Korean semiconductor ‘cooling down’ U.S. Chip and Science Act public-private sharing National Semiconductor Technology Center launched
As smartphone and semiconductor inventories overlapped and Korea's semiconductor stimulus stimulus was frustrated, Samsung Electronics' stock price adjustment sharply rose, and in the United States, the National Semiconductor Technology Center was launched on the 9th with the Semiconductor Science Act (Chips and Science Act).
The 'semiconductor economic stimulus', which was collectively led by securities analysts with government support, suddenly turned into a 'short-term adjustment' on the 12th, and 'Chosun Biz' said, "Based on these conditions, stock market experts need to be cautious when investing in semiconductors for the time being even after the Lunar New Year holiday." “It was reported on the 12th.
‘Chosun Biz’ published on January 3, ‘The memory semiconductor industry has passed the dark ages… Samsung Electronics and SK Hynix will raise DRAM prices by 40% this year, predicting a rebound in related stock prices.
Hi Investment & Securities said that the reason for the sharp turn to negative in the securities firm's outlook for Samsung Electronics was a surge in Chinese smartphone inventory.
Regarding the smartphone market, Trend Force said, “Although chip manufacturers are focusing on improving processing performance, the impact of AI has been somewhat limited due to the absence of new AI functions.” He added, “With memory prices plummeting due to oversupply in 2023, low-priced options will lose their appeal.” Average DRAM capacity per smartphone increased by 17.5% and NAND flash capacity by 19.2%, but with no new applications expected in 2024, content growth per box for DRAM and NAND flash in smartphones will slow to 14.1% and 9.3%, respectively.” The report on the 5th focused on ‘slowdown’.
Regarding the AI industry, Minister of Trade, Industry and Energy Ahn Deok-geun defined the separation of the AI strategy meeting and '100-person working group' with the CEOs of Samsung, Hyundai, and SK, and U.S. Secretary of Commerce Raymond established an equal sharing partnership between 'government demand, customers, suppliers, academia, entrepreneurs, and venture investors'. It was revealed as the core of the AI industry.
On the 7th, Minister of Trade, Industry and Energy Ahn discussed the 'Industrial Investment Strategy' with the presidents of Samsung, Hyundai Motor, and SK, and established 'New Industrial Policy for the AI Era' through 'Operation of a 100-member working group' at the 'AI Industrial Policy Committee' of AI industry experts. officially announced an investment of 110 trillion won.
On the 9th, the White House officially announced the launch of the National Semiconductor Technology Center, with a federal budget of $11 billion and an investment of $5 billion for semiconductor research and development.
Secretary of Commerce Gina Raimondo said at the White House that day, "The National Semiconductor Technology Center is a place where government, industry customers, suppliers, academia, entrepreneurs and venture capitalists come together to innovate, connect, network, solve problems, and help Americans compete." “It is a public-private partnership that will enable us to win the world.”
The White House meeting approved the Semiconductor Science Act on this day and stipulated a ‘25% tax credit’ for the construction of a chip factory worth $24 billion out of a total investment of $52.7 billion, including $39 billion in semiconductor production subsidies and $11 billion in research and development.
The U.S. National Semiconductor Technology Center (NSTC) establishes an investment fund to help emerging semiconductor companies develop technologies for commercialization, and directly conducts cutting-edge semiconductor technology research and prototyping through R&D programs using the funds.
At a Cabinet meeting on December 30 last year, President Yoon Seok-yeol ordered, “Actively consider ways to further expand tax support for national strategic industries such as semiconductors,” making tax credits a key focus for investment by large corporations.
President Yoon said on KBS on the 7th, “To allow foreign capitalists to invest domestically, we must reduce the ‘Korea discount’ (stock market undervaluation),” and added, “It is very important to remove regulatory aspects, especially the tax system.” “He revealed the U.S. Republican Party’s regulatory policy strategy.
In a joint statement at the summit with President Biden in May 2022, President Yoon announced ‘exchange of semiconductor professional manpower’ and ‘promotion of investment between the two countries’ in the “Agreement to Promote Semiconductor Supply Chain,” and in July, “Measures to Strengthen Competitiveness of the Semiconductor Industry” announced an investment of 340 trillion won over 5 years and training of more than 150,000 semiconductor manpower over 10 years, handing over cutting-edge semiconductors to Japan.
At that time, the Korea-U.S. summit only agreed to stabilize the semiconductor supply chain, and the U.S.-Japan summit that followed shortly thereafter widened the gap by agreeing to lead the way in advanced semiconductors and to agree on a joint task force for the development of next-generation semiconductors.
