As TSMC speed up its global expansion, the developments in its overseas fabs and the appointments of key leaders are under intense scrutiny. According to reports from DeepTech’s Voice, TSMC is said to choose Ray Chuang as the General Manager/CEO for its Fab in Germany. Chuang is considered a rising star promoted from the 18A fab manager to Vice President of Fab Operations I in this year.

Ray Chuang, a TSMC veteran since 1997, originally served as the senior manager of the 18A fab, showcasing expertise in various process technologies. Notably, he successfully led teams in the mass production of N5 and N4 process. He was elevated to Vice President of the Fab Operations I in May, 2023.

The unveiling of fab managers for TSMC’s overseas sites is progressing. In addition to the already disclosed appointments of Rick Cassidy and Dr. Y.L. Wang as Chairman and CEO of the Arizona fab, respectively, the Japanese fab (JASM) will see Vice President Y.H. Liaw, responsible for mature process production, taking the helm as CEO, according to the press release from Taiwan OCAC.

Potential Impacts May Postpone TSMC’s Fab in Germany Progress

TSMC’s plan includes the establishment of a subsidiary, European Semiconductor Manufacturing Company (ESMC) GmbH, set to build a fab in Dresden, eastern Germany. The total investment stands at EUR 10 billion, with an expected subsidy of about EUR 5 billion from the German government. Noteworthy partners in this venture, including Infineon, NXP, and Bosch, will each hold a 10% stake, while TSMC retains substantial control with over 50% ownership. The fab’s primary focus will be on producing automotive chips using 28nm/22nm processes, with an estimated capacity of 30,000 to 50,000 wafers.

The fab in Germany was initially expected to receive an EUR 5 billion subsidy, with production scheduled for 2027. However, a report from Reuters on November 23rd highlighted a ruling by the Germany’s Constitutional court that the German government’s re-location of EUR 60 billion from the pandemic fund to the climate transition fund was unconstitutional. Consequently, the German Ministry of Finance issued an emergency notice, freezing spending plans across various federal budgets. This unexpected move may impact the subsidies initially earmarked for TSMC fab in Germany.

Insights from TrendForce indicate that ESMC’s total planned production capacity is approximately 40Kwspm. The fab is set to focus on 28/22nm and 16/12nm processes, with groundbreaking expected in the latter half of 2024 and full-scale production in 2027. Forecast from TrendForce suggest that TSMC’s overseas capacity share (includes China), will rise from 9% in 2023 to 15% by 2027.
(Image: TSMC)

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Power semiconductors, the key of energy conversion and circuit control in electronic devices, find themselves at the heart of electronic circuit functions such as power conversion, amplification, switching, and rectification. They play a pivotal role in various sectors like automotive, industrial, rail transportation, and electricity. As the new energy industry, led by solar energy and electric vehicles, advances, power semiconductors like IGBT and MOSFET emerge as key players in the realm of green energy.

The power semiconductor market, previously driven by the surge in the new energy sector, particularly in new energy vehicles, solar power, and energy storage, has experienced robust overall demand. China, being the global leader in both new energy vehicles and solar energy production, has significantly contributed to the strong demand for power semiconductors. However, the current trend indicates a slowdown in the power semiconductor market.

According to TrendForce’s latest report, titled “Power Semiconductor Deceleration, Chinese Companies Breaking Through in 12-inch Wafers and IGBT,” it shared a comprehensive analysis of China’s role in the development of the power semiconductor industry. The following highlights summarize the key points of this report:

1. Slowdown in Chinese Foundries due to Downturn in Consumer Electronics and Communication Sectors

In the first half of 2023, prominent Chinese foundries—SMIC, Hua Hong Semiconductor, Nexchip, and SMEC—encountered a slowdown in revenue growth. Among them, only Hua Hong witnessed a marginal revenue increase, while SMIC, Nexchip, and SMEC experienced YoY revenue declines of 19.29%, 50.43%, and 24.08%, respectively. The overall performance of Chinese wafer fabs is entering a downward cycle due to a sluggish market in consumer electronics, PCs, and communication.

2. IGBT Emerges as the Growth Driver Amidst Deceleration in the Power Semiconductor Market

Despite a comparative growth with digital ICs, the overall growth in the power semiconductor market is decelerating. Hua Hong’s revenue from discrete devices increased by 33.04% YoY in the first half of 2023, yet the growth rate is lower than that of the same period in 2022. The number of top-ten listed power semiconductor companies with negative revenue growth has expanded from one in 2022 to four, and those with negative net profit growth increased from one to eight.

While the overall growth is slowing, IGBT remains the driving force for power semiconductors. Companies like Silan and CR Micro have initiated mass production of IGBT, experiencing a rapid growth rate in the IGBT business. Additionally, Wingtech is making its foray into the IGBT sector. Notably, between January and July 2023, 17 IGBT projects were initiated or signed, with a cumulative investment exceeding CNY 15 billion, indicating a swift expansion by Chinese companies in the IGBT domain.

