Amid the overwhelming wave of Artificial Intelligence, the importance of advanced process chips is becoming increasingly prominent. Currently, the 3nm process is the most advanced node in the industry. Meanwhile, manufacturers such as TSMC, Samsung, Intel, and Rapidus are actively promoting the construction of 2nm wafer fabs. TSMC and Samsung previously planned to mass-produce 2nm chips in 2025, while Rapidus to begin trial production in 2025.

2nm Wafer Fabs to Complete Construction as Soon as this Year?

Recently, the Semiconductor Equipment and Materials International (SEMI) announced that it is expected that both TSMC and Intel will potentially complete the construction of 2nm wafer fabs by the end of this year.

Intel is anticipated to be the first to achieve commercialization of 2nm chips. The Intel PC CPU Arrow Lake product will utilize the 2nm process node. TSMC’s 2nm process is expected to be applied in Apple’s iPhone AP chips. Subsequently, TSMC’s 2nm capacity will soar up.

According to a report from Commercial Times the installation of equipment for TSMC’s 2nm process is accelerating. TSMC’s Fab20 P1 plant in Hsinchu, Baoshan is scheduled to install equipment in April this year, with pilot production expected to commence in 2H24 and small-scale production in 2Q25.

As for Intel, ASML already delivered the world’s first High Numerical Aperture (NA) EUV EXE:5200 to Intel in late 2023, supporting the latter in producing 2nm chips. Later, Intel kicked-start the calibration of lithography machine, which has been well on track.

Samsung and Rapidus all Set to Move

In terms of Samsung, its previously announced technology roadmap indicates that it will first mass-produce 2nm process chips for mobile terminals starting in 2025, followed by high-performance computing (HPC) products in 2026. It plans to expand to automotive chips by 2027.

Rapidus is setting up a 2nm chip fab in Chitose City, Hokkaido, Japan. Its pilot production line is scheduled to start operation in April 2025, aiming to commence mass production in 2027.

Recently, it’s reported that in order to promote the development of advanced wafer fabs in Japan, several Japanese manufacturers will supply products to Rapidus. Among them, Dai Nippon Printing (DNP) will begin mass production of masks for 2nm chips at its Fukuoka plant and other operations in Japan in 2027, which will be provided to Rapidus.

In addition to DNP, Japanese company TOPPAN Holdings is also collaborating with IBM to develop masks for 2nm chips and achieve mass production by 2026, and Rapidus is reportedly the purchaser. Moreover, companies like Tokyo Ohka Kogyo (TOK), JSR, Shin-Etsu Chemical are also expected to be the suppliers of Rapidus.

1nm Chip Plans Brought to Light

Following 2nm, 1nm chip will be the next target for wafer fabs. In light of manufacturers’ plans, the industry is expected to see mass production of 1nm-level chips from 2027 to 2030.

TSMC plans to reach the A14 node (1.4nm) in 2027 and the A10 node (1nm) in 2030. Recent reports from Economic Daily News indicated that TSMC intends to establish a factory in the Science Park of Taibao City, Chiayi County in central Taiwan to produce 1nm chips.

Samsung anticipates to launch the 1.4nm process by late 2027. It is reported that Samsung’s SF1.4 (1.4 nm) process can increase the number of nanosheets from 3 to 4, which is expected to significantly improve performance and power consumption.

Intel’s latest foundry roadmap shows that the Intel 14A (1.4nm-level) node will put into production in 2026, and Intel 10A (1nm-level) will start development or production in late 2027.

Contract chip manufacturer United Microelectronics Corp has partnered with Intel to develop a 12-nanometer technology platform and will commence production at three Intel facilities in Arizona, USA. According to a report by Nikkei, mass production for chips destined for communication and other applications is slated to begin in 2027

During an interview at the Intel IFS Direct Connect event in February, Jason Wang, Co-President of UMC, stated that both UMC and Intel are pioneering innovative collaboration models. They aim to provide customers with foundry services with competitive pricing through vertical specialization. The two companies will leverage complementary advantages to accelerate the development timeline and expand their global presence.

The foundry market is generally divided into advanced chips and mature chips. Advanced chips, which constitute the brains of smartphones and other devices, are predominantly led by TSMC and Samsung Electronics.

In the realm of mature chips, around 10 companies from Taiwan, China, South Korea, and the United States are competing for the demands of telecommunications equipment, Vehicular communication systems, and other technology manufacturers.

