TSMC is accelerating its global expansion, receiving robust support from governments in Japan and China. In the first half of this year alone, TSMC secured nearly NT$8 billion in subsidies from the two countries, bringing its total government aid from Japan and China to NT$62.5 billion(approximately USD $1.96 billion).

According to the Central News Agency, TSMC’s financial reports show that its subsidiaries—JASM in Japan and Nanjing in China—received these subsidies to support their plans to establish and operate manufacturing facilities in Kumamoto and Nanjing. The funds are primarily earmarked for real estate, plant, and equipment purchases, as well as to offset construction and operational costs.

TSMC reported that it received NT$7.051 billion in subsidies from Japan and China in 2022, followed by NT$47.545 billion in 2023, and an additional NT$7.956 billion in the first half of this year, totaling NT$62.5 billion.

Governments worldwide have increasingly recognized semiconductors as vital strategic assets, spurring a race to subsidize the industry’s growth. With TSMC’s cutting-edge technology leading the global market, it has become a key target for investment incentives from various governments. TSMC has already established a presence in Kumamoto, Japan, and Arizona, U.S., and is expanding its 28nm capacity in China.

On August 20, TSMC broke ground on its European Semiconductor Manufacturing Company (ESMC) in Dresden, Germany, marking the start of its initial land preparation phase for a new wafer fab. This expansion extends TSMC’s global footprint from the U.S., China, and Japan to Europe.

The groundbreaking ceremony, hosted by TSMC Chairman C.C. Wei, was attended by German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen. The European Commission also announced its approval of a €5 billion German subsidy package under EU state aid rules, demonstrating its support for the ESMC project.

TSMC’s Kumamoto plant is progressing rapidly, with its first wafer fab set to begin mass production of 12nm, 16nm, 22nm, and 28nm process technologies in the fourth quarter of this year. A second fab is scheduled to start production in 2027, utilizing 6nm, 7nm, 12nm, 16nm, and 40nm process technologies.

In Arizona, TSMC’s first wafer fab is on track to begin 4nm process production in the first half of 2025, with a second fab expected to commence 2nm production in 2028. The company also plans to construct a third fab that will deploy 2nm or more advanced technologies.

In April, the U.S. Department of Commerce announced a USD $6.6 billion subsidy for TSMC’s advanced fab in Arizona. However, TSMC has yet to receive these funds and does not speculate on future government subsidies.

(Photo credit: TSMC)

China has turned itself into “the world’s market” for semiconductor, while it eyes to play a crucial role in chip manufacturing by procuring more equipment. The latest reports by Bloomberg and Technews, citing data from China’s General Administration of Customs, indicates that Chinese imports of chip equipment in the first seven months of 2024 hit a new high, totaling USD 26 billion.

It is worth noting that in July 2024, the Netherlands’ total exports to China exceeded USD 2 billion, reporting the second-highest single-month record ever, the reports say, which can be largely contributed to China’s stockpiling of ASML’s systems and other machinery.

Tightening U.S. Export Restrictions May Lead to China’s Import Surge with Mature Nodes Its Major Focus  

The primary reason behind this surge, according to Bloomberg, may likely be that Chinese tech companies are preparing for further export restrictions on advanced chip manufacturing tools launched by the U.S. and its allies.

The report states that Chinese tech companies are particularly focused on purchasing semiconductor equipment for mature process, from companies like ASML, Applied Materials, and Tokyo Electron. The move allows fabs in China to produce chips needed for local industries, primarily the automotive sector.

Most of the equipment was said to be lithography systems used for mature nodes, which are crucial for Chinese foundries like SMIC. The company is rumored to produce 5nm chips for Huawei this year, by using old deep ultraviolet (DUV) lithography machines purchased from ASML.

New Local Fabs Opening up, Driving China’s Chip Making Equipment Procurement

In addition to counter the possible export restrictions from the U.S., the reports state that China’s aggressive procurement may also be due to the expansion wave of fabs this year. According to SEMI’s projection, among the 42 new fabs expected to go online in 2024, China leads by 18, which further boosts the country’s purchase of semiconductor production equipment.

The momentum also drives demand for local semiconductor equipment manufacturers in China. Chinese semiconductor company Advanced Micro-Fabrication Equipment Inc. (AMEC) reported a strong second quarter, with its revenue up 36.46% year-on-year to RMB 3.448 billion. Its etching equipment revenue reached RMB 2.698 billion, a year-on-year increase of 56.68%.

Read more

• [News] ASML Claims the World Counts on China for Legacy Chips; So Do Chip Equipment Giants
• [News] Samsung and SK hynix’s China Revenue Doubled in 1H24, Reportedly Driven by Semiconductor and HBM Demand

(Photo credit: SMIC)

Earlier in June, Samsung updated its roadmap in the Angstrom era, stating that its 2nm node optimized with backside power delivery network (BSPDN), referred to as SF2Z, will enter mass production in 2027. Now, according to the latest report by the Korea Economic Daily, compared with the traditional front-end power delivery technology, BSPDN is said to reduce the size of Samsung’s 2nm chip by 17%.