3. China’s Power Semiconductor Giants Scale Up from 8-Inch to 12-Inch

Major Chinese power semiconductor players are transitioning from 8-inch to 12-inch wafers. Notably, Hua Hong has already implemented 12-inch capacity, and the expansion of the Wuxi Phase 2 project is underway. SMIC’s third-phase 12-inch special process wafer line produced its initial 10,000 wafers in June 2023. In the IDM sector, companies like Wingtech, Silan, and CR Micro are actively constructing 12-inch wafer fabs, with some of the capacity already in operation.

According to TechNews’ report, Apple, NVIDIA, AMD, Qualcomm, and MediaTek all utilize TSMC’s semiconductor processes for manufacturing their latest chips, with some potentially employing Samsung’s foundry, though typically not for flagship products.

With Samsung’s improved yield rates in recent months, the company is eager to secure a portion of the orders, particularly for the 3-nanometer GAA (Gate-All-Around) process.

Earlier market reports suggested that Qualcomm’s Snapdragon 8 Gen 4 might adopt a dual-foundry strategy, simultaneously utilizing TSMC’s N3E process technology and Samsung’s SF3E process technology.

However, both Qualcomm and MediaTek currently plan to employ TSMC’s second-generation 3-nanometer process technology (N3E) for manufacturing chips like the Snapdragon 8 Gen 4 and Dimensity 4, without pursuing a dual-foundry strategy at this time.

As of the end of June 2022, Samsung announced the commencement of production for 3-nanometer process chips at its Hwaseong Industrial Complex in South Korea. These chips incorporate a new GAA transistor architecture technology, rumored to be more energy-efficient compared to TSMC’s 3-nanometer FinFET technology. Despite this, in the realm of 3nm, Samsung has yet to secure substantial orders from major clients.

Interestingly, the company has seen more success in the 4nm domain. It is reported that Samsung has gradually addressed yield and various issues in the 4-nanometer process technology domain. The third generation of 4-nanometer process technology has seen improvements in performance, reduced power consumption, increased density, and achieved yields close to TSMC’s level. Market sources indicate that Samsung has gained recognition from companies like AMD and Tesla, securing new orders.

Currently, TSMC’s 3-nanometer process technology production capacity is ramping up, with an expected monthly capacity of 100,000 wafers by the end of 2024. The revenue contribution is projected to increase from the current 5% to 10%.

Meanwhile, Samsung plans to introduce the second generation of its 3-nanometer process technology, named SF3 (3GAP), in 2024. Building upon the existing SF3E, it aims for further optimization, and Samsung’s in-house Exynos 2500 is expected to be one of the first high-performance chips to adopt this new process technology.

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Recent reports suggest that Li Auto, a Chinese new energy vehicle company, is currently building a team in Singapore dedicated to the R&D of SiC power chips. On LinkedIn, Li Auto has posted five recent job openings in Singapore, including roles like General Manager, SiC Power Module Failure Analysis/Physical Analysis Expert, SiC Power Module Design Expert, SiC Power Module Process Expert, and SiC Power Module Electrical Design Expert.

In terms of power devices, electric drive systems in current 400V models typically employ Si IGBT, while 800V models mostly utilize SiC MOSFETs. This choice enables higher power density, leading to smaller and lighter equipment.

SiC, known for enhancing the driving range of electric vehicles and improving charging efficiency, finds widespread application in components like main inverters, on-board chargers, and DC/DC converters.

Recognizing the potential, Li Auto is among the many new energy vehicle makers incorporating SiC into their products.

As of August last year, Li Auto had launched the construction of power semiconductor R&D and production base in the Suzhou High-tech Zone. The base aims to initiate sample production in the first half of 2023, officially beginning full-scale production in 2024, with an ultimate annual capacity of 2.4 million SiC power modules. This marks Li Auto’s strategic move into the independent industry landscape for the next generation of high-voltage electric drive technology.

To achieve higher efficiency on the high-voltage platform, Li Auto is opting for SiC power modules over traditional IGBT. At the 2023 Auto Shanghai in April, Li Auto unveiled an 800V fast charging solution featuring an 800V high-voltage electric drive system built on SiC technology, enabling a 10-minute charge for a range of 400 km.

Li Auto’s next-gen SiC power module, integrating multiple components into the motor controller design, compresses the controller’s volume to within 4L, boasting a high power density of up to 62 kW/L. This reduces the volume and weight of the electric drive system, further optimizing the vehicle’s spatial layout and energy consumption.

In addition to Li Auto, the all-new NIO ES6, also showcased at the 2023 Auto Shanghai, incorporates SiC power modules and is equipped with a the second generation high-efficiency e-drive platform.

Furthermore, Hongqi, FAW Group’s premium auto brand, latest electric E202 SUV debuted at the 2023 Auto Shanghai. Based on the FMEs architecture 800V SiC charging platform, it requires only 5 minutes of charging for a range of 300 km.

