As the Japanese government injects substantial funds to revitalize its semiconductor industry, the dynamics of the Japanese semiconductor industry have been a global focus. TrendForce, during this year’s SEMICON Japan, organized its first overseas industry-focused information seminar, delving into the global semiconductor, optoelectronics, and electric vehicle industries, with a particular focus on the dynamics and strategies of the Japanese market and companies. The event attracted over a hundred participants from Japanese technology industry.

The seminar, opened by TrendForce CEO Kevin Lin, under the theme of “the era of challenges,” served as a commentary on the future development of the technology industry in the coming years. Lin pointed out that global technological industries, influenced by geopolitical factors, are experiencing a trend of supply chain restructuring. He also highlighted China’s expansion in the semiconductor, electric vehicle, and downstream supply chains, reshaping the global supply chain landscape—an aspect requiring global attention.

During the seminar, TrendForce’s Senior Research Vice President, Ken Kuo, presented an analysis of the global memory and AI server market. He noted that after a year and a half of adjustments, prices in the DRAM and NAND markets started to rise across the board in the fourth quarter, driven primarily by robust growth in AI. This trend is expected to continue into the next year.

Beyond AI servers, the introduction of technologies such as Microsoft’s Copilot, as well as AI PCs and AI smartphones, is poised to be a growth driver next year. In terms of AI chip shipments, NVIDIA is projected to maintain its dominance, with an estimated 1.5 million units shipped this year and an anticipated 100% growth next year.

The semiconductor foundry market is expected to recover in 2024.

The recovery of the semiconductor market in 2024 was a major focus for participants. TrendForce’s analyst Joanne Chiao mentioned that as supply chain inventory pressures gradually ease, the semiconductor foundry industry is expected to experience a recovery in 2024, driven by TSMC’s advanced processes and inventory replenishment momentum, with a projected growth of 7%.

In light of geopolitics, , semiconductor foundry supply chains are undergoing restructuring. In 2023, Taiwan is expected to account for approximately 46% of global semiconductor foundry capacity, followed by China at 26%, South Korea at 12%, the United States at 6%, and Japan at 2%. With the drive from subsidy policies in China and the United States to increase local production capacity, by 2027, Taiwan and South Korea’s production capacity shares are expected to converge to 41% and 10%, respectively.

Meanwhile, Japan is actively implementing subsidy policies to support local company Rapidus and attract Taiwan’s TSMC and PSMC to establish facilities, aiming to secure a place in the semiconductor foundry market.

The introduction of Apple Watch with Micro LED is expected in 2026, with estimated display costs 2.5-3 times higher than OLED.

TrendForce’s Senior Research Vice President, Eric Chiou, analyzed Apple’s progress in adopting new display technologies during the display technology session. He mentioned that the next-generation Apple Watch panel would use Micro LED as the display technology, with a size larger than the current Apple Watch Ultra at 2.12 inches.

The product will have two key suppliers: German LED giant ams OSRAM, which will exclusively supply Micro LED chips smaller than 10x10um, and South Korean panel manufacturer LG Display, responsible for the chip mass transfer engineering in addition to providing LTPO glass backplates.

Chiou pointed out that the adoption of small-sized chips inherently helps compress costs. Considering Apple’s strong bargaining power in the supply chain, he estimated that when the product is launched in 2026, the cost of the Micro LED display panel could be controlled below $120, equivalent to 2.5 to 3 times the current price of OLED panels—a reasonable range for a new technology.

Moreover, with Apple’s outstanding ability to integrate new technologies and specifications, there is an expectation of achieving million-unit-level shipments in the first year of launch, injecting abundant vitality into the demand for Micro LED chips and the overall industry’s development.

China’s EV expansion brings impact to the global automotive industry.

In 2023, China became the world’s primary exporter of automobiles, prompting the global automotive industry to recognize that competition with Chinese automakers will extend from the domestic market to the global market. TrendForce analyst Caroline Chen highlighted in her speech that the most significant threat to international automakers is China’s advantage in EV( including BEV, PHV, FCV).

She emphasized that due to China’s early development of EVs, it has established a complete supply chain, particularly in the proactive development of power battery production capacity and upstream materials. EVs account for over a quarter of China’s passenger car exports.

On the other hands, with a nearly 60% market share in the Southeast Asian market, Chinese automakers gradually threaten Japanese automakers’ long-term dominance in the Southeast Asian automotive market.

