An increasing number of Chinese semiconductor design companies are seeking collaboration with testing and packaging facilities in Malaysia to carry out advanced chip packaging. According to Reuters’ report, this move aims to hedge the risk of potential expanded U.S. restrictions on the Chinese semiconductor industry.

As there is currently only one non-U.S. testing and packaging provider in Malaysia with advanced capabilities, namely ASE Technology Holding Co., a Taiwanese semiconductor packaging and testing firm, industry sources believe that ASE is likely to become the top choice for orders from Chinese enterprises.

Previously, the U.S. has imposed controls on China’s advanced semiconductor manufacturing processes and access to high-performance chips from major companies like NVIDIA. However, advanced packaging has not yet fallen within the restricted scope.

Two anonymous sources reportedly revealed that some of the Chinese businesses are showing interest in advanced chip packaging services. Despite the fact that the chip packaging sector has not yet faced export controls from the U.S., concerns are rising among businesses due to its involvement in sophisticated technology, fearing that it might be targeted for curbs on exports in the future.

Reuters’ report also indicates that due to the relatively affordable investment costs in Malaysia and the availability of experienced workforce and sophisticated equipment, an increasing number of Chinese chip design firms are seeking Malaysian Firms to carry out advanced chip packaging activities, including graphic processing units (GPUs).

Insiders have informed Reuters that the related contracts only involve packaging and do not violate any restrictions imposed by the U.S.. Additionally, they clarified that wafer manufacturing is not included in these contracts.

Two of the sources mentioned that some contracts have already been agreed. However, these insiders prefer not to disclose the names of the involved companies.

Meanwhile, according to a report from Taiwan’s Economic Daily News, when observing the global landscape of advanced packaging, in addition to TSMC, there are integrated device manufacturers (IDMs) like Intel and Samsung, as well as outsourcing semiconductor assembly and test (OSAT) companies like ASE Technology, Amkor, and others that possess advanced packaging capabilities. Among them, only ASE Technology, Amkor, and Intel have production capacity in Malaysia.

Reportedly, industry analysts predict that Chinese companies seeking advanced packaging support in Malaysia, due to geopolitical considerations, are likely to avoid American companies such as Intel and Amkor. Given that ASE is not an American company and can provide high-end packaging services, it is expected to be the preferred choice for Chinese companies.

ASE has previously stated that it will continue to invest in advanced packaging for AI, expecting the performance of advanced packaging to double next year compared to this year.

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(Photo credit: ASE Holdings)

Following Intel’s move to split its outsourced foundry model, TSMC is gearing up to expand its advanced manufacturing processes in Taiwan, ready to face the competition head-on.

According to China Time’s report, following the equipment first tool-in at the 2nm fab in Baoshan scheduled for April next year, industry sources suggest a high likelihood of the 1.4nm fab being established in the second phase of the Central Taiwan Science Park.

Additionally, TSMC is actively expanding its CoWoS process and considering the construction of its 7th advanced packaging and testing plant in the central region, with Chiayi Science Park and Yunlin actively under consideration.

Semiconductor industry insiders point out that TSMC is beginning to feel the pressure, and this year, founder Morris Chang’s main concern regarding competition has shifted from Samsung to the resurgent Intel.

Starting from the second quarter of next year, Intel, a rival of TSMC, plans to separately disclose financial reports for chip development and Intel Foundry Services (IFS), implementing its internal foundry outsourcing model.

Intel’s move aims to protect the assets and know-how of third-party customers. Coupled with international chip design firms gradually releasing orders to Intel due to diversified supply chain concerns, it shows that Intel’s outsourcing strategy is gradually proving effective.

Intel’s recent successes in foundry processes, including the PowerVia backside power delivery technology, glass substrates and Foveros Direct for advanced packaging.

According to TrendForce’s 3Q23 Ranking of  Global Top10 Foundries by Revenue, Intel’s foundry business has entered the global top 10 for the first time, ranking ninth with the industry’s fastest quarterly growth.

Confronted with growing competition from Intel, TSMC is intensifying its efforts and accelerating the construction of advanced process production capacity. The recent expansion plans are becoming clearer, with the 1.4nm fab likely located in the second phase of the Central Taiwan Science Park, aligning with the ongoing increase in demand for advanced packaging.