Intel is changing its vertically integrated business model to compete with TSMC and Samsung in contract manufacturing demands.

In March of this year, the US government announced that Intel would receive up to USD 8.5 billion in subsidies for the development of advanced chips. By collaborating with UMC on mature chips, Intel may focus more resources on cutting-edge technologies like 1.4nm.

For UMC, partnering with Intel enables it to mass-produce chips that are more advanced than its mainstream 22nm to 28nm products. Obtaining production facilities in the United States will also help the company win North American clients, as revenue from this region currently accounts for less than 30% of its total.

TSMC is also constructing a semiconductor plant in Arizona, utilizing US assistance to produce advanced 4nm chips. In contrast, the collaboration between UMC and Intel will focus on relatively mature chips.

UMC has long been one of the pillars of the semiconductor industry in Taiwan. Established in 1980, seven years before TSMC, the company has been vying for the position of industry leader until the 2000s.

During the 2010s, UMC lagged behind TSMC in advanced chip development, as the latter made significant investments in the semiconductor market following the global financial crisis. Since then, UMC has reportedly put more emphasis on mature chips.

The company is currently at a turning point. Benefiting from the global chip shortage, its performance continued to grow from 2020 to 2022. However, as of December 2023, annual revenue declined by 20% to 222.5 billion New Taiwan dollars ($6.9 billion), marking the first decrease in four years. This is approximately one-tenth of TSMC’s revenue.

UMC’s downturn in 2023 also signifies an intensification in mature process technologies, especially as Chinese semiconductor enterprises’ mature process technologies and equipment remain unaffected by US export restrictions. In an effort to overcome US restrictions, China is heavily investing in mature process.

Per data from TrendForce, China’s share of mature chip production at 28nm and above is expected to increase from the current 31% to 39% by 2027, as production volumes grow.

Joanne Chiao stated that semiconductors for applications such as general sensors and display controllers are expected to face fierce price competition.

On the other hand, UMC continues to face competition from Taiwanese foundries. TSMC plans to produce mature chips at a new plant in Japan by the end of 2024 and at a plant in Germany by the end of 2027. With subsidies from the Japanese and German governments, TSMC will form joint ventures with buyer customers to ensure stable production capacity.

Powerchip Semiconductor Manufacturing Corporation (PSMC) announced at the end of February its plans to assist Tata Group in building a chip plant in India. PSMC stated that it would provide intellectual property for the project without investment, aiming to generate licensing revenue.

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(Photo credit: UMC)

It’s reported that TSMC’s new fab in Arizona, USA, is rushing to conduct the trial production of its first production line by mid-April and aims to complete all preparations for mass production by the end of this year. According to a report from the Economic Daily News, if everything goes smoothly, there is a chance that the original schedule for mass production in the first half of 2025 at the new US fab could be advanced to the end of 2024.

Regarding these rumors, TSMC stated on April 1st that the progress of the Arizona fab is proceeding according to plan, and for relevant information, please refer to the company’s official announcements.

TSMC is scheduled to hold an earnings call on April 18th, and ahead of the conference, positive news has emerged regarding the new US fab. It is anticipated that the related topics will also be the focus of attention on the day of the conference.

In the previous earnings call, TSMC announced its plan for the new US fab to commence mass production using the 4-nanometer process in the first half of 2025. Per Economic Daily News‘ report, the company believes that once this fab begins operations, it will be able to provide manufacturing quality and reliability on par with its Taiwan fabs in Arizona.

Industry sources cited by the report suggest that TSMC’s new fab in the United States is racing to complete the setup of its first production line by mid-April and commence trial production. Based on estimations of around 6.5 months from trial production to mass production, with an additional month for verification, there’s a chance that all preparations for mass production could be completed by the end of this year.

Taking stock of TSMC’s presence in the United States, the company currently operates an 8-inch fab in Camas, Washington, and has design centers in Austin, Texas, and San Jose, California. The new fab in Arizona will serve as TSMC’s second production base in the United States.

TSMC’s new fab construction in the United States faced labor shortage issues, which previously led to the announcement of a delay in the production schedule until 2025. However, TSMC has been making efforts to improve the problems encountered in the new fab and is seeking the maximum official subsidy support. Earlier report from Bloomberg indicated that TSMC’s new US fab could potentially secure over USD 5 billion in subsidies from the US government, but the relevant proposal has not been finalized.