Citing Lee Sungjae, vice president of the Foundry PDK Development Team at Samsung, on Thursday, the report also notes that by applying BSPDN to its 2nm chips, Samsung is expected to improve the product’s performance and power efficiency by 8% and 15%, respectively.

Lee’s remarks was the first time a Samsung foundry business executive provided details publicly regarding its BSPDN roadmap. The report explains that by positioning the power rails on the back of the wafer to remove bottlenecks between power and signal lines, the production of smaller chips would be easier.

However, Samsung is not the first semiconductor giant to adopt this technology. Among the Big Three in the foundry sector, Intel is at the forefront, aiming to produce chips with BSPDN technology, which it calls PowerVia, with Intel 20A (2 nm) in 2024. The tech giant also plans to implement PowerVia on Intel’s 20A along with the RibbonFET architecture for the full-surround gate transistor.

According to Intel, power lines typically occupy around 20% of the space on the chip surface, while its self-developed PowerVia’s backside power delivery technology saves this space, allowing more flexibility in the interconnect layers.

On the other hand, foundry leader TSMC reportedly plans to integrate its backside power delivery technology, Super PowerRail architecture, and nanosheet transistors in its A16 chip in 2026.

In addition to BSPDN, Samsung also revealed its roadmap about the next-generation gate-all-around (GAA) technology, which the company was first introduced in 2022, according to the report.

Samsung plans to begin mass production of 3 nm chips based on its second-generation GAA technology (SF3) in 2H24 and will also implement GAA in its upcoming 2 nm process, the report notes.

According to Lee, SF3 has enhanced chip performance by 30%, improved power efficiency by 50%, and reduced chip size by 35% compared to the chips produced with the first-generation GAA process. Coupling with the adoption of BSPDN, the two technologies can further reduce the chip size for Samsung.

Read more

• [News] Samsung Unveils Next-gen 2nm Node Roadmap; SF2Z with Backside Power Delivery to Enter Production in 2027
• [News] TSMC’s Backside Power Delivery Reportedly Set for 2026, Benefiting the Supply Chain

(Photo credit: Samsung)

As semiconductor giants, including Intel, TSMC and Samsung, have been competing fiercely in the Angstrom era for advanced nodes, the progress on their adoption of ASML’s High-NA EUV (high-numerical aperture extreme ultraviolet) equipment has been brought back into spotlight lately. However, the semiconductor market, which seems to get more polarized in the meantime, may rely more on China than most people have imagined.

ASML: China is Ten Years behind the U.S. regarding Cutting-edge Chips

In May, without the assistance for extreme ultraviolet (EUV) lithography machines manufactured by ASML, China’s largest foundry, SMIC, is rumored to produce 5nm chips for Huawei this year. However, ASML’s CEO has denied the possibility that China would be able to replicate EUV technology.

According to an interview by Germany media Handelsblatt in July, ASML CEO Christophe Fouquet stated that the EUV technology, which the Dutch semiconductor heavyweight boasts of, is highly complex. Wccftech, citing Fouquet’s remarks in the interview, noted that it would be extremely difficult for China to replicate because the country lacks the know-how.

Citing Fouquet, the reports noted that regarding the development of cutting-edge chips, China is about ten years behind the U.S.

The World in Dire Need of the Legacy Chips Produced by China

However, Fouquet argued that chip buyers, including those in the German automotive industry, are in need of older generation computer chips, an area in which Chinese chipmakers are currently increasing their investments.

His remarks highlight the importance of China’s semiconductor production for global markets, which may still thrive under U.S. export restrictions.

According to the reports, Fouquet stated that though global demand for the legacy chips have been soaring dramatically, Europe cannot even meet half of its own needs. As manufacturing these chips is not very profitable, Western firms are not investing enough in the sector, Fouquet said.

Therefore, neither did he agree with the extensive, tightening chip controls recently. Fouquet noted that it doesn’t make sense to prevent someone from producing something you need.

Peter Wennink, former CEO of ASML, stated in July that the chip war between China and the US lacks factual basis and is entirely driven by ideology. Wennink also anticipated that this chip war will not be resolved anytime soon and could potentially persist for decades.

China Contributes up to 50% Revenue of the World’s Top 5 Chip Equipment Makers

Take a look at the latest financial results of the world’s top semiconductor equipment manufacturers, and we may find where the strong momentum of China has led to.

ASML, as the world’s exclusive EUV provider, reported second-quarter earnings and sales (USD 6.8 billion) that beat forecasts, as AI chips drives up demand for the Dutch firm’s critical semiconductor making equipment.

