On June 30th, the Netherlands introduced new export restrictions on advanced semiconductor manufacturing equipment. Despite facing export controls from the US, Japan, and the Netherlands, TrendForce anticipates the market share of Chinese foundries in terms of 12-inch wafer production capacity will likely increase from 24% in 2022 to an estimated 26% in 2026. Moreover, if the exports of 40/28 nm equipment eventually receive approval, there's a chance that this market share could expand even further, possibly reaching 28% by 2026. This growth potential should not be dismissed.

Several manufacturing processes including photolithography, deposition, and epitaxy will be subject to these recent export restrictions. Beginning September 1st, the export of all controlled items will require formal authorization. TrendForce reports that Chinese foundries have been primarily developing mature processes like 55 nm, 40 nm, and 28 nm. Furthermore, demand for deposition equipment can be largely met by local Chinese vendors, meaning concerns regarding expansion and development are minimal. The main limiting factor, however, remains the equipment used in photolithography.

The Financial Times believes that Apple is running into major production issues related to its Vision Pro mixed reality headset—insider sources claim that the mega-sized multinational technology company is adjusting internal sales goals for the $3499 AR/VR "spatial computer." Leadership had set an ambitious internal target of 1 million units sold in 2024, but the complexity of the system's design has apparently caused major setbacks for manufacturing partners. Apple is reported to have signed up with Luxshare, a Chinese contract manufacturer, to assemble Vision Pro headsets—insiders within both organizations reckon that only 400,000 units will be ready for sale throughout 2024. This number seems to be fairly optimistic given that Trendforce predicted that a mere 200,000 would be shipped next year.

FT gathered information from two other sources placed within the Chinese supply chain—they claim that Apple and Luxshare could encounter major component shortages in 2024, resulting in a production shortfall—with an estimated 130,000 to 150,000 finalized units. The article points out that the most complex (and costly) aspect of the headset lies in its micro-OLED display setup, that also includes outward facing lenses. TSMC and Sony are reported to be the suppliers of these parts (as featured on the prototypes), but Apple is allegedly not satisfied with low production numbers, and not enough batches are "free of defects." A cheaper version of the Vision Pro is apparently now on the backburner, since Apple is unlikely to recoup—factoring in R&D expenses—within the first year of the intial product's launch.

Huawei announced they will launch a complete set of commercial 5.5G network equipment in 2024 at the 5G Advanced Forum during MWC Shanghai 2023. Huawei's Director and President of ICT Products & Solutions Yang Chaobin who made the announcement said the company intends for this launch to mark the beginning of the 5.5G era for the ICT industry.

5G deployment progressed rapidly over the past four years and is already yielding significant financial gains. Today, there are more than 260 commercial 5G networks worldwide, serving over 1.2 billion users, and there are already 115 million gigabit F5G users. With service models and content continuously evolving, breakthroughs in technologies like glasses-free 3D are creating unprecedented immersive experiences for users. However, these new services continue to require stronger 5G network capabilities. The industry has widely agreed that 5.5G will be a key milestone in 5G evolution, and that it is fast approaching.

According to Taiwanese media, TSMC will start production of its first 1.4 nm fab in 2026, with chip production in the fab said to start sometime in 2027 or 2028. The new fab will be located in Longtan Science Park outside of Hsinchu in Taiwan, where many of TSMC's current fabs are located. TSMC is currently constructing a 2 nm and below node R&D facility at a nearby plot of land to where the new fab is expected to be built. This facility is expected to be finished in 2025 and TSMC has been allocated a total area of just over 158 hectares of land for future expansion in the area.

In related news, TSMC is expected to be charging US$25,000 per 2 nm GAA wafer, which is an increase of about a fifth compared to its 3 nm wafers which are going for around US$20,000. This is largely due to the nodes being fully booked and TSMC being able to charge a premium for its cutting edge nodes. TSMC is also expanding in CoWoS packaging facilities due to increased demand from both AMD and NVIDIA for AI related products. Currently TSMC is said to be able to output 12,000 CoWoS wafers per month and this is twice as much as last year, yet TSMC is unable to meet demand from its customers.

