01. AI Boom Leads to Tight Capacity for Traditional Chips, DRAM Prices Soar
On October 22, foreign media reported that global chip manufacturers are ramping up production of artificial intelligence (AI) chips, leading to a tight supply of traditional chips. Some customers are panic-buying, driving up chip prices.
The AI boom has unexpectedly boosted memory chip manufacturers, including South Korea's Samsung Electronics. Since ChatGPT sparked the generative AI craze in November 2022, memory chip manufacturers have shifted more capacity to high-bandwidth memory (HBM) for high-performance AI chipsets. Meanwhile, the rise of Chinese competitors has also prompted Samsung Electronics and SK Hynix to accelerate their transformation and invest in high-end chips.
According to TechInsights data, DRAM spot prices more than doubled in September, and the average inventory level of DRAM this quarter dropped from 10 weeks last year to 8 weeks.
02. Tantalum Capacitor Prices Rise, Benefiting Nichicon, Yageo, and Taiyo Yuden
On October 24, according to the Economic Daily, tantalum capacitor prices are on the rise. In addition to Kemet, a subsidiary of Yageo, benefiting from this trend, Nichicon is also expected to benefit as it agents tantalum capacitors from major manufacturers like Kemet.
Nichidenbo has been agenting Kemet's tantalum capacitors for many years. With the favorable trend of passive components in the AI market this year, especially the significant increase in demand for high-capacity, high-voltage tantalum capacitors, these components are set to replace some multilayer ceramic capacitors (MLCCs) due to the increasingly compact internal design of AI servers.
As demand for AI servers surges, the high-end MLCCs, tantalum capacitors, and supercapacitors that Nichidenbo agents play an important role in the market.
03. Micron Exits China Data Center Server Chip Market
On October 21, Micron Technology announced plans to stop shipping server chips to Chinese data centers. This move is due to restrictions on its products in critical infrastructure areas, affecting its business in China. However, Micron will continue to supply chips to customers with data center operations outside China (such as Lenovo) as well as to customers in the automotive and smartphone sectors.
Micron stated that its exit from the China data center market is to comply with local regulations and existing restrictions. Since 2018, the intensification of Sino-US trade tensions and technological competition has seen China become the world's second-largest server memory market. This has enabled competitors like Samsung Electronics and SK Hynix to gain more market share.
Despite a surge in investment in data center computing capabilities in China, Micron's business in China still faces challenges. Its data center team in China consists of over 300 people, but the number of affected positions is still unclear. Micron has also cut staff in other China-based operations.
Micron is still expanding in areas such as its chip packaging plant in Xi'an and has said that China remains a key market for it, with a strong operational and customer base presence.
04. Nexperia Resumes Supply, Easing Automotive Industry Supply Chain Crisis
On October 24, Nexperia, a semiconductor company, resumed supplying chips to mainland Chinese dealers, with transactions now conducted in renminbi (RMB). Previously, due to export controls between China and the Netherlands, Nexperia's supply chain was disrupted, leading to a potential disruption in the global automotive industry supply chain. Now, the supply chain crisis in the automotive industry has been significantly alleviated.
Although Nexperia has resumed supply, its competitors, such as Diodes and Taiwan Semiconductor, are still expected to continue benefiting from order transfers. The current resumption is limited to domestic transactions within mainland China, and the requirement to use RMB for settlement aims to stabilize supply within the mainland.
05. iPhone18 A20 Processor Costs Rise, Prices Likely to Increase
On October 24, according to foreign media reports, Apple is developing the A20 processor for the iPhone 18 series, which uses TSMC's 2-nanometer process. The cost is as high as $280, an increase of over 86% compared to the A19 processor in the iPhone 17 series, making it the most expensive component in next year's new models. As a result, the price of the iPhone 18 is expected to rise.
Since the iPhone 16 Pro series, the cost of the processor has surpassed that of the display panel, becoming the most expensive component in the phone. The A20 processor, with TSMC's 2-nanometer process, is expected to significantly enhance performance and energy efficiency, and also pave the way for the subsequent M6 series processors for Macs.
06. Tesla's AI5 Chips to Be Co-Produced by TSMC and Samsung
On October 24, Tesla CEO Elon Musk announced that Tesla's AI5 chips will be jointly produced by TSMC's Arizona factory and Samsung's Texas factory. Previously, Musk had revealed that the AI5 chips would primarily be produced by TSMC, with Samsung taking on the production of the next-generation AI6 chips. This adjustment aims to ensure a sufficient supply of AI chips and even achieve "over-supply," with excess capacity to be used for Tesla's own data centers.