Giant Chip

Semiconductor Weekly - Business | Investing | Technology

August 04, 2024

Intel’s not-so-great week after announcing its Q2 earnings. However, the competition for next-generation chips remains intense and dynamic.

Today’s newsletter

  • 💸Cerebras is (probably) coming to the market soon

  •  🦾SK Hynix’s record profit in 6 years

IPO on the horizon! Cerebras Systems has confidentially filed for an IPO with the SEC.

  • The company is targeting a launch for its initial public offering as soon as October.

  • Cerebras is allegedly looking for a valuation figure above the $4 billion it achieved after its 2021 funding round.

Who is Cerebras? Cerebras Systems is pioneering the development of AI-specific hardware, focusing on creating the world’s largest chip, the Wafer Scale Engine (WSE), to handle massive AI workloads more efficiently than traditional GPUs.

  • Cerebras Systems was founded in 2016 by a team led by Andrew Feldman, a seasoned entrepreneur and co-founder of SeaMicro, which was acquired by AMD.

  • They challenge Nvidia by offering superior performance for AI tasks, with their WSE boasting significantly more compute cores and memory bandwidth.

Silicon Valley’s finest backers Its investors include Benchmark, Coatue Management and Altimeter Capital.

  • Cerebras has raised approximately $720 million in total funding across several rounds.

  • The latest valuation of the company, as of their most recent funding round, stands at around $4 billion.

Going forward Cerebras’s IPO will test market's appetite for Nvidia challengers and AI chip/compute stock.

  • There is a growing market appetite for alternatives to Nvidia, as demand for AI computation continues to surge and companies seek diverse and specialized hardware solutions.

  • “What OpenAI showed was that this class of model would get better as it got bigger, approximately without bound” by Andrew Feldman

SK Hynix Reports Record Q2 Revenue and Profit Surge Driven by AI Memory Demand

125%! SK Hynix reported record Q2 revenue of $12.6 billion, a 125% year-over-year increase, and the highest profit since 2018.

  • The surge was driven by strong AI memory demand and price increases for DRAM and NAND products, leading to profitable NAND business for two consecutive quarters.

  • HBM revenue surged by over 250%, with capacity almost sold out until 2025, emphasizing HBM's crucial role in AI investments.

$4 billion! SK Hynix posted $4 billion in second-quarter operating profit, a turnaround from a loss of $2 billion in the year-earlier period.

  • The operating profit, aligned with market expectations, is the highest since the third quarter of 2018.

SK Hynix plans to start mass production of 12-layer HBM3E chips in Q3 2024, reinforcing its HBM market leadership.

  • Analysts expect HBM to contribute 5% of DRAM bit shipments and 20% of revenue in 2024, with continued profit growth driven by AI memory demand.

  • The company is preparing for mass production at the new Cheongju M15X DRAM plant in H2 2025.

🚀 Funding & Deal

  • OPENEDGES Technologies, a South Korean semiconductor IP platform company, has raised $45 million from Atinum Investment and Stonebridge Ventures. (Link)

  • Rebellions, a South Korean AI semiconductor startup, secured a $15 million strategic investment from Wa’ed Ventures, the venture capital arm of Saudi Aramco. (Link)

  • SirenOpt, based in Oakland, CA, an advanced manufacturing intelligence company, closed a $6.6 million seed funding round led by Voyager Ventures. (Link)

  • PowerCubeSemi, a Korean startup specializing in power semiconductors, raised $5 million in its Series C funding round to establish a silicon carbide post-processing line and expand its gallium oxide processing line. (Link)

  • RAAAM Memory Technologies, based in Israel, received a €5.25 million grant from the European Innovation Council to support the development and commercialization of its innovative memory solutions. (Link)

  • Renesas Electronics, headquartered in Japan, completed the $5.9 billion acquisition of Altium, enhancing its design software capabilities for electronic systems. (Link)

  • Merck KGaA, based in Darmstadt, Germany, plans to acquire French semiconductor firm Unity-SC for €155 million to enhance its metrology and defect inspection solutions for the semiconductor industry. (Link)

💹 Earning Spotlight

  • Intel experienced an 85% drop in profit for Q2 2024, with AI chip sales lagging behind competitors Nvidia and AMD. (Link)

  • AMD reported a 9% annual revenue increase, although gaming hardware revenue declined by 59%; AI datacenter sales generated $1 billion, and overall datacenter revenue surged by 93%. (Link)

