According to TrendForce, as the United States continues to expand the content of various lists, successively pass anti-China bills, and explicitly prohibit the export of certain products to China, the two countries have gradually drifted apart and this antagonistic relationship will continue if no drastic changes occur between the two parties in the next 6-8 years.

In the face of U.S. encroachment, all sectors in China must continue to look for escape routes if the country wishes to tear down the many walls built by the U.S. and move towards industrial autonomy. China’s top priority is to make breakthroughs in the semiconductor field. As far as current development is concerned, there are still many companies in China’s domestic IC design industry moving towards advanced manufacturing processes even after leading manufacturers such as Huawei, Changsha Jingjia Microelectronics, and Goke Microelectronics were placed on the entity list. At the same time, semiconductor manufacturers such as SMIC, CXMT, and Yangtze Memory Technologies have repeatedly developed advanced process technologies while Hua Hong Group has gradually expanded in the field of mature processes. If this trend continues, it will not be difficult for China to realize semiconductor autonomy in processes above 10nm.

If U.S. effectively enforces EDA ban and does not expand controls, impact on China will emerge in 2025

The U.S. Department of Commerce’s export restrictions on Chinese manufacturers are escalating but the autonomy of China’s domestic semiconductor industry is also gradually increasing. As the confrontation between the United States and China intensifies, the United States has launched a new wave of export control measures. On August 12, 2022, the U.S. Department of Commerce announced that it will restrict the export to China of EDA software required to design integrated circuits with GAAFET structure. Since GAAFET is a structure that is used in processes below 3nm, this move is equivalent to setting an advanced threshold for China’s semiconductor development.

Domestic Chinese IC designers who are committed to the development of SoCs, cloud computing chips, and GPUs are destined to move to more advanced manufacturing processes in order to meet the iterative needs of product upgrades and are expected to move toward the 4nm manufacturing process in the next 2 to 4 years. If the U.S. effectively implements the EDA software ban and does not expand the scope of EDA software restrictions, the impact of the ban on China’s semiconductor industry is expected to gradually emerge in 2025, not only delaying the development schedule of some domestic Chinese IC designers but even causing developmental stagnation.

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Although the overall economy is unstable, the use of automotive MCUs is still increasing gradually due to electric and smart vehicle trends. In order to meet market demand, IDMs have strengthened their investment in production resources. There will also be volume and price growth in 2022. Overall market size is estimated to reach US$8.58 billion, with an annual growth rate of 25.7%.

Automotive MCU market dominated by major international IDMs, 32-bit penetration rate will reach 80.1% in 2022

NXP, Renesas, and Infineon account for approximately 70% of global automotive MCU market share. In 2022, NXP will focus on the development of its S32 series and presented a S32M test chip featuring TSMC’s 5nm process, symbolizing a major milestone in the development of automotive chips. Renesas is focusing on its RH850 series, supplemented by the Low Power RL78 to stabilize development. Infineon’s automotive MCU development is focused on its AURIX series which features a self-developed TriCore core and is designed to perform mid-to-high-level automotive system control.

In general, major international IDMs have a complete line of automotive MCUs. With the increasing number of automotive functions, requirements for MCU computing power have advanced. Considering the optimization of major manufacturers’ product portfolios, the penetration rate of 32-Bit MCUs will also increase year by year and is forecast to grow to 80.1% in 2022.

Nuvoton ranks among top ten MCUs producers worldwide, Taiwanese manufacturers’ operations suffer headwinds after tide of shortages recedes

Taiwanese MCU manufacturers are represented by Nuvoton, Holtek, and Sonix. There are other manufacturers such as Generalplus, Nyquest, Hycon, and Megawin but their revenue scale is small and proportion of MCU is low. Overall, only Nuvoton is an IDM with a MCU market share ranked among the top ten in the world and readily available automotive MCU products.

Taiwanese manufacturers mainly focus on mid-to-low-end consumer electronics applications with low barriers to entry. Most of them are fabless manufacturers, meaning the barriers to entry for capital are also low. Therefore, it is difficult to compare their product portfolios with major international manufacturers. After the shortage of semiconductors subsided, operation in 1H22 inevitably encountered headwinds and demand for consumer electronics in 2H22 will continue to be weak, signaling the arrival of a cold winter for the consumer MCU market.