She believes that as Chinese automakers expand into the international market, Japanese automakers should not only accelerate the development of new energy vehicles but also leverage their long-accumulated brand value and well-established maintenance systems as core competitive advantages. Additionally, maintaining leadership positions in semiconductor and chemical materials is a strategy for sustained investment to consolidate their influence in the automotive industry.

Due to escalating raw material and labor expenses, The Elec reported that Dongwoo Fine-Chemistry, a subsidiary of Japan’s Sumitomo Chemical, plans to increase the prices of KrF and L-line photoresists for South Korean semiconductor companies. Price increases vary depending on the type of offering, ranging from around 10% to 20%.

As a pivotal material in semiconductor manufacturing, photoresist leverages photochemical reactions and undergoes processes like exposure and development through photolithography. This facilitates the transfer of intricate patterns from the reticle to the processing substrate. The KrF photoresist highlighted in this report represents a high-end variant, marking a significant competitive market for future players.

The photoresist market has been dominated by several major manufacturers such as Tokyo Ohka Kogyo, DuPont, JSR, Shin-Etsu Chemical, Sumitomo Chemical, and Dongjin Semichem. This market concentration is particularly pronounced in the market segment for semiconductor photoresist.

The photoresist industry demands high specialization, involving intricate formulations of resins, photosensitive acids, and additives—guarded as trade secrets by each company. The substantial technological barrier, coupled with the necessity for purity and performance from laboratory trials to market production, makes the entire product development process time-consuming and intricate. Additionally, meeting customer requirements and adaptation of the production line requires 1 to 3 years of validation, making it challenging for the customers to shift from current photoresist companies.

Faced with technological and customer-centric challenges, photoresist companies wield substantial negotiating power. The recent uptick in photoresist prices has prompted a noteworthy response from the South Korean semiconductor industry.

Insiders from the foundries commented, “In the face of rising photoresist prices, foundries have little choice but to pass on some of the costs to customers (fabless companies).” They further noted, “The price increase in Dongwoo Fine-Chemistry’s photoresist may contribute to a decline in the profitability of foundries and the fabless industry.”

(Image: Dongwoo Fine-Chemistry)

Nvidia CEO Jensen Huang announced on the 11th the company’s intention to deepen collaboration with high-tech companies in Vietnam, with a focus on fostering local expertise in AI and digital infrastructure development. Huang revealed plans to establish a chip center in Vietnam, as reported by Reuters.

According to documents released by the White House in September to enhance bilateral relations, Nvidia has invested USD 250 million in Vietnam. The company has strategically aligned with leading tech companies to implement AI technology in cloud computing, automotive, and healthcare industries.

This marks Huang’s first visit to Vietnam, where, during an event in Hanoi, he emphasized, “Vietnam is already our partner as we have millions of clients here.” He stated, “Vietnam and Nvidia will deepen our relations, with Viettel, FPT, Vingroup, VNG being the partners Nvidia looks to expand partnership with,” Huang said, adding Nvidia would support Vietnam’s artificial training and infrastructure.

Vietnam’s Minister of Planning and Investment, Chi Dung Nguyen, highlighted during the meeting on December 11th the country’s ongoing efforts to design mechanisms and incentives to attract investments in semiconductor and AI projects.

During his meeting with Vietnamese Prime Minister Pham Minh Chinh on the 10th, Huang shared the vision of establishing an R&D center, emphasizing that “the base will be for attracting talent from around the world to contribute to the development of Vietnam’s semiconductor ecosystem and digitalization.” Subsequently, on the 11th, Nguyen Chi Dung extended an invitation for Nvidia to consider establishing an R&D base in the country.

On the 11th, Nvidia engaged in discussions with the Vietnamese government and local tech companies regarding semiconductor cooperation agreements. According to insiders, Nvidia may potentially reach a technology transfer agreement with at least one Vietnamese company.

Given the strained trade relations between China and the U.S., Vietnam’s technology and manufacturing sectors are presented with a significant opportunity. The government actively seeks to enhance chip design capabilities and explore avenues for establishing a viable chip manufacturing industry.

Vietnam already serves as a pivotal IC packaging hub for global chip manufacturers. For instance, Intel boasts that it has world’s largest IC packaging and testing facility, is situated in Vietnam. Despite temporary delays in the expansion of its Vietnamese factory due to power supply and bureaucratic challenges, Intel affirmed in a Reuters interview, “Vietnam will continue to be a critical part of our global manufacturing operations as demand for semiconductors grows.”

