• According to German association FBDi, turnover in electronic component distribution declined by 29% in Q1 2024. FBDi CEO Georg Steinberger commented that the expected consolidation after three record years has now hit the industry hard and will continue over the next few quarters. However, the mood on both the distributor and customer side remains optimistic.
• The USA recently announced new tariffs on Chinese imports, which included a 50% tariff on semiconductor products manufactured in China, a 100% tariff on EVs, and a 25% tariff on batteries. These new tariffs will come into play by 2025. This has accelerated a shift in supply chains which has resulted in increased orders for Taiwanese foundries. In H2 2024, Vanguard’s capacity utilisation rate is expected to rise above 75%, PSMC’s 12-inch capacity utilisation rate will reach over 85%, and UMC’s capacity utilisation rates are projected to hit above 70%.
• Despite the US raising tariffs on Chinese battery imports to 25%, China still maintains the market share in battery development. The tariff increase is expected to have a detrimental effect on the local EV manufacturing where costs are now expected to increase for US automakers. The cost of LFP batteries imported from China still remains higher than those manufactured in the US which will complicate efforts by US automakers to reduce overall vehicle costs.
• According to TrendForce, HBM3e production is expected to surge, making up 35% of the advanced wafer input by the end of 2024. Following a rise in memory contract prices, companies have boosted their capital investments, with capacity expansion focusing on the second half of this year. It is expected that wafer input for 1alpha nm and above processes will account for approximately 40% of total DRAM wafer input by the end of the year. HBM production will be prioritised due to its profitability and increasing demand.
• Nvidia has forecast quarterly revenue above estimates, lifting its shares to a new record. After the announcement, its shares rose 5,9% to settle at $1005 per share to add $140 billion in stock market value. This has prompted the company to raise its quarterly dividend by 150%. So far in 2024, Nvidia’s stock has seen an increase of 90%.
• According to Berg Insight, the installed base of cellular POS terminals will reach 189 million in 2027. Over 52% of POS terminals shipped in 2023 used cellular connectivity, and with advances in cellular technology and the move from older protocols to 4G and 5G, this percentage is expected to increase at a CAGR of 8,2%.
• The adoption of enterprise SSDs by AI servers gained traction in February this year, leading to large orders being placed. This trend has subsequently driven up the price of NAND Flash and boosted Q1 revenue from enterprise SSDs by over 60%. Samsung remained as market leader in this sector followed by SK Hynix, Kioxia, and Micron who has recently overtaken Western Digital for 4th place.
• Shipments for multi-layer ceramic capacitors (MLCC) in Q1 2024 reached a low for the third consecutive quarter. However, as demand for AI servers and other ICT equipment continues to grow steadily, MLCC shipments are expected to bounce back, increasing by 6,8% in Q2 to reach 1,235 trillion units.
• South Korea has joined the likes of the US, China, and Taiwan with a $19 billion injection into its local semiconductor industry. Tax breaks that were set to expire in 2024 have been extended and financial support will be given to local chipmakers. Taiwan recently saw a 56% rise in semiconductor exports compared to the same period last year. This move will hopefully allow South Korea to keep pace with the US, which has seen a surge in domestic chip production since the CHIPS Act was passed.
• The global GPU market is projected to reach $274 billion within the next 5 years, representing a CAGR of 33%. This is primarily attributed to both the high demand for processors used in high-end graphics applications like gaming, and the advancement of AI technologies.
• The last three years have been challenging for the PC industry, but according to Stocklytics [www.stocklytics.com], the global PC market is set to fully recover in 2026 when it hits $750 billion in revenue. It is forecast that global spending on PC and mobile computing devices will grow by $40 billion in the next two years.
Companies
• The state-owned Central Energy Fund (CEF) has purchased the ailing Sapref refinery in Durban for R1. South Africa’s largest refinery, which accounts for around 35% of the countries refining capacity and was jointly owned by BP and Shell, will now fall under the Department of Mineral Resources and Energy. It has been stated that the 48 permanent staff that currently work at the site and 16 trainees will transfer with the sale of the business.
• Stellantis broke ground on its first car plant near Gqeberha, South Africa in June where the company is expected to invest R3 billion on the state-of-the-art manufacturing facility. Speaking at a press conference, Mike Whitfield, MD of the SA unit of Stellantis, said that the company is debating whether to branch into the local production of EVs and other alternative vehicles besides the standard car models that they currently produce, including Alfa Romeo, Opel, Peugeot, and Jeep. South Africa’s car industry, which currently employs around 116000 people, is in danger of being left behind in the global move towards alternative-energy vehicles.
• STMicroelectronics is to build a fully integrated silicon carbide facility in Italy. This new high-volume 200 mm manufacturing facility will be for power devices and modules. The project is in the form of a projected 5 billion Euros investment program including 2 billion Euros support by the State of Italy in the framework of the EU Chips Act. The complete facility will form ST’s Silicon Carbide Campus and will realise the company’s vision for the mass production of SiC on one site.
Technologies
• At the recently held EnLit conference in Cape Town, Eskom’s group executive for generation stated that the utility is considering using smaller, modular reactors at coal-fired plants that are set to be de-commissioned. However, it was noted that these small nuclear reactors are not commercially available yet and that a few types were entering trials overseas. This news aligns with the Department of Mineral Resources and Energy’s plans to procure 2500 MW of new nuclear power by 2032.
• NVIDIA’s H100 started to see a reduction in shortages during the first quarter this year. The company has also started to ramp up production of its H200, which will be entering the market in Q3. NVIDIA’s new Blackwell platform will see production ramping up in Q4, but the company is not expecting this to have a marked effect on the current H100 and H200 from their Hopper platform.
• The microLED chip market is expected to reach $580 million within the next 4 years as the technology focusses on head-mounted devices and automative applications. This will represent a CAGR above 80%. Efforts to reduce the size of microLED chips is ongoing as manufacturers seek to minimise the cost of production.
• The South African Department of Basic Education has finally seen the light and gazetted changes to the National Policy, effectively adding coding and robotics to the subject roster for grades R to 9. This effectively means that all junior and senior primary students should have access to formal tuition in this field. The department has been piloting a trial in certain schools for several years starting in 2021. In grades 4 to 9, the subject is offered alongside mathematics, natural science, and technology. As yet, the subject has not been added to the curriculum for grades 10 to 12.
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