01. Global IC Sales Expected to Grow by 29% YoY in Q3 2024
The global semiconductor industry is gearing up for a robust Q3 2024, with IC sales expected to surge by 29% year-over-year. A recent industry report by SEMI and TechInsights highlights a significant uptick in Q2 2024, characterized by a substantial increase in IC sales and a boost in wafer fab capacity. Although some end markets are experiencing a sluggish recovery, the industry is being propelled forward by a surge in demand for AI chips and high-bandwidth memory (HBM).
The first half of 2024 saw a minor 0.8% year-on-year decline in electronics sales due to seasonal factors and subdued consumer demand. However, a rebound is anticipated in Q3, with a projected 4% year-on-year growth. The IC market, which grew by 27% in Q2, is set to continue this momentum with the upcoming 29% increase, breaking records set in 2021. This growth is primarily attributed to the escalating demand for AI applications.
Wafer fab capacity reached a milestone of 40.5 million wafers per quarter in Q2 2024, with an expected 1.6% growth in Q3. The expansion in foundry and logic-related capacity, particularly in advanced node technology, is expected to continue, with China emerging as the region with the most rapid growth despite lower fab utilization rates.
Capital expenditure in the semiconductor sector was cautious in the first half of 2024, reflecting a 9.8% decrease year-on-year. However, with the increasing demand for AI chips and HBM, the industry expects a positive shift from Q3 onwards. Memory capital expenditure is forecasted to grow by 16% quarter-on-quarter, while non-memory capital expenditure is set to increase by 6% in the same period.
Industry experts, such as Clark Tseng from SEMI and Boris Metodiev from TechInsights, emphasize that the strong demand for AI chips and HBM is a key catalyst for growth across the semiconductor manufacturing ecosystem. They anticipate that AI will continue to influence the market, driving the development and production of high-value ICs, especially in the HBM segment.
02. Memory Sector Fuels Semiconductor Market Surge in 2024 Q2
The global semiconductor market surged to a remarkable $149.9 billion in the second quarter of 2024, marking a 6.5% sequential increase from Q1 and an impressive 18.3% year-on-year growth, as reported by WSTS. This robust performance was primarily fueled by the memory sector, which delivered substantial growth and set the stage for a prosperous first half of the year.
Leading the charge were memory giants such as SK Hynix and Kioxia, which reported staggering revenue increases of over 30% compared to the previous quarter. Samsung Semiconductor also made significant strides with a notable 23% revenue boost, while Micron Technology enjoyed a healthy 17% growth in revenue. The top 15 semiconductor companies recorded an 8% weighted average growth in Q2 2024. However, the memory companies truly stood out, achieving a remarkable 22% growth, significantly outpacing the non-memory segment, which saw a more conservative 3% increase.
This surge in the memory sector underscores the pivotal role of memory technologies in driving the overall growth of the semiconductor market, reflecting the increasing demand for advanced memory solutions across various industries and applications.
03. Western Digital Announces Strategic Split of NAND and SSD Business
In a strategic move to streamline its operations and capitalize on market opportunities, Western Digital is reportedly set to spin off its NAND and SSD business, according to Wedbush analyst Matt Bryson. This division is anticipated to be valued between a substantial $10 billion and $22 billion, reflecting the company's significant investment and growth in the sector.
The split will result in two distinct entities: one dedicated to the continued development and innovation of hard disk drives (HDD), and the other concentrating on NAND flash memory and solid-state drives (SSD). Western Digital's current CEO, David Goeckeler, will lead the NAND and SSD division, bringing his expertise to this burgeoning area. Meanwhile, Irving Tan, the Executive Vice President of Global Operations, will assume the role of CEO for the HDD business, ensuring continuity and stability in that segment.
Bryson's valuation assessment is informed by Western Digital's acquisition of SanDisk for $19 billion nine years prior, which has clearly paid dividends and positioned the company as a major player in the NAND and SSD market. Despite Western Digital achieving a revenue of $13 billion last year—surpassing Seagate's revenue by a factor of two—the company's market capitalization of $21.9 billion is nearly on par with Seagate's, indicating an undervaluation of its assets.
The analyst estimates the HDD business to be worth between $19 billion and $24 billion, while the NAND/SSD business is projected to be valued in the range of $10 billion to $22 billion. Bryson foresees that the total valuation of both entities post-split could reach a minimum of $30 billion, and it may even surpass $40 billion, with the full benefits of this strategic move expected to be realized by 2025.
This strategic realignment is poised to unlock greater value for shareholders and enhance Western Digital's competitive edge in a rapidly evolving technology landscape.
04. Samsung Advances Towards HBM4 Production with Year-End Tape-Out
Samsung Electronics is advancing its High Bandwidth Memory (HBM4) technology with plans to complete the tape-out process by the end of this year. This move is a precursor to the mass production of 12-layer HBM4 products expected by the end of 2026. The tape-out is the final stage in semiconductor design, marking the transition from schematics to physical production.
Initial HBM4 test products are anticipated in early next year, with final testing to be completed a few months later. Samsung will use the performance data from these tests to refine the HBM4 design and process. Although specific product roadmap details are not yet available, the company is set to engage in customer testing post-refinement.
In a competitive market, SK Hynix is also preparing to mass-produce 12-layer HBM4 products in the second half of next year, indicating a growing industry focus on high-performance memory solutions.
05. TSMC Launch Its First Plant in Europe
TSMC initiated construction on its inaugural European facility in Dresden, Germany, on August 20. This milestone underscores the European Union's strategy to relocate essential supply chains to the continent. The ceremonial event attracted notable figures including German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen, who heralded it as a testament to Europe’s role as a global center of innovation.
Semiconductors play a vital role across various sectors, from consumer electronics to renewable energy and defense systems. TSMC has committed approximately 3.5 billion euros (around $3.9 billion) to the Dresden venture and possesses a 70 percent ownership stake, while Dutch chipmaker NXP and German companies Infineon and Bosch each hold 10 percent.
In a bid to enhance domestic semiconductor production, Western nations are prioritizing localization. Scholz highlighted the critical nature of semiconductor availability for a sustainable tech future, asserting that Europe must not depend on chips from other locales. The Dresden plant will cater specifically to the automotive sector in Germany, which is undergoing a significant shift towards electric vehicles.
Situated in the "Saxony Silicon Valley," the Dresden facility embodies a key regional project, having garnered about 10 billion euros in total investment. The German government bolstered this initiative with $5 billion in public funding and obtained exemptions from EU state aid regulations. The plant aims for operational status by late 2027, promising approximately 2,000 jobs and a monthly production capacity of 40,000 300mm wafers.
06. Korean AI Chipmakers Rebellions and Sapeon to Merge
In a strategic move to strengthen the South Korean presence in the global AI chip market, Rebellions and Sapeon Korea have officially signed a merger agreement. The announcement, made on Sunday, follows the initial merger discussions in June. This union is part of a broader effort by South Korean firms to compete with established AI chip giants like Nvidia.
Sapeon boasts a strong investor base, including SK Telecom, the nation's largest telecommunications company, and SK Hynix, the world's second-largest memory chip manufacturer. Meanwhile, Rebellions recently secured a $15 million investment from Wa'ed Ventures, the venture capital subsidiary of Saudi Aramco, in July. This injection of capital raised Rebellions' total funding to over $225 million.
The merger is set to combine the technological prowess and resources of both companies, potentially creating a formidable player in the AI chip industry.