Today, the U.S. Department of Commerce shared the Biden-Harris Administration's strategic vision to strengthen the semiconductor supply chain through CHIPS for America investments. To advance this vision, the Department announced a funding opportunity and application process for large semiconductor supply chain projects and will release later in the fall a separate process for smaller projects. Large semiconductor supply chain projects include materials and manufacturing equipment facility projects with capital investments equal to or exceeding $300 million, and smaller projects are below that threshold.

The announcement leads into the Biden-Harris Administration's Investing in America tour, where Secretary Raimondo and leaders in the Administration will fan across more than 20 states to highlight investments, jobs, and economic opportunity driven by President Biden's Investing in America agenda and the historic legislation he's passed in his first two years in office, including the bipartisan CHIPS and Science Act.

The newly established Department for Science, Innovation and Technology (DSIT) in the UK has recently released the UK's National Semiconductor Strategy. Dr. Shih-Chieh Chang, General Director of Electronic and Optoelectronic System Research Laboratories at the Industrial Technology Research Institute (ITRI) of Taiwan had an initial exchange with DSIT. During the exchange, Dr. Chang suggested that Taiwan can become a trustable partner for the UK and that the partnership can leverage collective strengths to create mutually beneficial developments. According to the Strategy, the British government plans to invest 1 billion pounds over the next decade to support the semiconductor industry. This funding will improve access to infrastructure, power more research and development and facilitate greater international cooperation.

Dr. Chang stressed that ITRI looks forward to more collaboration with the UK on semiconductors to enhance the resilience of the supply chain. While the UK possesses cutting-edge capabilities in semiconductor IP design and compound semiconductor technology, ITRI has extensive expertise in semiconductor technology R&D and trial production. As a result, ITRI is well-positioned to offer consultation services for advanced packaging pilot lines, facilitate pre-production evaluation, and link British semiconductor IP design companies with Taiwan's semiconductor industry chain. "The expansion of British manufacturers' service capacity in Taiwan would create a mutually beneficial outcome for both Taiwan and the UK," said Dr. Chang.

According to the report coming from Bloomberg, European Union has approved as much as 8.1 billion Euros (about 8.6 billion USD) for research of advanced semiconductors. Accompanied by the 13.7 billion Euros in private funds, the total investment for boosting domestic semiconductor manufacturing in the EU is almost 22 billion Euros. As part of the European CHIPS Act, the project aims to develop Europe as the world's semiconductor powerhouse, with as much as 20% of all semiconductors produced in the EU by 2030. This ambitious goal is backed by state subsidies, as well as investors creating private pools of funds to aid companies in creating semiconductor manufacturing facilities on European soil.

This Important Project of Common European Interest (IPCEI) on Microelectronics and Communication Technologies is an essential step for Europe's semiconductor independence. Internal Market Commissioner Thierry Breton noted, "In a geopolitical context of de-risking, Europe is taking its destiny into its own hands. By mastering the most advanced semiconductors, the EU will become an industrial powerhouse in markets of the future." Companies like Intel, Infineon, STMicroelectronics, GlobalFoundries, and Wolfspeed announced European investments, with TSMC considering a production facility in Germany. German Economy Minister Robert Habeck has noted that Germany has 31 projects in 11 regions, adding, "We can thus increase resilience across Europe in this important field and secure value creation and jobs."

Universal Display Corporation (UDC) and PPG today officially opened a new state-of-the-art organic light-emitting diode (OLED) manufacturing facility in Shannon, Ireland. This County Clare site is expected to double the production capacity and further diversify the worldwide manufacturing footprint for UDC's energy-efficient phosphorescent OLED emissive materials for the growing OLED market. UDC's initial investment of 10 million euros, and subsequent multimillion-euro expenditures and multiyear, multiphase expansions of the site are expected to have a significant positive economic impact on the region.

