play an important role in smart manufacturing, smart transportation, and smart cities, especially considering green industry trends such as energy conservation and carbon reduction The Metaverse platform’s virtual simulation functionality can reduce waste generated in real-world testing and usage including in product design and inspection, production line management and trial operation, traffic simulation and planning, and virtual tour of urban facilities Assisted by AI applications and computing performance, virtual simulations will reduce the costs of running corporations and governments, and will also increase the willingness to adopt and accelerate the popularity of the Metaverse
Large-scale Commercial Use of 5G FWA Adopted Globally in 2023, Accelerates Popularization of Home Broadband
Since 5G FWA can support home and business applications and provides larger bandwidth and lower latency connections, it has become an alternative to fixed broadband connections At present, 83 operators in more than 45 countries and regions worldwide have launched 3GPP-compliant 5G FWA services FWA operators need to provide data at the lowest possible total cost of ownership (TCO), while ensuring network connectivity and the future development of the entire broad ecosystem In 2023, operators around the world have invested in the development of broadband construction In addition, regulators see wireless as an alternative to wired connections Operators are also considering expanding the deployment of FWA services, accelerating the provision of broadband Internet services, and improving transmission rates through wireless communication technology Deploying 5G FWA services involves shorter time-to-market and lower cost Therefore, service providers can furnish high-speed, low-latency broadband services in a shorter timeframe through integrating 5G technology In addition, the provision of new spectrum in multiple frequency bands and services that are becoming gradually more affordable to families will become a driving factor for the development of 5G FWA in 2023
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/10/08
The US Department of Commerce announced new semiconductor restrictions on October 7 in the United States In addition to existing restrictions on the logic IC sector, this new update extends to the memory category In addition to Chinese-funded enterprises, the extent of these restrictions stipulate foreign-owned production centers located in China will also need to apply for approval on a case-by-case basis in order to continue to obtain manufacturing-related equipment In addition, the new restrictions increase the difficulty for China to obtain any chips that may be used for military purposes through imports
According to TrendForce research, the scope of this update is primarily limited to 16nm, 14nm, or more advanced proceses for logic ICs (such as FinFET or GAAFET), 18nm or more advanced processes for DRAM, and 128-layer or higher products for NAND Flash chips
Analysis of impact on foundry industry
In terms of foundry equipment supply, after SMIC was included on the Entity List in 2020, according to TrendForce investigations, the US Department of Commerce targeted US equipment manufacturers who wished to export equipment used for processes below 16nm (inclusive) to Chinese fabs not included on the Entity List including HuaHong Group, etc, and even foreign-owned production centers located in China, instituting a review before export can be implemented Therefore, most Chinese fabs are currently focusing their production expansions on processes 28nm and above As for non-Chinese wafer foundries, only TSMC Nanjing is focused on 28nm expansion and has no plan for advanced processes
TrendForce indicates, although Chinese fabs are actively partnering with domestic Chinese, European, and Japanese equipment manufacturers in an attempt to develop non-US centric production lines and have turned to the development of 28nm and above processes, the ban is completely stifling the possibility for China to develop and expand advanced processes 16nm and below and the expansion of processes 28nm and above is also subject to a protracted review process
In addition, the US ban will expand the scope of its restrictions following the inclusion of high-end GPUs such as NVIDIA’s A100/H100 and AMD’s MI250 in the HPC sector into the range of sanctions at the end of August In the future, it will target US manufacturers, including HPC sector CPUs, GPUs, and AI accelerators used in datacenter, AI, and supercomputer applications, requiring review before such items can be exported to China In addition, foundries may no longer be able to manufacture any of the above-mentioned HPC-related chips for any Chinese IC design houses TrendForce believes, regardless of whether the client is a Chinese or American IC design house, most HPC-related chips are currently manufactured by TSMC with mainstream processes at the 7nm, 5nm, or certain 12nm nodes In the future, whether the situation is American factories no longer being able to export to the Chinese market or Chinese factories being unable to initiate projects and mass produce wafer starts, it will all have a negative impact on the future purchase order status of TSMC's 7nm and 5nm processes
Analysis of impact on memory industry
TrendForce indicates, according to the new specifications announced by the US Department of Commerce, the DRAM portion of sanctions will be limited to the 18nm process (inclusive) and equipment must be reviewed by the Department before import This move will greatly restrict or delay the sustainable development of China's DRAM sector CXMT possesses the largest memory market share for a Chinese company in the domestic Chinese market Since 2Q22, the company has been committed to moving from the 19nm process into the 17nm process Although the purchase of machinery to fulfill future needs had been accelerated before the ban, volume is still insufficient CXMT continues to build new plants, including Phase 2 in Hefei and SMBC (SMIC Jingcheng), which is in discussion with SMIC All of these projects will face difficulties in obtaining equipment in the future
In addition to CXMT, the C2 plant of SK hynix's DRAM production center in Wuxi is also affected by the restriction order The factory accounts for approximately 13% of the world's total DRAM production capacity and its process has evolved to 1Ynm and more advanced nodes, which means that subsequent continuous addition of equipment required for production requires approval on a case-by-case basis
TrendForce has also observed, considering geopolitics, although current market demand is sluggish and supply and demand are seriously imbalanced, the three major manufacturers in the DRAM market still plan to increase production capacity in their home countries in the next 10 years and continue to reduce the proportion of production in China