Furthermore, several chipmakers have recently set up or expanded production facilities in Vietnam. Major OSAT provider Amkor commenced operations at its new USD 1.6 billion IC packaging plant in Yen Phong 2C Industrial Park, Bac Ninh Province, Vietnam, in October this year. A month earlier, Samsung’s OSAT partner, Hana Micron, announced the inauguration of its USD 600 million IC packaging plant in Bac Giang Province.

(Image: Nvidia)

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• [News] Amkor’s Vietnam Plant Meets High-End Semiconductor Demand as Advanced Packaging Thrives

Samsung, the Korean tech giant, has unveiled SAINT technology to counter TSMC’s advanced CoWoS packaging, aiming to benefit from the surging AI market. Market reports reveal that Samsung is strategically procuring a substantial amount of 2.5D packaging equipment, indicating a keen awareness of the soaring demand from AI chip companies like NVIDIA, reported by Korean media The Elec.

Samsung has acquired 16 sets of packaging equipment from the Japanese company Shinkawa. Currently, 7 sets have been received, with the possibility of additional orders based on future requirements. Samsung’s objective is to demonstrate its prowess in packaging and HBM technologies, seeking recognition and partnership with NVIDIA. As the limitations in NVIDIA’s current supply chain, especially due to insufficient CoWoS advanced packaging capacity in TSMC, Samsung emerges as a promising alternative for diverse supply chain.

On the other hand, NVIDIA’s ambitious goal of achieving USD 300 billion in AI sector revenue by 2027 requires a reliable supply chain, as per reported by TechNews. To this end, Samsung is poised to supply its next-gen GPU, Blackwell, featuring HBM3 and 2.5D packaging. This move aligns with NVIDIA’s strategy to diversify its supply chain away from existing providers like TSMC.

For Samsung, this collaboration presents a significant opportunity to enter the thriving AI market. Success in this venture could not only bolster the financial performance of Samsung’s memory and advanced packaging divisions but also open doors to orders from players like AMD and Tesla. However, the key lies in how effectively Samsung meets the formidable market demand, particularly in semiconductor production, advanced packaging, and memory technology.

(Image: Samsung)

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• [News] TSMC’s CoWoS Demand Surges from NVIDIA, Apple, AMD, Broadcom, Marvell, Monthly Capacity Up 120% in 2024

The AI landscape witnesses a robust surge with the consecutive launches of AMD’s “Instinct MI300” series AI chips and NVIDIA’s upcoming “B100” GPU structure. This wave of innovation propels a flourishing demand for AI-related Outsourced Semiconductor Assembly And Test Services (OSAT), surpassing initial estimates by over 10%. OSAT companies like ASE Holdings, King Yuan Electronics (KYEC), and Sigurd are poised to experience a notable uptick in revenue, as reported by UDN News.

According to reports, AMD is launching the “Instinct MI300” series AI chips this week, and NVIDIA plans to unveil the next-gen “B100” GPU next year. This successive release of new AI products by the two giants is boosting momentum in related OSATs collaboration.

NVIDIA is gearing up for the 2024 launch of its next-gen Blackwell architecture B100 GPU, saying AI performance exceeding twice that of the H200 GPU under the Hopper architecture, signifying a substantial leap in computational prowess.

Positive Outlook in 2024 for OSATs Amid AI Chip Development

Industry source indicates that due to the AI extensive computation requirements, advanced packaging is gradually becoming mainstream. This involves stacking chips and packaging them on a substrate. Depending on the arrangement, it is divided into 2.5D and 3D packaging. The advantage of this packaging technology is the ability to reduce chip space while also reducing power consumption and costs.

It is said the surge in AI chip orders from AMD and NVIDIA has led to a bottleneck in TSMC CoWoS advanced packaging capacity. This unexpected demand has exceeded projections for related OSATs, including ASE Holdings, KYEC, and Sigurd.

In the case of ASE Holdings, its subsidiary Siliconware Precision Industries (SPIL) possesses the advanced packaging capacity essential for generative AI chips. Joseph Tung, CFO of ASE Holdings, notes that while AI currently in its early-stage and is set to drive explosive growth. As AI integrates into existing and new applications, the demand for advanced packaging is expected to fuel the industry’s entry into the next super growth cycle.

For KYEC, a significant expansion in AI chip testing capacity since Q2 this year positions the company to benefit from the surge in demand.

Sigurd’s COO Tsan-Lien Yeh addresses that, with the release of AI phones, recognizing the doubled testing time for phone chips, which now carry APU/NPU for AI computing compared to general 5G chips. Sigurd has upgraded its equipment to align with future customer needs.

(Image: ASE VIPack’s video)