PPG produces UDC's highly-efficient, high-performing UniversalPHOLED materials. There are currently 50 people working at the new production site, and the headcount is expected to increase up to 100 as further investments roll out. The high-tech roles at the Shannon facility include engineering and operational disciplines, supply chain roles, synthetic chemists, and analytical technicians.

Sharp Corporation's Chief Executive Officer, Robert Wu, has revealed that the Japanese company's display division is involved in the research and development of an LCD screen intended for use in an "upcoming" gaming console. This small detail was announced during an earnings briefing/call with analysts (on May 11), and Wu was careful to not name the key client: "I can't comment on any details regarding specific customers. But as to a new gaming console, we've been involved in its R&D stage." Bloomberg reports that information about a gaming device was removed from presentation material, soon after the conclusion of the conference call. Sharp expects to launch pilot LCD-panel production lines by the end of this fiscal year.

Given the secrecy surrounding this business partnership and projected time frame for the new line of gaming oriented LCD screens, games industry analysts point to Nintendo being the "unnamed" client. Sharp is the current supplier of 6.2-inch LCD panels that are featured on the standard Nintendo Switch (2017) handheld console. Samsung provides a 7-inch screen that is fitted to the premium Switch OLED (2021), and InnoLux makes a 5.5-inch LCD display - sported by the entry-level Switch Lite (2019). A next-gen Switch console successor is rumored to be deep into development but is not expected to arrive this year - Nintendo's CEO, Shuntaro Furukawa, informed investors (last week) that new hardware is due at some point after April 2024.

Due to the current lack of demand for NAND flash, the merger talks between Kioxia and Western Digital have picked up pace once again. The two companies have been at it since 2021 and it was reported back in January that the two companies once again wanted to try and combine their NAND production business. According to Reuters, the two have been pushed into the meeting room once again, largely due to the two NAND giants wanting to cut costs in a market where demand for their products isn't what it once was.

Kioxia and Western Digital are the second and fourth largest manufacturers of NAND flash, although all the memory is made in Kioxia's facilities. A merger of the two would create a company that is said to be owned at 43 percent by Kioxia and 37 percent by Western Digital, with current shareholders of the two companies getting the remaining 20 percent. However, a potential merger isn't without hurdles, as it's likely to be scrutinised by both the US and the PRC due to potential antitrust issues, with the combined company owning a third of the global NAND flash market. Kioxia has even shelved plans for a public offering, due to the sluggish demand for NAND flash. Time will tell if the two can come to an agreement, but it doesn't look like the best of times for a merger either.

The bipartisan Protecting Circuit Boards and Substrates Act of 2023 introduced by Representatives Blake Moore (R-UT-1) and Anna Eshoo (D-CA-16) finishes the job the CHIPS Act began by incentivizing investment in the domestic printed circuit board (PCB) industry. This bill is a necessary follow-on to the CHIPS Act: without a trusted, reliable domestic source of PCBs and substrates, computer chips don't connect to end use electronic devices.

Domestic PCB production shrunk over the past 20 years, falling from 30% to barely 4% of the world's supply. Ninety percent of the world's supply now comes from Asia…56% in China alone.

We're excited to announce that Unreal Engine 5.2 is now available. With this release, we've further expanded UE5's groundbreaking toolset as it continues to deliver on the promise of making Unreal Engine the most open and advanced real-time 3D creation tool in the world. Alongside feature refinements and stability improvements, Unreal Engine 5.2 pushes the boundaries of what creators can expect out of the box, delivering innovative new functionality.

Procedural Content Generation framework
Unreal Engine 5.2 offers an early look at a Procedural Content Generation framework (PCG) that can be used directly inside Unreal Engine without relying on external packages. The framework includes both in-editor tools and a runtime component. The PCG tools enable you to define rules and parameters to populate large scenes with Unreal Engine assets of your choice, making the process of creating large worlds fast and efficient.

TrendForce's latest research indicates that, as production cuts to DRAM and NAND Flash have not kept pace with weakening demand, the ASP of some products is expected to decline further in 2Q23. DRAM prices are projected to fall 13~18%; NAND Flash is expected to fall between 8~13%.

