According to sources cited by Nikkan Kogyo Shimbun, TSMC intends to commence the construction of the second fab in Kikuyo-cho, Kumamoto Prefecture, Japan, in April 2024, with the goal of commencing production before the end of 2026.

It is worth mentioning that news about TSMC’s plan to build its second fab in Japan had already surfaced earlier this year. In January, TSMC’s CEO, CC Wei, revealed that the company was considering establishing a second chip manufacturing facility in Japan. In June, TSMC’s Chairman, Mark Liu, also mentioned during a shareholders’ meeting that the Japanese government expressed a desire for TSMC to continue expanding its investments in Japan, while TSMC was still evaluating the construction of the second fab in the country.

Regarding TSMC’s establishment of a fab in Japan, TrendForce indicated that TSMC has played an instrumental role in fostering the growth of Japan’s semiconductor industry as Japanese fabs are unable to handle manufacturing processes as advanced as 1Xnm. TrendForce posits that TSMC could potentially consider setting up a 7nm production line in Phase 2 of JASM to cater to Japan’s demand for advanced technology. Yet, the ongoing market slowdown necessitates a long-term appraisal before implementing any expansion strategies.

In addition to TSMC, more than 20 new wafer fabs are scheduled for completion in the coming years, despite the industry being in a downturn. According to TrendForce’s statistics report in January this year, there are over 20 planned new wafer fabs worldwide, including 5 in Taiwan, 5 in the United States, 6 in Mainland China, 4 in Europe, and 4 in Japan, South Korea, and Singapore combined.

Furthermore, numerous new wafer fab projects have been announced globally since the beginning of this year. For example, in February, Infineon and Texas Instruments both announced plans to construct new wafer fabs. Infineon plans to invest 5 billion euros to build a 12-inch wafer fab in Germany, while Texas Instruments intends to establish its second 300mm wafer fab in Lehi, Utah, USA. On July 5th, PSMC signed an agreement with SBI of Japan, proposing the establishment of a 12-inch wafer foundry.

Currently, semiconductor resources have become strategic assets. In addition to considering commercial and cost structures, wafer fabs must also account for government subsidy policies, meet customer demands for local production, and maintain supply-demand balance. TrendForce believes that future product diversity and pricing strategies will be key factors for the operation of wafer fabs.

TrendForce has released the latest spot prices of memory, which have continued to decline due to the impact of the stagnant market conditions. Both DRAM and NAND Flash spot prices have dropped further. The details are as follows:

DRAM Spot Market:

Compared with last week, the spot market is still not showing a noticeable improvement in terms of trading activities. Sellers are under a certain amount of pressure because some module houses have already stocked up in advance, and the demand from channels remains fairly weak. Hence, spot prices of DDR4 and DDR5 products continue to register daily drops. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.27% from US$1.501 last week to US$1.497 this week.

NAND Flash Spot Market:

There has been no apparent WoW improvement to the dynamics of the NAND Flash spot market this week. Several module houses, having elevated their inventory in advance, are now experiencing a certain extent of sales pressure from a lack of betterment in demand among channel markets, which led to an on-going drop of NAND Flash prices. 512Gb TLC wafer spots have dropped by 0.28% this week, arriving at US$1.404.

AI Chips and High-Performance Computing (HPC) have been continuously shaking up the entire supply chain, with CoWoS packaging technology being the latest area to experience the tremors.

In the previous piece, “HBM and 2.5D Packaging: the Essential Backbone Behind AI Server,” we discovered that the leading AI chip players, Nvidia and AMD, have been dedicated users of TSMC’s CoWoS technology. Much of the groundbreaking tech used in their flagship product series – such as Nvidia’s A100 and H100, and AMD’s Instinct MI250X and MI300 – have their roots in TSMC’s CoWoS tech.

However, with AI’s exponential growth, chip demand from not just Nvidia and AMD has skyrocketed, but other giants like Google and Amazon are also catching up in the AI field, bringing an onslaught of chip demand. The surge of orders is already testing the limits of TSMC’s CoWoS capacity. While TSMC is planning to increase its production in the latter half of 2023, there’s a snag – the lead time of the packaging equipment is proving to be a bottleneck, severely curtailing the pace of this necessary capacity expansion.

Nvidia Shakes the foundation of the CoWoS Supply Chain

In these times of booming demand, maintaining a stable supply is viewed as the primary goal for chipmakers, including Nvidia. While TSMC is struggling to keep up with customer needs, other chipmakers are starting to tweak their outsourcing strategies, moving towards a more diversified supply chain model. This shift is now opening opportunities for other foundries and OSATs.

Interestingly, in this reshuffling of the supply chain, UMC (United Microelectronics Corporation) is reportedly becoming one of Nvidia’s key partners in the interposer sector for the first time, with plans for capacity expansion on the horizon.

From a technical viewpoint, interposer has always been the cornerstone of TSMC’s CoWoS process and technology progression. As the interposer area enlarges, it allows for more memory stack particles and core components to be integrated. This is crucial for increasingly complex multi-chip designs, underscoring Nvidia’s intention to support UMC as a backup resource to safeguard supply continuity.