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(Photo credit: TSMC)

With a financial boost from the Japanese government, electronic giants ROHM and Toshiba are joining forces in the power semiconductor industry. Collaboratively, they plan to not only enhance production but also delve into the realm of research and development, aiming to expand the capacities for Silicon Carbide (SiC) and Silicon (Si) power semiconductors.

In a joint announcement on December 8th, ROHM and Toshiba revealed their strategic collaboration in power semiconductor ventures, pooling a substantial investment totaling 388.3 billion Japanese Yen (ROHM: 289.2 billion JPY, Toshiba: 99.1 billion JPY). This capital injection aims to boost the capacities for SiC semiconductors, Si power semiconductors, and SiC wafers. The Japanese Ministry of Economy, Trade, and Industry is set to provide a generous subsidy, reaching up to 129.4 billion Japanese Yen for this collaborative venture.

Power semiconductors stand as the key necessity for energy-efficiency in electric vehicles (EVs) and industrial equipment. With a surge in global demand, ROHM concentrates its investment in SiC semiconductors, while Toshiba focuses on Si power semiconductors. The overarching objective is to elevate international competitiveness by fostering a robust collaborative manufacturing alliance.

As per report by the Japan Times, ROHM and Toshiba are embarking on a reciprocal production arrangement for power semiconductors. Toshiba leans significantly on ROHM for SiC semiconductor production, while ROHM entrusts Toshiba with the manufacturing of selected Si power semiconductors. The construction of Toshiba’s new plant in Nomi, Ishikawa Prefecture, sets the stage for Si power semiconductor supply commencing in March 2025. Meanwhile, ROHM’s new plant in Kunitomi, Miyazaki Prefecture, gears up to deliver SiC power semiconductors starting from April 2026.

Both two companies set up their goals in terms of future expansion in capacity. Toshiba envisions expanding power semiconductor capacity to 2.5 times that of the 2021 fiscal year by the 2024 fiscal year. Simultaneously, ROHM aims to elevate SiC power semiconductor capacity to 6.5 times that of the 2021 fiscal year by the 2025 fiscal year, with further expansions to 35 times by the 2030 fiscal year.

ROHM President and CEO, Isao Matsumoto, also shared the insights aiming the collaboration. In an interview with Nikkei Asia released on December 16th, Matsumoto expressed the company’s aspirations to broaden its power semiconductor collaboration with Toshiba, extending beyond production into the research and development.

Matsumoto stated that both companies aim to “discuss collaboration in development” after the launch of the joint production of power devices announced previously.

Matsumoto also emphasized that they will commence with commissioned production, and implied the possibility to enter the next stage. Looking ahead, He hope to explore collaboration involving engineer exchanges and development. When probed about the possibility of this collaboration leading to future business integration, he responded there is not definitive decision by now.

Kyodo News underscored that while Japanese firms have a significant presence in the global power semiconductor market, they often trail behind their European and American competitors, holding a market share in the 20% range. As a result, it is an urgent priority for Japanese firms to enhance international competitiveness, expand scale, and improve efficiency. This collaboration between ROHM and Toshiba is poised to serve as a catalyst for expediting the collaboration of other Japanese firms.

(Image: ROHM)

In a bid to revitalize its semiconductor industry, Japan has enticed the sector with subsidies worth trillions of yen, aiming to attract both domestic and international semiconductor companies.

Leading semiconductor foundry Taiwan Semiconductor Manufacturing Co. (TSMC) has invested USD 8.6 billion to construct a factory in Kumamoto Plant, and it is considering building a second plant nearby. According to reports, TSMC is also contemplating a third plant within Kumamoto Prefecture to produce cutting-edge 3nm chips.

Apart from TSMC, major players like Samsung and Powerchip Semiconductor Manufacturing Corporation (PSMC) are actively investing in Japan. The initiatives of these giants have not only influenced semiconductor manufacturing equipment suppliers in Japan but also spurred them to accelerate technological research and expand production capacity.

As a result of these efforts, the investment of Japan’s six major semiconductor equipment suppliers has surged by 70% over the past five years.

TSMC Kumamoto New Plant Aims for Monthly Production of 55,000 12-Inch Wafers

Reportedly, the new chip plant in Kumamoto, Japan, operated by Japan Advanced Semiconductor Manufacturing (JASM), a joint venture between TSMC, Sony, and Denso, is poised for commencing production in the fourth quarter of 2024, while the plant’s production capacity will target a full capacity of 55,000 12-inch wafers per month.