TrendForce reports that the significant drop in DRAM prices was mostly attributed to high inventory levels of DDR4 and LPDDR5 as PC DRAM, server DRAM, and mobile DRAM collectively account for over 85% of DRAM consumption. Meanwhile, the market share for DDR5 remains relatively low.

AMD is reported to be reissuing its old Zen+ (12 nm) tech in order to meet demand for cheaper, lower-end systems in China, according to information released by Board Channels this week. The insider source claims that a new production order has been placed for Ryzen 3000G series APUs (requesting up to 30,000 units) and these processors are likely to be sold as part of hardware bundles with (similar vintage) low-end AM4-based motherboards - for example the B450 and A320 series, these older boards are still popular budget choices in China and readily available. The leak does not mention whether AMD is choosing to issue completely new hardware or if it is simply reproducing its 2019-era SKUs.

AMD released two Ryzen 3000G models back in 2019 - the 3400G and 3200G, both are quad-core Picasso APUs although the latter is lacking in simultaneous multithreading. It is not clear whether the super low budget AMD Athlon 3000G model will be included as part of the alleged 30K unit order. The 3000G series' onboard iGPUs (based on AMD's first generation Vega architecture) are likely preferred by the budget-conscious buyer since a discrete graphics card is not an essential part of builds intended for an office setting or a simple/functional home computer setup.

Last October, the US Department of Commerce imposed semiconductor restrictions on Chinese imports of equipment for processes of 18 nm and below. SK hynix's Wuxi fab was granted a one-year production license, but geopolitical risks and weak demand prompted the company to reduce wafer starts by about 30% per month in 2Q23, according to TrendForce's latest research.

TrendForce reports that SK hynix had planned to transition its Wuxi fab's mainstream process from 1Y nm to 1Z nm, decreasing the output of legacy processes. However, due to limitations imposed by the US ban, the company instead opted to increase the share of its 21 nm production lines, focus-ing on DDR3 and DDR4 4Gb products. SK hynix's long-term strategy involves shifting its capacity expansion back to South Korea, while the Wuxi fab caters to domestic demand in China and the legacy-process consumer DRAM market.

LG is reported to be making substantial investments into improving and upgrading its OLED manufacturing facilities in South Korea - last month we found out about a similar effort underway at Samsung (courtesy of Reuters). Nikkei Asia has today published an article that explores this situation plus a wider context - their findings reaffirm existing claims that Samsung Display has spent $3+ billion on the sprucing up of its Tangjeong factory. LG's modernization bill is smaller at a mere $2.5 billion - this will be spent on creating additional production lines at the company's mainline Paju plant. LG is aiming to increase factory output of medium-sized OLED panels using sixth generation technology.

According to last month's report, industry insiders have suggested that Samsung was ramping up its high end OLED production lines in order to secure substantial component orders from a key client, Apple, with premium display panels destined for fitting on next generation iPad and MacBook products. Reuters posited that LG was not able to fulfil any new requests from Apple at the time - due to its display factories being fully booked and operating at maximum capacity. It seems that LG is now addressing this problem by making necessary and essential upgrades at its Paju P10 OLED facility. A domestic rivalry is only part of the problem, both giant South Korean electronics firms are also keeping a collective eye on other rival manufacturers (operating out of nearby nations).

According to the Nikkei, Microsoft is cutting production for a wide range of its Surface accessories, i.e. keyboards, mice, docking solutions, headsets etc. This is despite the fact that the company has invested heavily into its Surface brand of computers and accessories over the past decade. This is said to be in response to the poor performance of the business unit in Microsoft's last financial report. The Nikkei mentioned that Microsoft is suspending all standalone keyboards in the Surface series and it seems like Microsoft is also looking at calling it quits when it comes to its own branded accessories, or there won't at least be any new models from the company in the foreseeable future.