Meanwhile, as Nvidia secures production capacity, it is observed that the two leading OSAT companies, Amkor and SPIL (as part of ASE), are establishing themselves in the Chip-on-Wafer (CoW) and Wafer-on-Substrate (WoS) processes.

The ASE Group is no stranger to the 2.5D packaging arena. It unveiled its proprietary 2.5D packaging tech as early as 2017, a technology capable of integrating core computational elements and High Bandwidth Memory (HBM) onto the silicon interposer. This approach was once utilized in AMD’s MI200 series server GPU. Also under the ASE Group umbrella, SPIL boasts unique Fan-Out Embedded Bridge (FO-EB) technology. Bypassing silicon interposers, the platform leverages silicon bridges and redistribution layers (RDL) for integration, which provides ASE another competitive edge.

Could Samsung’s Turnkey Service Break New Ground?

In the shifting landscape of the supply chain, the Samsung Device Solutions division’s turnkey service, spanning from foundry operations to Advanced Package (AVP), stands out as an emerging player that can’t be ignored.

After its 2018 split, Samsung Foundry started taking orders beyond System LSI for business stability. In 2023, the AVP department, initially serving Samsung’s memory and foundry businesses, has also expanded its reach to external clients.

Our research indicates that Samsung’s AVP division is making aggressive strides into the AI field. Currently in active talks with key customers in the U.S. and China, Samsung is positioning its foundry-to-packaging turnkey solutions and standalone advanced packaging processes as viable, mature options.

In terms of technology roadmap, Samsung has invested significantly in 2.5D packaging R&D. Mirroring TSMC, the company launched two 2.5D packaging technologies in 2021: the I-Cube4, capable of integrating four HBM stacks and one core component onto a silicon interposer, and the H-Cube, designed to extend packaging area by integrating HDI PCB beneath the ABF substrate, primarily for designs incorporating six or more HBM stack particles.

Besides, recognizing Japan’s dominance in packaging materials and technologies, Samsung recently launched a R&D center there to swiftly upscale its AVP business.

Given all these circumstances, it seems to be only a matter of time before Samsung carves out its own significant share in the AI chip market. Despite TSMC’s industry dominance and pivotal role in AI chip advancements, the rising demand for advanced packaging is set to undeniably reshape supply chain dynamics and the future of the semiconductor industry.

(Source: Nvidia)

TrendForce has released the latest spot prices for DRAM and NAND Flash, indicating that market demand remains weak and there are no signs of a rebound in spot prices. The details are as follows.

DRAM Spot Market:

Similar to the contract market, the spot market is still showing weak demand, and spot prices on the whole have been registering small daily declines. There is no indication of a turnaround anytime soon. Both spot prices of DDR4 and DDR5 products are falling as channel customers are restrained with respect to stock-up activities. The average spot price of the mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.33% from US$1.506 last week to US$1.501 this week.

NAND Flash Spot Market:

Recent spot market transactions remain relatively apathetic under sporadic inquiries and sluggish demand, and concluded prices of NAND Flash products are still slowly dropping due to the lack of stimulation from seasonal order pulls. 512Gb TLC wafer spots have dropped by 0.21% this week, arriving at US$1.408.

According to TrendForce’s “2023 GaN Power Semiconductor Market Analysis Report – Part 1,” the global GaN power device market is projected to grow from $180 million in 2022 to $1.33 billion in 2026, with a compound annual growth rate of 65%.

The development of the GaN power device market is primarily driven by consumer electronics, with a focus on fast chargers as the core application. Other consumer electronic scenarios include Class D audio and wireless charging.

However, many manufacturers have already shifted their focus to the industrial market, with data centers being a key application. ChatGPT has sparked a wave of AI cloud server deployment, and GaN technology will help data centers reduce operating costs and improve server efficiency.

Simultaneously, the automotive market is also gaining attention, as OEMs and Tier 1 suppliers recognize the potential of GaN. It is expected that by around 2025, GaN will gradually penetrate low-power onboard chargers (OBC) and DC-DC converters. Looking further ahead to 2030, OEMs may consider incorporating GaN technology into traction inverters.

In terms of market competition, based on GaN power device business revenue, Power Integrations ranked first in 2022. The company has been leading the high-voltage market’s development since 2018, and its excellent GaN integrated solutions have gained wide market recognition. Other leading manufacturers include Navitas, Innosic, EPC, GaN Systems, and Transphorm.

Additionally, the industry paid attention to the acquisition of GaN Systems by Infineon. According to TrendForce’s statistics, the combined market share of both companies was approximately 15% in 2022.

Turning to the supply chain, as mentioned earlier, the development of the GaN power device market will be driven by consumer electronics for a long time. Therefore, the industry must pursue scale and low cost, necessitating the expansion of wafer sizes. Currently, mainstream GaN power wafers still rely on 6-inch silicon substrates, with only Innosic, X-FAB, and VIS offering 8-inch options. With a positive outlook for the long-term development of the GaN power market, several wafer manufacturers have announced plans to shift to 8-inch wafers in the coming years, including Infineon, STMicroelectronics, TSMC, and others.

Furthermore, Samsung recently announced its entry into the 8-inch market and plans to provide foundry services starting from 2025, a development worth industry attention.

(Photo credit: Navitas)