01. SiC Substrate Market Oversupply Leads to Price Drop in 2024
The silicon carbide (SiC) substrate market, which previously faced strong demand and supply constraints, is now facing oversupply in 2024, causing a significant drop in prices and indicating a major shift in the power semiconductor materials industry.
In Q4 2023, the market price for 6-inch SiC wafers, the industry standard, plummeted to $400-$450 per piece, significantly below previous levels and below the estimated production cost of $500. This sharp decline is attributed to oversupply and increased market competition.
Chinese suppliers have initiated a price war, with smaller manufacturers following suit, which has disrupted market stability. This has empowered global buyers, allowing major international IDM firms such as Bosch and Infineon to negotiate more favorable pricing.
The price drop in China's SiC substrate market has been more significant compared to the global market. While international suppliers maintain prices at $750-$800 for 6-inch SiC wafers, Chinese manufacturers have reduced prices by about 30%. This highlights the intense competition in China and the domestic manufacturers' strengths in cost control and capacity expansion.
Despite the price war, IDM companies remain cautious about establishing new supplier relationships, with European, American, and Japanese manufacturers prioritizing supply chain stability and security.
Industry experts predict that the consolidation in the SiC substrate market, initially expected by 2026, may now occur earlier, possibly by mid-2025, due to the ongoing price war.
02. AI-Driven, Semiconductor Market Expected to Surpass $850 Billion by 2025
According to the latest analysis by Techinsights on November 20th, the global semiconductor market is thriving due to the surge in demand for AI chips and the increase in average selling price (ASP). It is projected that by the end of the year, the market size will approach $680 billion, and this growth will reshape the competitive landscape in the AI hardware sector.
By 2025, the semiconductor industry is expected to maintain its growth momentum, with sales forecasted to increase by 25%, potentially reaching a market value of $850 billion. There is strong demand from data centers, consumer devices, and the edge AI market, with ASP anticipated to continue growing by 5%.
The key drivers for growth in 2025 include:
1. Expansion of Edge AI: The increased adoption of AI-driven devices across various industries will fuel the demand for semiconductors.
2. Device Replacement Cycles: Many devices are facing upgrades and replacements, especially the transition from Windows 10 to Windows 11.
3. Broad Market Recovery: With the stabilization of inventory levels and prices, a steady recovery is expected across all market segments.
03. ST Collaborates with Hua Hong for 40nm MCU Production in China
ST has partnered with Chinese foundry Hua Hong Semiconductor to manufacture 40nm microcontroller (MCU) chips in Wuxi. Production is expected to begin by the end of 2025. This strategic move is designed to bolster ST's market position in China, especially within the burgeoning electric vehicle (EV) and industrial sectors.
ST CEO Jean-Marc Chery emphasized the importance of local manufacturing in China, the world's largest and most innovative EV market, stating that local production is crucial for maintaining a competitive edge. Fabio Gualandris, ST's head of manufacturing, highlighted the benefits of local production, such as cost efficiency within the local supply chain, compatibility, and mitigating risks from government restrictions. He also noted that not being present in China would mean missing out on the rapid development cycles of China's EV industry.
ST has been expanding its presence in China, as evidenced by its 2023 partnership with Sanan Optoelectronics to establish a silicon carbide (SiC) joint venture in Chongqing. The joint venture will target high-efficiency chips for EVs. The company also plans to apply best practices and technologies learned in China to its global operations to maintain a competitive edge.
This collaboration comes amidst ST's update of its long-term financial forecasts during its Investor Day, acknowledging the challenges posed by the downturn in the industrial chip market. As a leading SiC chipmaker, with clients including Tesla and Geely, ST's reliance on the Chinese market underscores its strategic importance.
04. Samsung Initiates Equipment Setup at NRD-K R&D Complex
Samsung Electronics has begun installing equipment at its NRD-K semiconductor R&D complex in Giheung, Yongin, South Korea, with a ceremony held on November 18. The facility aims to be fully operational by mid-2025, backed by a 20 trillion won investment plan by 2030. Covering an area of 109,000 square meters, NRD-K will concentrate on core research and development in memory, logic, and foundry semiconductor technologies. It will feature state-of-the-art equipment such as EUV lithography systems, advanced deposition tools, and wafer bonding facilities to support the creation of next-generation memory and innovative semiconductor structures.
05. TSMC Aims for 10 New fabs by 2025 with $38B Capital Expenditure
TSMC is ramping up its global expansion with plans to construct 10 new fabs by 2025, a milestone that could see the company's capital expenditure reach up to $38 billion, a significant increase for the semiconductor industry.
The majority of these fabs, seven in total, will be in Taiwan, focusing on advanced wafer fabrication and packaging technologies. This includes four 2nm production sites in Hsinchu and Kaohsiung, and three advanced packaging facilities in Tainan, Central Taiwan Science Park, and Chiayi.
Internationally, TSMC is also promoting projects in the U.S., Japan, and Europe:
·Kumamoto Fab 2 in Japan is scheduled to start construction in Q1 2025, with production expected in 2027.
·Fab 21 in the U.S. is currently under construction.
·A new fab in Dresden, Germany is focused on specialty processes and is on track.
This expansion follows TSMC's average of five new fabs per year from 2022 to 2023, with seven planned for 2024, setting a new record for the company and the industry. TSMC has not yet detailed its 2025 capital expenditure plans, promising more information at a later date.
06. Foxconn Secures $1.1B Loan for AI Server Expansion
Foxconn Technology Group has obtained a $1.1 billion loan from a consortium of 17 banks to fund its strategic focus on the growing AI server market. This financial boost is expected to support Foxconn's initiatives in the AI sector, as the company anticipates a surge in demand for AI servers, which is predicted to continue into the next year。 Foxconn's Chairman, Young Liu, has highlighted cloud-related products as a core growth driver for the company by 2025, potentially rivaling revenue from smartphone sales。 The company's financial results for the third quarter of 2024 show a revenue of NT$1.85 trillion, a 20% increase year-over-year, with a net profit of NT$49.325 billion, marking a record high for the period。 This loan will likely be directed towards capitalizing on the rapid development of the AI server market, which Foxconn is well-positioned to lead given its capabilities in system design, vertical integration, and global presence.