Microsoft used to be a significant competitor in the keyboard, mouse and webcam market, but with increasing competition from more brands, it seems like the company has been having a hard time making a niche for itself in what can only be said to be a crowded market. Consumer expectations have also changed and most people don't want membrane keyboards any more and are instead buying more expensive mechanical keyboards. Microsoft has also been late to market with many of its Surface computers and have delivered overpriced and underwhelming products, which in turn has led to fewer sales of both the computers and the matching accessories. We'll have to wait and see if Microsoft makes an official announcement as to what will happen to its Surface brand of products, but right now it doesn't look like there's a very bright future for the Surface line of products as a whole.

TrendForce reports that mass production of new server platforms—such as Intel Sapphire Rapids and AMD Genoa—is imminent. However, recent market reports have indicated a PMIC compatibility issue for server DDR5 RDIMMs; DRAM suppliers and PMIC vendors are working to address the problem. TrendForce believes this will have two effects: First, DRAM suppliers will temporarily procure more PMICs from Monolithic Power Systems (MPS), which supplies PMICs without any issues. Second, supply will inevitably be affected in the short term as current DDR5 server DRAM production still uses older processes, which will lead to a convergence in the price decline of DDR5 server DRAM in 2Q23—from the previously estimated 15~20% to 13~18%.

As previously mentioned, PMIC issues and the production process relying on older processes are all having a short-term impact on the supply of DDR5 server DRAM. SK hynix has gradually ramped up production and sales of 1α-nm, which, unlike 1y-nm, has yet to be fully verified by consumers. Current production processes are still being dominated by Samsung and SK hynix's 1y-nm and Micron's 1z-nm; 1α and 1β-nm production is projected to increase in 2H23.

NVIDIA's fresh faced GeForce RTX 4070 graphic card range has not been flying off shelves around the world, and Team Green could be pivoting their approach somewhat after receiving lower than expected sales figures via company reports. Their component suppliers have already mentioned that the entire GeForce RTX 40 family is on a comfortably steady production schedule - with no instructions received from HQ to up the ante. In the latest development this week, individuals with insider knowledge of factory schedules in China have claimed that NVIDIA has informed board partners (AICs) that output for the GeForce RTX 4070 line is getting paused for a month. The temporary cutoff in factory output will allow, they hope, for the currently sitting stock to get cleared out. A substantial surplus of GeForce RTX 4070 cards could disrupt distribution networks and overstock warehouses.

Industry watchdogs have theorized that NVIDIA's board partners are having a difficult time offloading their premium tier RTX 4070 custom cards onto paying customers. The Founders Edition and closer-to-reference models have sold quite respectable numbers according to early analyses, but more expensive options are considered to be too expensive by the customer base. There is apparent crossover in pricing with the fancier GeForce RTX 4070 Ti range, and a savvy buyer will tend toward superior silicon rather than a shiny cooling solution combined with a factory-issued overclock. A computer hardware retailer in the UK, Novatech, has chosen to cut the price of a Palit RTX 4070 Dual model by £40/$50, as reported yesterday. The asking price has since returned closer to RRP - at the time of writing it stands at £579.98.

Two of NVIDIA's providers of Outsourced Semiconductor Assembly and Test (OSAT) services are of the opinion that Team Green is happy to stay the course with its Ada Lovelace GPU production schedule. The backend providers Siliconware Precision Industries (SPIL) and King Yuan Electronics (KYEC) have not been given any new instructions with regard to shifts (up or down) in component assembly output. It is theorized that NVIDIA is aiming to clear any stock backlogs of graphics card models featuring previous generation architecture - namely the second gen GeForce RTX 30-series, built on Ampere.

The retail demand for the newly released GeForce RTX 4070 cards has been mild, to say the least - with plenty of inventory remaining on the shelves in the States. Critical reception of the midweight GeForce RTX GPU has also been middling - many have advised that budget conscience buyers should potentially look elsewhere. The market for discrete graphics card is in a fairly healthy state at the moment, with major production issues and fractured supply chains becoming lesser concerns for electronics manufacturers. NVIDIA has the advantage of being a market leader, and seems to be quite content with proceedings - but their analysts are very likely keeping an eye on the RTX 4070 sales figures. Its products are out and readily available - no need to change direction too sharply.