More importantly, regarding ASML’s sales in lithography units in the second quarter of 2024, China emerged as the largest market, as it contributed 49% of the revenue, higher than South Korea’s 28% and Taiwan’s 11%.

It is worth noting that a year ago, in the second quarter of 2023, China only accounted for 24% of ASML’s sales in lithography units, while Taiwan and South Korea contributed 34% and 27%, respectively. The results, in a way, have reflected China’s ambition and importance in chip making, as Fouquet noted.

Despite export controls, China has also become the largest market by region for U.S. semiconductor equipment giant, Applied Materials. In the second quarter, China accounted for 43% of its total sales of Applied Materials, a 22 percentage point increase YoY, while Taiwan and South Korea contributed 15% and 15%, respectively.

The dominance of the Chinese market is also evident with other major semiconductor equipment makers. China contributed 39% of Lam Research’s revenue in the June quarter, 2024, much higher than 26% a year ago.

Tokyo Electron, on the other hand, attributed as high as 49.9% revenue to China for the first quarter of its 2025 fiscal year, compared with 39.3% a year ago. China accounted for 44% of KLA’s revenue in the June quarter, 2024.

As DUV systems, which have not been extensively regulated, can still be applied to nodes down to 7nm, or even 5nm, Chinese chipmakers, with the support of government, may continue to hold a significant position in the global semiconductor ecosystem.

Read more

• [News] ASML Former CEO Predicts Chip War Between China and the US May Persist for Decades
• [News] US to Lobby Netherlands and Japan to Contain China’s Chip Development, Focusing on HBM

As semiconductor giants, starting with Intel and TSMC, have been bringing in ASML’s High-NA EUV (high-numerical aperture extreme ultraviolet) equipment to accelerate the development in advanced nodes, the elite group has now reportedly been added two new members: Samsung and SK hynix.

According to the reports by Korean media outlet Sedaily and ZDNet, Samsung Electronics’ semiconductor (DS) division is said to bring in High-NA EUV equipment as early as the end of 2024. SK hynix’s High-NA equipment, which is expected to be applied to the mass production of advanced DRAM, will reportedly be introduced in 2026.

Samsung to Introduce First High-NA EUV Machine as soon as Year-End, Eyeing Full Commercialization by 2027

Sedaily, citing industry sources on August 13^th, notes that Samsung is expected to begin bringing in its first High-NA EUV equipment, ASML’s EXE:5000, between the end of this year and the first quarter of next year. It is worth noting that Samsung’s first High-NA EUV equipment is likely to be used for foundry operations, the report reveals.

Among the semiconductor heavyweights which have been advancing in the foundry business, Intel is the first to order new High-NA EUV machines from ASML. In May, Intel was said to have secured its first batch of the new High-NA EUV lithography equipment from ASML, which the company will allegedly use on its 18A (1.8nm) and 14A (1.4nm) nodes.

TSMC, on the other hand, is more concerned on the new machine’s expensiveness, as it might be priced at as much as EUR 350 million (roughly USD 380 million) per unit, according to a previous report by Bloomberg. However, the report, citing ASML’s spokesperson, confirmed that the Dutch chip equipment giant will ship High-NA EUV equipment to TSMC by the end of this year.

Now, following its two major rivals in the foundry sector, Samsung, by introducing High-NA EUV equipment as soon as year-end, aims to boost its competitive edge in the advanced nodes.

As the installation process is quite time-consuming, Samsung aims for the full commercialization of High-NA by 2027, supported by its efforts to build the related ecosystem, the report says.

According to the report, Samsung is working with electronic design automation (EDA) companies to design new types of masks, including curved (curvilinear) circuits for High-NA EUV that improve the sharpness of the printed circuits on wafers. This collaboration includes companies like Synopsys, a global leader in semiconductor EDA tools.

SK hynix’s High-NA EUV Reportedly to be Applied to 0a DRAM Production

According to the report by Sedaily, ASML has produced eight EXE:5000 High-NA EUV units currently, as Intel has the lion’s share by securing multiple units. Samsung is said to be the last customer to place the order for ASML’s first batch of units.

On the other hand, SK hynix, Samsung’s major rival in the memory sector, is reported to bring in ASML’s next generation of High-NA EUV machine, the EXE:5200, in 2026, ZDNet suggests.

Citing industry sources on August 16th, ZDNet notes that the HBM giant has been expanding the personnel dedicated to High-NA EUV development within the company.

Although specific plans, such as the fab where the equipment will be installed or the direction of additional investment, have not been disclosed, it is expected that the technology could be applied to mass production in 0a (single-digit nanometer) DRAM as early as possible, the report indicates.

Read more

• News] TSMC Reportedly Invests over USD 12.3 Billion in EUV, Advancing in 2nm Production
• [News] Intel Secures First Batch of High-NA EUV Equipment from ASML, Ahead of Samsung and SK Hynix

(Photo credit: ASML)