Simultaneously, JASM aims to enhance the local contribution of semiconductor supply chain and ecosystem in Japan from the current 25% to 60% by 2030.

Meanwhile, according to sources cited by Bloomberg, TSMC has informed its supply chain partners that it is considering building a third factory in Kumamoto Plant in southern Japan, codenamed TSMC Fab-23 Phase 3.

TrendForce’s analysis mentioned that Japan’s expertise in semiconductor materials and machinery makes it an attractive location for TSMC’s expansion.

Additionally, Japan’s critical role in semiconductors and raw materials, coupled with collaboration with Sony, provides TSMC with significant advantages. TSMC’s investment in Japan is expected to facilitate access to advanced materials and expertise in CIS technology.

Furthermore, industry speculation suggests that in the future, Japan will not only continue subsidizing semiconductor manufacturing but also enhance collaboration between the semiconductor industry and academia to attract more talent to join the semiconductor industry.

PSMC Japanese Plant Aims for Monthly Production of 40,000 12-Inch Wafers

In late October, PSMC, in collaboration with SBI Holdings, Inc., the Miyagi Prefecture of Japan, and JSMC Corporation, signed a memorandum of understanding. The memorandum confirmed that JSMC’s first semiconductor wafer plant is expected to be located in the Second Northern Sendai Central Industrial Park in Ohira Village, Kurokawa District, Miyagi Prefecture (Second Northern Sendai Central Industrial Park).

The plant will produce 28nm, 40nm, and 55nm chips for automotive and industrial applications, with a planned monthly production of 40,000 12-inch wafers. Previous reports indicated that PSMC plans to construct multiple plants, with the first phase potentially starting construction as early as 2024, involving an investment of around JPY 400 billion (USD 2.6 billion).

The Japanese Ministry of Economy, Trade, and Industry (METI) is expected to provide up to JPY 140 billion in subsidies for the project, targeting operational commencement by 2026. The timeline and plans for the second phase are yet to be determined, with a total investment of approximately JPY 800 billion.

Regarding subsidies, PSMC stated that once Japan announces the subsidy amount for this semiconductor wafer plant investment, all relevant parties will reconfirm the effectiveness of this memorandum of understanding and proceed with the planned construction.

Is Foundry Revenue Expected to Continue its Upward Trend?

In the semiconductor industry chain, the significance of the foundry industry is self-evident. In recent years, the foundry sector has been affected by headwinds in end markets such as consumer electronics. However, as entering the latter half of the year, there are gradually emerging positive signals in the semiconductor industry.

According to TrendForce’s report on December 6th, looking ahead to 4Q23, TrendForce’s anticipation of year-end festive demand is expected to sustain the inflow of urgent orders for smartphones and laptops, particularly for smartphone components.

Although the end-user market is yet to fully recover, pre-sales season stockpiling for Chinese Android smartphones appears to be slightly better than expected, with demand for mid-to-low range 5G and 4G phone APs and continued interest in new iPhone models. This scenario suggests a continued upward trend for the top ten global foundries in Q4, potentially exceeding the growth rate seen in Q3.

According to the Semiconductor Equipment and Materials International (SEMI) report presented at SEMICON Japan 2023 on December 12, the global semiconductor equipment market is anticipated to experience a 6.1% year-on-year decline to USD 100.9 billion in sales for new equipment in 2023, marking the first contraction in four years.

However, the forecast for 2024 shows a reversal, with the semiconductor equipment market expected to grow by 4%, reaching USD 105.3 billion in sales. In 2025, a substantial increase of 18% is projected, surpassing the historical high of USD 107.4 billion in 2022.

SEMI CEO Ajit Manocha has noted that the semiconductor market exhibits cyclical patterns, with a short-term downturn expected in 2023. However, he anticipates a turning point towards recovery in 2024.

The year 2025 is poised for robust recovery, driven by increased production capacity, the construction of new wafer fabs, and growing demand for advanced technologies and solutions.

Major Companies Indirectly Boost Chip Equipment Investment in Japan, Surging 70% in 5 Years

According to a report by Nikkei, the proactive investments by semiconductor giants such as TSMC and Micron in Japan have accelerated technological innovations and production capacity expansion among Japanese chip equipment manufacturers.