Samsung Electronics will be cutting back on memory chip production, following a worrying drop in its operational profits. Estimates for the first quarter point to a 96% year-on-year decline - the silicon mega-corporation's lowest profit result in 14 years (since the first quarter of 2009). Samsung's operating profits fell to 600 billion won ($456 million) in January to March 2023, from 14 trillion won the previous year. The company has confirmed that a slump in sales is the main cause behind the smaller margins - with a slow global economy and a drop in demand after the chip shortages of 2020 - 2022. Manufacturers of computer and server equipment have reduced expenditure on procurements of RAM and storage solutions.

In a statement released last week, the company confirmed that it was adjusting its manufacturing output in reaction to the drop in demand: "We are lowering the production of memory chips by a meaningful level, especially that of products with supply secured." Industry analysts in South Korean are foreseeing that Samsung's chip business will post heavy losses (into the billions of dollars) during the first three months of 2023. Samsung is expected to publish detailed financial results later this month. The analysts have spotted similar patterns at other South Korea-based memory chip markers - SK Hynix and Micron have recorded heavy financial losses across recent quarters.

Samsung Electronics has announced that its sub-division, Samsung Display, is planning to invest $3.1 billion until 2026 in Asan, South Korea to manufacture advanced organic light-emitting diode (OLED) display panels. The country's ministry stated that Samsung's next generation of OLED display panels will be integrated into tablets and laptops. There are already rumors swirling that Apple has contracted with Samsung Display to produce parts for a refresh of the MacBook Pro range that is set to debut at some point before 2026.

Industry insiders are claiming that the substantial investment into the company's Asan, South Chungcheong factory will help fulfil orders placed by Apple for iPad and MacBook OLED displays - the North American company has not officially confirmed an adoption of that type of screen technology for these product ranges. Samsung is likely trying to secure a long term relationship with the Silicon Valley behemoth, and at the same time outmaneuver its competitors in South Korea as well as those in neighboring nations. It has been reported that domestic rival LG is currently unable to take on new orders, as its display factories are functioning at maximum production capacities.

Although NAND suppliers have continued to roll back production, there is still an oversupply of NAND Flash as demand for products such as servers, smartphones, and notebooks is still too weak. Therefore, TrendForce predicts that the ASP of NAND Flash will continue to fall in 2Q23, though that decline may shrink to 5~10%. The key to supply and demand returning to a market equilibrium lies in whether NAND suppliers can cut back on production even more. TrendForce believes if demand remains stable, then the ASP of NAND Flash will have an opportunity to rebound in 4Q23; if demand is weaker than expected, then ASP will take longer to recover.

Client SSD: Currently, PC OEM's have managed to liquidate most of their component inventory, and are now gearing up in preparation for mid-year sales events. Suppliers are cutting prices to clear out their inventories of PCIe Gen 3 SSDs, which are gradually being phased out. Meanwhile, prices of PCIe Gen 4 SSDs continue to face downward pressure due to a slow intake of new customer orders. The continuous decline of QLC products in 1Q23 has also dragged down the prices of TLC products, and there is relatively little room for prices to keep falling in 2Q23. While it still remains unclear whether or not demand will recover, TrendForce projects that the prices of PC client SSDs will drop 5~10% in 2Q23.

On Monday 27 March U.S. President Joe Biden invoked the Defense Production Act in order to form a budget of $50 million, to be spent on domestic and Canadian production of printed circuit boards (aka PCBs). This move was deemed as important to matters of national defense, and technology has been cited as key part of North American security efforts. In a memo issued that day, Biden stated that without presidential action under the act: "United States industry cannot reasonably be expected to provide the capability for the needed industrial resource, material, or critical technology item in a timely manner."

PCBs form the basis of vital components that are integrated into military-purpose missiles and radars, in addition to electronics utilized for energy distribution and the nation's healthcare. The President continues to outline the importance of the Defense Production Act: "I find that action to expand the domestic production capability for printed circuit boards and advanced packaging is necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability."