Semiconductor market news (July 25 to July 31) | Tech giants warn that demand for PCs and mobile phones may slow down…

1. Tech giants warn that demand for PCs and mobile phones may slow down

The latest article in The Economist warns that the explosive boom in the chip shortage is turning into a "Super Depression". it is worth paying attention to the recent global chip industry murmurs, a number of major technology industry manufacturers have raised the alarm.

According to foreign media reports, SK hynix said in its earnings statement on the 27th that shipments of personal computers and smartphones equipped with memory chips will be lower than initially expected. As customers will digest inventory, server memory chip demand is also likely to slow down.

Samsung announced on the 28th that its Q2 operating income grew 12% to 14.1 trillion won, the best performance in four years over the same period, but warned that due to geopolitical issues and inflation, global economic uncertainty continued to rise, coupled with components and Higher logistics costs predict weaker demand for smartphones and PC chips.

In the memory business, server demand is expected to remain stable, while demand for computer and mobile phone equipment is likely to remain weak, Samsung said. US chip maker Qualcomm also warned on Wednesday (27) that slowing demand for smartphones would hit Q4 sales.

The crisis in Ukraine and the coronavirus lockdown in China, the world's largest smartphone market, have exacerbated supply chain hurdles, forcing many phone makers to cut chip orders. However, Samsung is relatively optimistic about the demand for smartphones in the second half of the year, the supply disruption has been basically resolved, and the demand is expected to remain stable or even show single-digit growth.

2. China says US chip act will distort global semiconductor supply chain

On 28 July, the US Federal House of Representatives passed the Chip and Science Act, which subsidizes the semiconductor industry. The bill will provide US$52 billion in subsidies for US semiconductor production and approximately US$24 billion in tax credits for investment in chip plants. At the same time, it will also approve strengthening scientific research by about 200 billion US dollars over 10 years to enhance its competitiveness against China. According to the bill, companies receiving U.S. semiconductor subsidies are not allowed to invest in mainland China.

In response to the passage of the "Chip Act" by the US House of Representatives, China's Ministry of Commerce issued a response on its official website on the 29th saying that "China is highly concerned" and said that this is a "typical differentiated industry support policy".

The Ministry of Commerce said that some of the provisions in the bill restrict the normal economic and trade and investment activities of relevant companies in China, which will distort the global semiconductor supply chain and disrupt international trade.

The Ministry of Commerce stated that the bill implemented by the US side should comply with the relevant rules of the World Trade Organization and the principles of openness, transparency and non-discrimination, and will help maintain the security and stability of the global industrial chain and supply chain and avoid fragmentation. China will continue to monitor the progress and implementation of the U.S. act and take measures to safeguard its legitimate rights when necessary, the ministry said in a statement.

3. US Quietly Tightens Grip on Exports of Chipmaking Gear to China

According to a report by Bloomberg on Friday (29th), semiconductor equipment makers Lam Research (Lam Research) and KLA (KLA) pointed out that the Biden administration is quietly strengthening the US semiconductor defense line, prohibiting US companies from selling without a license. The sale of semiconductor equipment below 14 nanometers is not only restricted to Chinese companies but even the TSMC foundry in China may also be included in the ban.

The U.S., which originally banned advanced technology (10nm or below) semiconductor equipment from being shipped to Chinese companies, has now quietly expanded sanctions to 14nm equipment.

Tim Archer, CEO of Colin R&D, revealed that he has recently been notified that the United States has increased restrictions on the shipment of semiconductor equipment to mainland China, including fabs below 14 nanometers. They will cooperate with the government and abide by relevant regulations. The ban is not only for SMIC, but also for those who have foundries in the mainland, such as TSMC.

KLA Corp. CEO Rick Wallace on Thursday also confirmed his company had been notified by the US government of the change in export licensing requirements on China-bound gear for chips more advanced than 14 nm. Wallace said there was no material impact on KLA’s business.

In the past two weeks or so, all US equipment makers have received letters from Commerce telling them not to supply gear to the Chinese for manufacturing at 14 nm or below, according to people familiar with the matter.

4. Global smartphone shipments hit lowest level since pandemic began

Global smartphone shipments fell 9% to about 290 million units in the second quarter of this year, the lowest in two years, as inflation and recession fears dented consumer confidence, according to market research firms Canalys and Counterpoint.

Samsung Electronics topped the list with 62 million units shipped, followed by Apple in second place, followed by Xiaomi, Oppo and Vivo. All three Chinese companies saw double-digit declines in shipments, with Xiaomi down 25%, the data showed.

“Supply chain shortages are no longer the most pressing issue as component orders are rapidly reduced and suppliers begin to worry about oversupply,” analyst Tony Zhu said in a statement. Although brands will launch new products in the second half of the year, Festive promotions, but geopolitical issues, declining consumer confidence and high inflation will continue to hurt market performance going forward.

Samsung said after announcing its results on Thursday that it was lowering its mobile market expectations for the rest of the year to flat or slightly higher. Apple also echoed its caution about weak demand in a conference call after the earnings release.

5. Micron Ships World’s First 232-Layer NAND, Extends Technology Leadership

US memory giant Micron Technology announced on Tuesday (26th) that the company's most advanced and the world's first 232-layer NAND Flash chips have begun to ship. This product adopts the industry's top innovative technology and will bring unprecedented performance to storage solutions.

Micron said the groundbreaking technology encompasses innovations on many levels, including advanced process capabilities to create high-aspect-ratio structures, the development of new materials, and design improvements for Micron's industry-leading 176-layer NAND technology. The 232-layer NAND is now in volume production in the company’s Singapore fab. It is initially shipping to customers in component form and through its Crucial SSD consumer product line.

Micron said 232-layer NAND is the result of Micron’s leadership in research, development, and process technology advancements. The breakthrough capabilities of this NAND will enable customers to deliver more innovative solutions in data centers, thinner and lighter laptops, the latest mobile devices and across the intelligent edge.

6. TSMC, UMC to visit India for potential local plants

TSMC and UMC will visit India to investigate the possibility of setting up local factories.

Taiwan-based semiconductor manufacturers such as TSMC and UMC will visit India to discuss setting up local factories in the manufacture of chips needed for electronics, communication devices, healthcare systems and motor vehicles, as well as cooperation with local manufacturers.

The news came after Indian government officials visited Taiwan twice in 2021 to discuss semiconductor cooperation.

The delegation from Taiwan's semiconductor industry has not yet set a date for the visit, but expected to arrive in India in the next few weeks.

The Indian government announced its semiconductor plans in December 2021, including a $10 billion incentive grant program that it has approved, attracting semiconductor manufacturers and display makers to invest in a bid to make India part of the global electronics production hub.

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