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Although current semiconductor process technologies have evolved to the 3nm and 5nm nodes, SoC (system on a chip) architecture has yet to be manufactured at these nodes, as memory and RF front-end chiplets are yet to reach sufficient advancements in transistor gate length and data transmission performance. Fortunately, EDA companies are now attempting to leverage heterogeneous integration packaging technologies to link the upstream and downstream semiconductor supply chains as well as various IP cores. Thanks to this effort, advanced packaging technologies, including 2.5D/3D IC and SiP, will likely continue to push the limits of Moore’s Law.

While SoC development has encountered bottlenecks, EDA tools are the key to heterogeneous integration packaging

As semiconductor process technologies continue to evolve, the gate length of transistors have also progressed from μm (micrometer) nodes to nm (nanometer) nodes. However, the more advanced process technologies are not suited for manufacturing all semiconductor components, meaning the development of SoC architectures has been limited as a result. For instance, due to physical limitations, memory products such as DRAM and SRAM are mostly manufactured at the 16nm node at the moment. In addition, RF front-end chiplets, such as modems, PA (power amplifiers), and LNA (low noise amplifiers) are also primarily manufactured at the 16nm node or other μm nodes in consideration of their required stability with respect to signal reception/transmission.

On the whole, the aforementioned memory, and other semiconductor components cannot be easily manufactured with the same process technologies as those used for high-end processors (which are manufactured at the 5nm and 3nm nodes, among others). Hence, as the current crop of SoCs is not yet manufactured with advanced processes, EDA companies including Cadence, Synopsys, and Siemens (formerly Mentor) have released their own heterogeneous integration packaging technologies, such as 2.5D/3D IC and SiP (system in package), in order to address the demand for high-end AI, SoC architecture, HPC (high performance computing), and optical communication applications.

EDA companies drive forward heterogeneous integration packaging as core packaging architecture and integrate upstream/downstream supply chain

Although the current crop of high-end semiconductor process technologies is still incapable of integrating such components as memory, RF front-end, and processors through an SoC architecture, as EDA companies continue to adopt heterogeneous integration packaging technology, advanced packaging technologies, including 2.5D/3D IC and SiP, will likely extend the developmental limitations of Moore’s Law.

Information presented during Semicon Taiwan 2021 shows that EDA companies are basing their heterogeneous integration strategies mainly on the connection between upstream and downstream parts of the semiconductor supply chain, in addition to meeting their goals through chip packaging architectures. At the moment, significant breakthroughs in packaging technology design and architecture remain unfeasible through architectural improvements exclusively. Instead, companies must integrate their upstream chip design and power output with downstream substrate signal transmission and heat dissipation, as well as other factors such as system software and use case planning. Only by integrating the above factors and performing the necessary data analysis can EDA companies gradually evolve towards an optimal packaging architecture and in turn bridge the gap of SoC architectures.

With regards to automobiles (including ICE vehicles and EVs), their autonomous driving systems, electronic systems, and infotainment systems require numerous and diverse semiconductor key components that range from high-end computing chips to mid-range and entry-level MCUs. As such, automotive chip design companies must carefully evaluate their entire supply chain in designing automotive chip packages, from upstream manufacturers to downstream suppliers of substrates and system software, while also keeping a holistic perspective of various use cases. Only by taking these factors into account will chip design companies be able to respond the demands of the market with the appropriate package architectures．

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A fire occurred at ASML’s factory in Berlin, Germany on January 3, according to TrendForce’s investigations. ASML is the largest supplier of key equipment (including EUV and DUV) required for foundry and memory production. According to TrendForce’s preliminary inquiry, approximately 200m2 out of a factory floor covering 32,000m2 was affected by the fire. This factory primarily manufactures optical components used in lithography systems such as wafer tables, reticle chucks, and mirror blocks. Reticle chucks used for affixing photomasks are in short supply. Currently, the majority of components produced at this factory go towards supplying EUV machines while the lion’s share of demand for these products come from foundries. If the fire delays component delivery, it cannot be ruled out that ASML will prioritize the allocation of output towards fulfilling foundry orders.