In the subsequent Washington Joint Statement and Action Plan (June 29, 2022), the U.S. and Japanese governments supported Korea in the development of advanced semiconductor technology by saying, “Both sides agreed on research and development goals for mass production of next-generation semiconductors” and “cooperation in energy security, including securing LNG.” excluded.
At the time, the joint statement from the U.S.-Japan summit was ‘Agreement to establish a joint research center for the development of next-generation semiconductors’, “Promoting regional development and prosperity through innovative methods such as the Indo-Pacific Economic Framework (IPEF), strengthening supply chain flexibility in strategic sectors such as semiconductors and batteries, and developing technology.” joint research and project promotion for this purpose.”
Accordingly, in the joint development of 2-nano next-generation semiconductors, the United States and Japan agreed to mass produce 2-nano semiconductors starting in 2025 through the establishment of the National R&D Research Institute for Advanced Industrial Science and Technology in Japan and the participation of RIKEN and the University of Tokyo.
President Yoon attempted to dominate the lithium battery market subsidized by the United States by handing over cutting-edge semiconductors to Japan, but failed as Chinese all-solid-state batteries became the market trend.
<Refer to the Korea-U.S. agreement on the operation of advanced semiconductors between the U.S. and Japan, the supply chain is a ‘Chip 4 delay’ strategy, dated August 1, 2022>
Regarding the semiconductor stock market crisis, Hi Investment & Securities predicted that Chinese smartphone shipments will rapidly increase from 26.8 million units in December of last year, and if sales in the first quarter of this year remain sluggish, memory semiconductor orders will be reduced due to inventory management from the second quarter onwards.
‘Chosun Biz’ published on January 3, <Memory semiconductor industry past the dark ages… Samsung Electronics and SK Hynix will raise DRAM prices by 40% this year. According to data from market research companies and Mirae Asset Securities, the big three global DRAM companies, including Samsung Electronics, SK Hynix and Micron, raised prices by 15-16% in the fourth quarter of last year. “Following the push for a price increase of more than 10% in the first quarter of this year, we plan to raise prices flexibly in accordance with the supply market and recover the operating profit ratio of ‘40%’ before the recession.”
Trend Force's report on the 5th said that contrary to Korea's expectations, “AI PCs will become more prominent in 2025 when mass production begins,” adding, “Client SSDs are on the rise in terms of content per box, but the annual growth rate is declining due to a sharp rebound in NAND flash prices. “This will only be 9.7%.”
A report by the Semiconductor Industry Association (SIA) on the 7th said, “Demand for NVIDIA’s graphics processing units (GPUs) has surged in securing semiconductors related to providing AI-related services, and global semiconductor sales this year are expected to reach $595.3 billion, up from $526.8 billion last year.” “A % increase is expected,” Reuters reported.
SIA's forecast is that the person in charge of industry, statistics and economic policy said, "The start of automotive semiconductors this year will be somewhat slow, but some items will grow by more than 6%," with 'automotive and AI' being the target of increase.
Trend Force's report on the 5th said, "The server industry that will benefit from the increased demand for AI servers is the introduction and mass production of advanced AI chips by major companies such as NVIDIA, AMD, and CSP ASIC," and "AI server training that mainly uses DRAM for high-speed computing is “As it is currently leading the market, server DRAM is expected to grow by 17.3% per year, and enterprise SSD is expected to grow by about 13.2%, so DRAM will have a higher content growth rate per box than NAND flash.”
Korean media all responded to Samsung Electronics' 4th quarter performance announcement, saying, "Last year's operating loss in the DS division was 4.58 trillion won in the first quarter, 4.36 trillion won in the second quarter, 3.75 trillion won in the third quarter, and 2.18 trillion won in the fourth quarter. “Business has entered a recovery phase,” the report said.
Samsung Electronics' inventory assets last year were KRW 51.6306 trillion, slightly lower than the inventory of KRW 52.1879 trillion the previous year. However, the media and securities companies focused on the 6.7% decrease on annualized basis from KRW 55.256 trillion in the third quarter of last year. SK Hynix inventory. Assets were 13.481 trillion won last year and 14.948 trillion won in the third quarter, which is a 9.8% decrease when converted to year-end.
LG Electronics' inventory assets decreased slightly from 9.95 trillion won in the third quarter to 9.39 trillion won at the end of last year.