The Tech Week that was... Dec 2 ~ 6th

Welcome to the latest edition of my weekly newsletter bringing you all the key global semiconductor and technology news from last week in one easy read

In industry news…

Singapore based, VisionPower Semiconductor Manufacturing (VSMC) held is groundbreaking ceremony for it’s new 300mm wafer Fab in Tampines, Singapore this week.  VSMC is a joint venture between Taiwan Foundry Vanguard (VIS) and Dutch chip manufacturer NXP.  The US$7.8billion Fab is due to open in 2027, is planned to have capacity of 55,000 300mm wfrs/month by 2029.

US based semiconductor manufacturer Microchip Technology announced the closure next year of its Fab in Tempe, Arizona, which will affect around 500 employees. The decision comes amid depressed sales, leading the company to lower its revenue forecast for Q4.  The closure of the Fab will save around US$90million/year. The company has also said this week that it will put on hold it’s deal to receive US$162million in CHIPS Act funding to expand it's Oregon and Colorado plants. 

Intel announced this week that it’s CEO, Pat Gelsinger will retire and step down from the board of directors effective 1st Dec 2024.  David Zinsner and Michelle (MJ) Johnston Holthaus have been named as interim co-chief executive officers while the board of directors conducts a search for a new CEO.

This week interim co-CEO David Zinsner reassured investors that the company’s strategy remains intact, however there is much speculation as to what is the plan for the future.  This article in the FT looks at the potential implications of Pat Gelsingers sudden exit could mean for Intel and the US CHIPS act funding.

Two South Korean AI chipmakers, Rebellions Inc. and Sapeon Korea completed their merger process this week.  The merged company will be called Rebellions and be led by former Rebellions CEO Park Sung-hyun and have a corporate value of around US$930million.

 Government Funding..

This week the US Department of Commerce announced it has agreed preliminary direct funding agreements to 3 additional companies under the US CHIPS Act.  Coherent will potentially receive up to US$33 million in direct funding to support the expansion and modernization of the company’s existing facility in Sherman, Texas.  SkyWater Technology Foundry will potentially receive up to US$16 million to support the modernization of its existing facility in Bloomington, Minnesota.  Whilst X-Fab will receive up to $50 million in proposed direct funding for the modernization and expansion of its existing silicon carbide fab in Lubbock, Texas.

GlobalFoundries secured an additional US$9.5 million in federal funding to advance GaN-on-silicon semiconductor manufacturing at its Vermont facility. The funding moves GF closer to large-scale production of GaN chips.  With the award, GF will continue to add new tools, equipment and prototyping capabilities to its market-leading GaN IP portfolio and reliability testing

In addition, this week the U.S. Department of Commerce finalized the funding of 2 separate CHIPS Act awards. SKC affiliate Absolics was awarded up to $75 million for the construction of  new facility in Georgia that will make glass substrates for advanced packaging whilst Entegris was awarded up to $77 million for the construction of a manufacturing center in Colorado that will produce liquid filtration products, as well as front-opening-unified pods (FOUPs).

In Europe SEMI called on the incoming Euopean Commision to create a more coherent industrial policy and launch a European "Chips Act 2.0" to remain competitive against the U.S. and China.

Chip Wars…

 The USA this week announced additional new restrictions on semiconductor exports to China adding controls on 24 types of chipmaking equipment and 3 kinds of software tools for developing or producing semiconductors, together with new controls on high bandwidth memory chips (HBM).  The USA also added 140 Chinese companies to the entity list  including Chinese equipment firms Naura Technology Group Co, Piotech Inc, ACM Research and  SiCarrier Technologies Co.  In addition there were new export curbs put on exporting semiconductor equipment made in countries like Singapore, Malaysia, Israel, South Korea and Taiwan, but exempting Japan and Netherlands. This the 3rd round of additional export controls in 3 years targeting the Chinese semiconductor industry citing security concerns. 

China subsequently announced this week that it would restrict exports to the US of some key metals used in making semiconductors.  Among the materials banned from export are the metals gallium, antimony and germanium, Chinese Ministry of Commerce said in a statement that cited “national security” concerns.  Exports of graphite would also be subject to “stricter reviews of end-users and end-uses,”.  China was the worlds largest producer of gallium, germanium and antinomy in 2023 accounting for 94% percent of the world’s production of gallium and 83% of germanium.

In Market Research news..

In the latest analysis from SEMI, they report that silicon wafer market demand showed promising signs of recovery in Q2 2024 after 6 quarters of decline, whilst semiconductor equipment investments also showed signs of an upturn in Q2 after a prolonged downturn.  DRAM blended ASP also continues to show it’s growth trend which started mid year last year, which is also contributing to the wafer shipment growth, however they note that DRAM pricing will potentially enter a downward trend in 2025 posing a risk to the pace of the wafer market recovery.

Global semiconductor sales hit $56.9 billion in October 2024, up 22.1% YoY and up 2.8% sequentially according to the latest data from WSTS.  WSTS is also forecasting that annual global semiconductor sales will increase 19% YoY in 2024 to reach US$627billion, whilst predicting that in 2025 sales will grow 11% to US$697billion.  John Neuffer, SIA president and CEO said that “The global semiconductor market is closing out 2024 on a high note, as the industry reached its highest-ever monthly sales total in October and month-to-month sales increased for the seventh consecutive month.”

Global semiconductor equipment billings increased 19% year-over-year to US$30.4 billion in Q3 2024, while quarter-over-quarter billings registered 13% growth.  China accounted US$12.9billion in billings followed by Taiwan (US$4.7billion), Korea (US$4.5billion) and North America (US$4.4billion) according to the latest data from SEMI.  The equipment market growth is driven by AI as well as mature node technologies.

TrendForce reports that the revenue from Micro LED chips is projected to reach approximately US$38.8 million in 2024, with large displays remaining the primary source of contribution. Looking ahead, breakthroughs in technical bottlenecks are on the horizon, while applications in automotive displays and the increasing maturity of full-color AR glasses solutions are expected to propel Micro LED chip revenue to $489.5 million by 2028.

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