Lead time for this exclusive supply of key EUV machines has been long and may affect the timeframe of advanced manufacturing process transition  

In terms of foundries, EUV is primarily used in advanced manufacturing processes smaller than the 7nm node. Currently, the only companies in the world using this equipment for manufacturing are TSMC and Samsung including TSMC’s 7nm, 5nm, 3nm nodes, Samsung’s EUV Line (7nm, 5nm and 4nm) built in Hwaseong, South Korea, and 3nm GAA node. However, due to factors such as the shortage of global foundry production capacity and the active expansion of manufacturing, semiconductor equipment lead times are also stretching further into the future.

In terms of DRAM, Samsung and SK Hynix are already using EUV in their 1Znm and 1alpha nm processes, while US manufacturer Micron is expected to introduce EUV to their 1gamma nm process in 2024. According to TrendForce’s current information, the lead time on ASML EUV equipment is approximately 12 to 18 months. Due to this long equipment lead time, ASML is at liberty to wait for the completion of replace components for those lost in the fire during the time necessary for equipment assembly.

Overall, the ASML Berlin factory fire will have a greater impact on the manufacturing of EUV lithography equipment when it comes to foundries and memory. According to TrendForce’s information, it cannot be ruled out that ASML will obtain necessary components from other factory campuses. In addition, the current lead time for EUV equipment is quite long. Therefore, the actual impact on EUV supply remains to be seen.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Due to material shortages caused by insufficient semiconductor supply, to date, power management IC (PMIC) prices remain on an upward trend, according to TrendForce’s latest investigations. Average selling price (ASP) for 1H22 is forecast to increase by nearly 10%, reaching a record six year high.

In terms of the global supply chain, in addition to the production capacity of major IDM manufacturers including TI, Infineon, ADI, STMicroelectronics, NXP, ON Semiconductor, Renesas, Microchip, ROHM (Maxim has been acquired by ADI and Dialog by Renesas), IC design houses such as Qualcomm and MediaTek (MTK) have obtained a certain level of production capacity from foundries. Of these, TI is in a leadership position and the aforementioned companies possess a combined market share of over 80%.

In terms of product structure, unrelenting demand from the consumer electronics, telecommunications, industrial control systems, and automotive end-user sectors and product innovation driven by industrial transformation will push a dramatic increase in global market demand for PMICs. The largest application for PMICs is consumer electronic products and there are near term rumblings in demand for notebooks, Chromebooks, smartphones, and televisions. In addition, restocking impetus for a small number of structurally simple items such as low drop-out regulators (LDO) has encountered a real slowdown. However, since the demand placed on PMICs by electronic products is a structural increase, certain models are still experiencing shortages. Qualcomm and MTK are limited by a shortage of mature production capacity on the foundry end, even resulting in a tightening of inventory for PMICs earmarked for self-use.

Furthermore, recovery in the automotive market and rapid growth in electric vehicles, automotive electronics, and advanced driver-assistance systems (ADAS) have increased demand in power source control and management and charging technology. In addition, automotive-use ICs are required to pass a number of inspections and must guarantee consistency and a zero failure rate. Currently, IDM companies’ automotive IC order backlog stretches until the end of 2022. Due to factors such as production running at full capacity and a shortage of raw materials, PMIC suppliers have currently announced longer lead times with consumer electronic IC lead times increasing to 12~26 weeks, automotive IC lead times reaching 40~52 weeks, and a cessation of orders for certain exclusive production models.

TrendForce expects 4Q21 demand for PMICs to remain strong with shortages in overall production capacity. Led by IDM companies, PMIC pricing will remain high. Despite variables related to the pandemic and the difficulties of greatly increasing 8 inch wafer production capacity, TI’s new fab RFAB2 will begin mass production in 2H22. In addition, due to the plans of foundries to carry forward a portion of 8 inch wafer PMIC manufacturing to 12 inch, there is a high likelihood of a moderation in PMIC shortages. However, close attention must still be paid to changes in future market supply.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com