In terms of NAND Flash, TrendForce indicates that the import of NAND production equipment into China will be further restricted in the future, especially for equipment used in the manufacture of product of 128 layers and above (inclusive), requiring prior approval before import It is estimated that this ban will significantly impact the long-term plans of China's YMTC to upgrade its factory campuses as well as Samsung's Xi'an plant and Solidigm's process migration plan in Dalian
TrendForce indicates that this ban will restrict YMTC from further expanding its customer base At this stage, YMTC has been aggressively sending SSD products out for verification, hoping to successfully infiltrate the supply chain of non-Chinese customers in 2023 In the future, as the impact of the ban materializes, the US government will impose stricter restrictions on the development of China's memory industry which will greatly limit non-Chinese customers’ adoption and consideration of YMTC
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/09/22
According to TrendForce research, rising inflation has weakened demand for consumer products, flattening the peak of peak season In 3Q22, memory bit consumption and shipments continued to exhibit quarterly decline Due to a significant decline in memory demand, terminal buyers also delayed purchases, leading to further escalation of supplier inventory pressure At the same time, the strategies of various DRAM suppliers to increase their market share remain unchanged There have been cases of "consolidated Q3/Q4 price negotiations" or "negotiating quantity before pricing" in the market, which are the reasons leading to a ballooning of declining DRAM prices to 13~18% in 4Q22
In terms of PC DRAM, due to weak demand for notebooks, PC OEMs will remain focused on destocking DRAM inventory While the DRAM supply side has not actually reduced production since operating profit remains favorable, bit output continues to rise and pressure on suppliers' inventory becomes increasingly obvious From the perspective of DDR4 and DDR5, the price drop forecast in 4Q22 is 13~18% with DDR5 declining more than DDR4 However, as the penetration rate of DDR5 continues to rise, coupled with a higher unit price, the penetration rate of DDR5 in the PC DRAM sector will increase 13~15% in 4Q22, which will buoy the average unit price of overall PC DRAM (combined DDR5 and DDR4) marginally and PC DRAM pricing in 4Q22 is estimated to drop by approximately 10~15%
In terms of server DRAM, server terminals have reduced server DRAM bit purchases due to a delay in their new platform and shipments of whole servers is expected to decline in 4Q22 Client server DRAM inventory will be at a high watermark for approximately 9-12 weeks At the same time, as OEMs and Chinese cloud service providers have slowed their purchasing momentum, manufacturers have shifted focus to negotiating pricing and volume with North American cloud service providers However, output cannot be effectively digested, compounding manufacturers’ inventory pressure In addition, barring the binding two-quarter consolidated price schemes originally negotiated in 3Q22, it cannot be ruled out that at the end of this year, sellers will offer buyers lower pricing to make advanced purchases for 1Q23 Therefore, the quarterly decline in DDR4 pricing in 4Q22 is likely to be as severe as 13~18% DDR5 will officially enter mass production in 4Q22 with sample pricing dropping by 25~30% compared with sample pricing in the previous quarter However, the initial penetration rate of mass production is only around 5% Therefore, the impact on overall server DRAM (combined DDR5 and DDR4) pricing is limited and server DRAM prices are estimated to drop by approximately 13~18% in 4Q22
In terms of Mobile DRAM, smartphone brands continue to adjust their mobile DRAM inventory Inventory levels are expected to be maintained at 7-9 weeks by the end of 3Q22 and variables remain in the seller’s market Therefore, smartphone brands continue to revise their annual production targets downward which increases the difficulty of destocking mobile DRAM As the proportion of advanced processes utilized by manufacturers continues to grow, their contribution to mobile DRAM bit output has increased These factories’ consolidated price negotiation strategy in 2H22 has yet to bear fruit, so demand from client brands did not increase Although new Apple products are bound to boost market demand in 4Q22, due to the pressure exerted by previously accumulated inventory and increased 4Q22 supply, pressure on factory inventory will worsen The price of mobile DRAM is estimated to drop by approximately 13~18% in 4Q22 and it may continue to deteriorate
In terms of Graphics DRAM, TrendForce expects another round of price cuts for graphics cards However, various types of terminal promotions can only eliminate preexisting inventory, which possesses limited value in driving new demand Demand for GDDR6 8Gb and 16Gb has weakened simultaneously due to buyer inventory adjustment Buyers’ purchasing volume was not stimulated even though DRAM suppliers slashed prices in 3Q22 Therefore, preexisting graphics DRAM inventory continues to pile up, creating greater pressure coupled with the gradual production of previous wafer starts From the perspective of 4Q22, although there are only two GDDR6 8Gb suppliers, Samsung and SK hynix, due to huge inventory pressure, the two parties will inevitably compete for orders by undercutting the other’s pricing Therefore, the decline of GDDR6 8Gb in 4Q22 may be higher than GDDR6 16Gb, lowering prices by approximately 10~15%
In terms of consumer DRAM, although networking benefited from an alleviation of materials shortages and infrastructure upgrades in Europe and the United States stabilizing consumer DRAM shipments, offsetting declining demand for other end products proved difficult In a down price cycle, customers have kept their inventories at healthy levels and are not actively stocking Demand for consumer DRAM is expected to remain weak Affected by downward revisions in smartphone production throughout the year, demand for image sensors (CIS) has also declined Therefore, Korean manufacturers have slowed the pace of migrating old processes (DDR3/DDR4) to CIS, resulting in continuous output of heavy consumer DRAM bit volume and inventory pressure that has become difficult to reduce As oversupply has not eased, DDR3 and DDR4 prices are expected to drop by 10-15% in 4Q22 and overall consumer prices will drop by 10-15%
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