Notably, Huawei recently introduced the new DriveONE 800V high-voltage SiC motor platform, focusing on better performance for electric vehicles. With high-voltage SiC technology, this motor platform achieves a rotation speed of up to 22,000 rpm and a maximum efficiency of 98%. Huawei’s latest SiC motor release is anticipated to open a new page in the electric vehicle industry.

The integration of SiC power devices into electric vehicles represents a significant trend in the development of the new energy vehicle industry. Leading automakers are poised to invest more resources in the research and development of related products, ultimately attaining independent control over core technologies.

(Image: Li Auto)

MediaTek announced a collaboration with Meta to develop its next-generation smart glasses chip. Since Meta has previously used Qualcomm chips for its two generations of smart glasses products, it is speculated that Meta’s expansion of chip suppliers is aimed at maintaining supply chain flexibility and reducing costs. MediaTek, in turn, is poised to leverage smart glasses to tap into opportunities within Meta’s VR/AR devices.

 TrendForce’s Insights:

1. Meta Expands Chip Collaboration Suppliers, Maintaining Product Development Flexibility and Potential Cost Reduction

In mid-November 2023, MediaTek hosted the overseas summit, Mediatek Executive Summit 2023, where it announced a collaboration with Meta to develop the next-generation smart glasses chip.

Meta’s first smart glasses, a collaborative creation with Ray-Ban in 2021, differ from the Quest series as they are not high-end VR devices but rather feature a simpler design, focusing on additional functionalities like music playback and phone calls.

In the fall of 2023, Meta introduced a successor product with significant improvements in camera resolution, video quality, microphones, and internal storage. This new device is designed to simplify the recording and live streaming process by integrating with Meta’s social platform. Additionally, the new product aligns with the trend of generative AI and incorporates Meta’s AI voice assistant based on Llama2 LLM.

Notably, the market has shown keen interest and discussion regarding MediaTek’s announcement on the collaboration with Meta, given that Meta’s previous two generations of smart glasses used Qualcomm chips, specifically the Qualcomm Snapdragon Wear 4100 for the older version and the AR1 Gen1 for the new version.

Analysis of Meta’s Motivation: Meta’s decision to collaborate with MediaTek may be driven by considerations of risk diversification among suppliers and overall cost reduction.

Firstly, Meta has been investing in the development of in-house chips in recent years to ensure flexibility in product development. Examples include the MTIA chip, disclosed in mid-2023, designed for processing inference-related tasks, and the MSVP, the first in-house ASIC chip for video transcoding, which is expected to be used in VR and AR devices.

Given Meta’s previous attempts, including collaboration with Samsung, to independently develop chips and move towards chip autonomy, the partnership with MediaTek can be seen as a risk mitigation strategy against vendor lock-in.

Secondly, considering that smart glasses, unlike the high-priced Quest series, are currently priced at USD 299 for both models, MediaTek’s competitive pricing may also be a significant factor in Meta’s decision to collaborate with them.

2. MediaTek Eyes VR and AR Device Market Opportunities Through Smart Glasses Collaboration with Meta

From MediaTek’s perspective, their focus extends beyond smart glasses to the vast business opportunities presented by Meta’s VR and AR devices. In reality, examining Meta’s smart glasses alone reveals estimated shipments of around 300,000 pairs for the older model. Even with the new model and the anticipated successor expected to launch in 2025, there is currently no clear indication of significant market momentum.

In practical terms, this collaboration with Meta might not contribute substantially to MediaTek’s revenue. The crucial aspect of MediaTek’s collaboration with Meta lies in strategically positioning itself in Meta’s smart headwear supply chain, challenging the dominance of the original chip supplier, Qualcomm.

Looking at global VR device shipments, Meta is projected to hold over 70% market share in 2023 and 2024. There are also reports of an updated version of the Quest device expected to be available in China in late 2024. If MediaTek can expand its collaboration with Meta further, coupled with the gradual increase in the penetration rate of VR and AR devices, significant business opportunities still lie ahead.

From an overall perspective of the VR and AR industry, the current design of headwear devices no longer resembles the early models that required external computing cores due to considerations of cost, power, and heat.

The prevalent mainstream designs are now standalone devices. Given that these devices not only execute the primary application functions but also handle and consolidate a substantial amount of data from sensors to support functions like object tracking and image recognition, VR and AR devices require high-performance chips or embedded auxiliary SoCs. This market demand and profit potential are compelling enough to attract chip manufacturers, especially in the face of the gradual decline in momentum in the consumer electronics market, such as smartphones.

The VR and AR market still holds development potential, making it a strategic entry point for manufacturers. This insight is evident in MediaTek’s motivation, continuing its market cultivation efforts after developing the first VR chip for Sony PS VR2 in 2022 and collaborating with Meta.