TSMC announced the expansion of its investment in the new US fab in December 2022. Construction of the second phase of the Arizona fab has begun, with a total investment of approximately USD 40 billion for both phases. The first phase is expected to produce 4-nanometer chips, while the second phase will produce 3-nanometer chips.

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(Photo credit: TSMC)

As American tech giants depart from China and relocate their production of artificial intelligence (AI) server to Mexico, according to a report from UDN, some major AI players have urged their Taiwanese manufacturing partners to enhance their investments in production in Mexico.

Reportedly, Taiwanese manufacturing giants like Foxconn and Inventec are increasingly attentive to this trend, ramping up their investments in Mexico and leveraging the advantages provided by the US-Mexico-Canada Agreement (USMCA) that came into effect in 2020.

As per a report by The Wall Street Journal, the USMCA has already attracted billions of dollars in investment in the manufacturing sector, aimed at shifting production operations from China to Mexico.

James C. F. Huang, from the Taiwan External Trade Development Council, stated that the three North American countries aim to minimize imports from Asia as much as possible. Based on this consensus, Mexico is expected to become the most significant production base within the USMCA for the production of goods.

In February, Foxconn, the world’s largest electronics manufacturing services provider, announced a USD 27 million investment in purchasing land in the western state of Jalisco, Mexico. According to the report citing sources, this move is aimed at significantly expanding the company’s production of AI servers. Foxconn stated that it has invested approximately USD 690 million in Mexico over the past four years.

Sources cited by UDN also revealed that Foxconn’s Mexican facility manufactures AI servers for American tech giants such as Amazon, Google, Microsoft, and NVIDIA. However, the US companies have declined to confirm this claim.

Last year, the chairman of Mexico’s largest private organization, Francisco Cervantes, pointed out that increased investment by Taiwanese businesses in Mexico will significantly reshape the country’s industrial structure over the next decade.

The production volume of AI server is on the rise, and American companies are hoping to avoid repeating the history of smartphones. Many core components and parts of smartphones ended up being produced in China, particularly in factories operated by companies like Foxconn, for the assembly of iPhones.

Foxconn’s Chairman Young Liu previously indicated a strong demand for AI servers, with Foxconn securing new projects continuously.

Foxconn spokesperson James Wu noted that Foxconn Group commands over 40% market share in the server industry, particularly in the mid-to-high-end products related to AI servers. Foxconn closely collaborates with customers and aims to maintain its dominance, anticipating substantial contributions once the entire supply chain stabilizes.

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(Photo credit: Foxconn)

Samsung Electronics Co. has recently established a HBM team within its memory division, with the goal of enhancing yield during the development of the sixth-generation AI memory HBM4 and the AI accelerator Mach-1.

According to a report of the Korea Economic Daily (KED) citing industry sources on March 29th, Samsung’s HBM team is primarily responsible for the research, development, and sales of DRAM and NAND flash memory. Samsung’s Executive Vice President and Chief of DRAM Product and Technology, Hwang Sang-joon, will lead the new team. This marks the second team focused on HBM since Samsung initiated its HBM task force in January.

Per KED’s report, Samsung is stepping up its efforts in hopes of surpassing SK Hynix, the leader in the advanced HBM field. In 2019, Samsung dissolved its HBM team due to a mistaken belief that the market would not see significant growth.

Per a previous TrendForce press release, the three major original HBM manufacturers held market shares as follows in 2023: SK Hynix and Samsung were both around 46-49%, while Micron stood at roughly 4-6%.

To vie for dominance in the AI chip market, Samsung is pursuing a “two-track” strategy by concurrently developing two cutting-edge memory chips: HBM and Mach-1.

According to TrendForce’s report, SK Hynix led the way with its HBM3e validation in the first quarter, closely followed by Micron, which plans to start distributing its HBM3e products toward the end of the first quarter, in alignment with NVIDIA’s planned H200 deployment by the end of the second quarter.

Samsung, slightly behind in sample submissions, is expected to complete its HBM3e validation by the end of the first quarter, with shipments rolling out in the second quarter.

According to the same report from KED, Samsung is also gearing up to develop the next-generation accelerator, “Mach-2,” tailored for AI inference. According to Kyung on March 29th, Samsung must expedite the development of Mach-2 as there is strong interest from customers in this regard.

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(Photo credit: Samsung)