The combined investment (including R&D and equipment investment) of Japan’s six major chip equipment firms, namely TEL, DISCO, Advantest, Lasertec, Tokyo Seimitsu, and Screen Holdings, for the fiscal year 2023 (April 2023 – March 2024) is approximately JPY 547 billion, marking a significant 70% increase compared to the 2018 fiscal year.

On December 13, Tokyo Electron Limited (TEL) President Tony Kawai stated at SEMICON Japan 2023 that the semiconductor market is projected to exceed USD 1 trillion by 2030, highlighting the immense potential within the industry.

On December 14, Hisashi Kanazashi, the Duputy Director at METI of Japan, noted that top overseas semiconductor firms plan to collaborate with Japan’s strength in “equipment” and expand their research and development presence in Japan.

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(Photo credit: TSMC)

While TSMC makes promising strides in the 2nm process, slated for mass production in 2025, rivals Samsung and Intel are making headlines with aggressive moves to secure cost-effective deals. This surge in competition for the 2nm process is intensifying.

According to CNA, experts suggest that given the escalating rivalry in the AI chip market, it is paramount to have flawless execution in the process. Despite the recent efforts from Samsung and Intel, TSMC is anticipated to clinch the lion’s share of 2nm orders.

TSMC’s 2nm process is on track for mass production in 2025, with construction underway at its first 2nm fab in the Phase 2 Expansion Area of the Baoshan Site in the Hsinchu Science Park. The tool-in is scheduled for April next year. Simultaneously, TSMC’s Kaohsiung fab is earmarked as a crucial production base for 2nm in the future.

• [News] Samsung’s Discount Strategy Challenges TSMC as the Battle for 2nm Orders Heats Up

Samsung is gearing up for mass production of its 2nm process in 2025 as well. Reports from the Financial Times indicate that, in a bid to secure orders from industry giants like NVIDIA, Samsung is contemplating discounted offerings to challenge TSMC.

Intel, in its bid to reclaim its place in the semiconductor landscape, has set an big target of advancing 5 nodes in four years. Sanjay Natarajan, Senior Vice President at Intel, revealed in a recent interview with Nikkei Asia that the company aims to commence mass production of 2nm chips in 2024, with a commitment to providing reasonably priced products. Additionally, Intel’s 18A process is poised for trial production in the first quarter of 2024.

• [News] Intel, Samsung, TSMC Race in Cutting-Edge Processes

Analysts also share the insights of the competitive landscape among the three major semiconductor players, TSMC, Samsung, and Intel. Arisa Liu, the research fellow and director at the Taiwan Industry Economics Services of Taiwan Institute of Economic Research, notes that TSMC’s 2nm is expected to adopt a gate-all-around (GAA) architecture. In contrast, Samsung has taken an early lead by introducing GAA architecture in its 3nm, aiming to outpace TSMC in the 2nm process after 1 or 2 years of adjustments.

Liu highlights the challenges facing Samsung, noting that the 3nm GAA process has exhibited unstable yields. For example, Qualcomm, a major player in mobile chip, has reverted to TSMC for production. Even with Samsung’s plans for bidding at a reduced price, it is anticipated to face difficulties in denting TSMC’s order share in the short term.

Turning attention to Intel, Liu observes that Intel’s current process technology has advanced to Intel 4 and Intel 3, which do not align with the industry’s 4nm and 3nm processes. In reality, Intel’s progress is closer to 7nm or an enhanced version thereof. Notably, Intel’s 3nm products are still estimated to be outsourced to TSMC, signaling a substantial technology gap.

TSMC’s President, C.C. Wei, has previously outlined the company’s plan to initiate mass production of the 3nm N3P process in the latter half of 2024. Notably, its performance metrics, including power, performance, area (PPA), are expected to surpass Intel’s 18A.

Liu further pointed out the news of TSMC’s clients contemplating additional foundry partners has surfaced recently. This move is primarily seen as an attempt to exert pressure on TSMC and gain negotiating leverage. Given the fierce competition in the AI chip market, it is imperative to control precision in the manufacturing process. As such, TSMC’s 2nm is anticipated to secure a significant majority of orders.

(Image: TSMC)

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