  • Samsung Electronics increased its net profit six-fold in Q2, reaching 9.841 trillion won ($7.11B), driven largely by its semiconductor division, which accounted for more than half of the operating profit. (Link)

  • Qualcomm exceeded expectations with fiscal Q3 net income of $2.13B, or $1.88 per share, compared to $1.8B, or $1.60 per share, in the same quarter last year, and saw a 12% rise in phone chip sales. (Link)

  • Arm provided lower earnings guidance; Q2 revenue increased by 39% year-over-year to $675M, with net income rising to $223M, or $0.21 per share, up from $105M, or $0.10 per share, the previous year. (Link)

  • BE Semiconductor Industries (BESI) reported Q2 2024 revenue of €151.2 million, a 7% decrease from the previous year, with net income down 20% to €41.9 million. (Link)

  • Aehr Test Systems posted record net sales of $20.3 million for Q4 2024, marking a 25% rise from $16.2 million in the same quarter the previous year. (Link)

🧿 Industry on the Move

  • Worldwide silicon wafer shipments increased 7.1% quarter-over-quarter to 3,035 million square inches in Q2 2024, driven by strong demand for data centers and generative AI, despite an 8.9% decline from the same quarter last year. (Link)

  • AI is projected to drive $1 trillion in global chip sales by 2030, with NVIDIA leading the charge. (Link)

  • Future chips may replace silicon with faster and more efficient 2D materials full of atomic defects. (Link)

  • Amkor plans a $400 million investment in a new packaging facility in Peoria, Arizona, to support AI chip production. (Link)

🧭 Chip Launchpad

  • Apple disclosed that it used Google TPUs instead of NVIDIA GPUs for training its Apple Intelligence Foundation Language Models, highlighting a shift in its AI hardware strategy. (Link)

  • Intel will unveil its next-generation Core Ultra processors at a launch event, showcasing advancements in performance and efficiency. (Link)

  • Lam Research introduced Lam Cryo™ 3.0 Cryogenic Etch Technology to accelerate the scaling of 3D NAND for AI applications. (Link)

  • TSMC plans to start using high-NA EUV tools for the 1.4nm A14P chip production in 2028, extending its lead in the foundry market. (Link)

  • Micron announced the shipment of its 9th Generation 276-layer TLC NAND, which offers significant density and performance improvements. (Link)

  • Imec released part 2 of its chiplets series, focusing on testing strategies, standardization efforts, and guidelines for efficient ESD protection strategies for advanced 3D systems-on-chip. (Link)

✈️ Across the Globe

🌎 America

  • The U.S. is considering new measures to limit China's access to advanced AI memory chips, potentially impacting China's technological advancements. (Link)

  • The National Science Foundation and the Department of Commerce are allocating $30 million to bolster the semiconductor workforce through education and training initiatives. (Link)

  • The U.S. House of Representatives has advanced measures to strengthen America's leadership in semiconductor design and innovation. (Link)

  • A new semiconductor manufacturing project is set to launch in Texas, bringing a $210 million investment and boosting the local economy. (Link)

  • The Select Committee on the CCP has proposed the Semiconductor Technology Advancement and Research (STAR) Act to enhance U.S. capabilities in semiconductor technology. (Link)

🌏 Asia

  • Infineon completed the sale of its manufacturing sites in the Philippines and South Korea to ASE. (Link)

🌏 Europe & EMEA

  • The UK will dole out more than £100 million in funding to develop five new quantum research hubs in Glasgow, Edinburgh, Birmingham, Oxford, and London. (Link)

  • BelGan, a Belgian semiconductor maker, has gone bankrupt, jeopardizing over 400 jobs (Link)

  • SEMI publishes recommendations on outbound investments in response to the European Economic Security Strategy. (Link)

🗼 In-Depth & Insights

“High-NA EUV will enable the logic A14 node by replacing a complex and expensive multi-patterning process with a single exposure solution.”

“With IBM unable to rely on South Korea and Taiwan, it turned its eye to Japan, where there was a strong trust for the country's chip tools and material supply chain.”

“Foundry 2.0 also aligns closely with the changed need of the top HPC customers, Apple, Nvidia, Intel, AMD and Broadcom. TMSC can basically deliver everything but the memory element of the CPU and GPU boards.”

📈 Chart of the Week

More than 670 firms are vying for $39 billion in grants and $75 billion in loans from the 2022 Chips and Science Act (Bloomberg).