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Samsung’s increased chip production prices to affect GPU and SoCs as well
According to the latest information, the South Korean foundry manufacturer Samsung Electronics revealed last week that it will increase foundry prices.
As per the report of Tom’s Hardware and SoyaCincau, that Ben Suh, senior vice president of Samsung’s investor relations department, said at a conference that Samsung’s foundry business is expected to accelerate growth, mainly through the expansion of the Pyeongtaek S5 production line and adjustment of pricing.
In other words, Samsung is planning to increase foundry prices to support the expansion of its S5 factory near Pyeongtaek, South Korea, so that it can get more revenue to support the next round of investment. The industry believes that the rise in Samsung foundry prices may affect the prices of chips such as GPUs, SoCs, and controllers manufactured by Samsung.
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Samsung Electronics plans to spend US$26.3 billion this quarter, of which US$23.75 billion is for semiconductors and US$1.6 billion is for displays. The investment in the foundry business focuses on the expansion of advanced processes, such as 5nm EUV lithography machines, and the launch of 3nm grid ring (GAA) designs.
The S5 factory is Samsung’s most advanced production line at present, which can support 5nm family 5LPP, 4nm 4LPE, and other process processes. In addition, the factory uses a large number of EUV lithography machines, and the cost of expansion is very high. Therefore, Samsung high capital expenditures in recent years, so they hope that customers will pay for it.
As we all know, Samsung uses its latest node technology to produce chips, such as its own Exynos chip, NVIDIA Ampere GPU chip, Qualcomm Snapdragon 888 chip, and tens of thousands of SoCs.
It is worth mentioning that Samsung is currently the only foundry that has officially confirmed the price increase. TSMC, UMC, SMIC, etc. reported by the media have not been formally confirmed.
A new report reveals that Samsung will participate as an anchor investor for Arm’s upcoming IPO after taking a conservative approach to the matter due to a perceived overvaluation and regulatory risk.
Samsung opted to make an investment in the chip designer, joining a slew of other industry players including Apple, Nvidia and Intel. Amazon, which was earlier rumored to be participating in the IPO, decided to step out.
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It’s worth mentioning that the strategic investors have agreed to invest between $25 million and $100 million each. The specific amount for each company hasn’t been disclosed yet.
This means the offering price will come in between $47 and $51 per share. It makes Arm’s valuation between $50 billion and $55 billion, down from the initial estimation of $64 billion.
Arm’s IPO on Nasdaq, which is expected in September, is considered to be the biggest IPO deal of the year. The company controls a majority of the world’s application processor market, designing and licensing basic blueprints for chips.
Market research firm TrendForce published the latest report on their analysis. The agency disclosed that after global smartphone production dropped by nearly 20% year-on-year in the first quarter, production continued to decline by about 6.6% in the second quarter, to 270 million units.
In particular, the global smartphone production in the first half of 2023 was 520 million units, a 13.3% decline compared to the same period last year. Both individual quarters and the first half of the year in total set a ten-year low.
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TrendForce analysts pointed out that there are three reasons for the sluggish production performance:
- First, the lifting of epidemic prevention restrictions did not drive demand as expected;
- Secondly, the demographic dividend effect of the emerging Indian market has not effectively exerted its advantages;
- Thirdly, in 2022, brands will be deeply affected by excessive channel inventory. It was originally expected that as inventory is reduced, brands will return to production levels.
However, now affected by economic weakness, people’s consumption willingness is more conservative, resulting in poor production performance in the first half of the year. expected.
Second Quarter Market
In the second quarter, Samsung still topped the list, with Q2 output reaching 53.9 million units, a decrease of 12.4% from the previous quarter. The same period coincided with the replacement of old and new Apple models, with output of 42 million units, a decrease of 21.2% from the previous quarter.
Adding to this, the most obvious change in the smartphone market was Transsion (including TECNO, Infinix, and itel). Transsion surpassed vivo and entered fifth place in the world for the first time. Its output increased by more than 70% month-on-month to 25.1 million units.
Production
In addition to Samsung and Apple, Xiaomi (including Xiaomi, Redmi, and POCO) produced approximately 35 million units in the second quarter, an increase of 32.1% from the previous quarter.
OPPO (realme, and OnePlus included) produced about 33.6 million units in the second quarter, an increase of 25.4% from the previous quarter. Q3 is expected to have a growth rate of about 10-15%, closely following Xiaomi.
Samsung and SK Hynix are strengthening their foray into the GDDR (Graphic Double Data Rate (GDDR) market amid the global gaming surge. The companies appear to be preparing to lead the GDDR market while gaining technological advantage in next-generation products.
Recently, IGI (Industry Growth Insights) published its new report citing that the GDDR market will grow from $3.2 billion in 2018 to $4.8 billion in 2030 with an average annual growth rate of 7.6%. It’s predicted that high-performance GDDR like GDDR6 will record a double-digit growth rate every year.
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Samsung x GDDR
In July, Samsung Electronics developed GDDR7, the industry’s most advanced product, for the first time, and supplied samples to Nvidia for verification for next-generation system installation. SK Hynix also plans to complete GDDR7 development within this year.
On the other hand, Micron plans to introduce GDDR7 in the first half of next year, a step later. In this situation, Nvidia, the world’s largest customer in the GPU market, is known to preferentially review Samsung Electronics’ products instead of Micron’s next-generation products.