According to a report in Commercial Times, the leading Chinese semiconductor foundry, SMIC (Semiconductor Manufacturing International Corporation), released its financial report for the third quarter on the evening of November 7. Due to robust growth in wafer production capacity and sales, SMIC’s revenue in the third quarter increased by 14% sequentially to USD 2.17 billion, a record high, reaching the milestone of USD 2 billion in a single quarter for the first time.

As for the Q4 guidance, however, the forecast is relatively muted. According to its press release, SMIC forecasts a 2% year-over-year increase in revenue for the fourth quarter. The company also expects its gross profit margin for the fourth quarter to be between 18% and 20%.

According to a report in the Reuters, in its third-quarter earnings call, SMIC CEO Zhao Haijun noted that current oversupply conditions are prompting the company to adopt a more cautious approach to capacity expansion. Zhao pointed out that industry utilization rates are around 70%, well below the optimal 85%, reflecting significant overcapacity. He warned that this overcapacity, especially in mature node chips, is likely to persist through 2025, if not worsen. As a result, SMIC was cautious on building new capacity.

In its press release, SMIC reported a 34% increase year-over-year in revenue for the period, reaching USD 2.17 billion. The gross profit was USD 444.2 million, and the gross margin was 20.5%, compared to 13.9% in 2Q24 and 19.8% in 3Q23.

According to Commercial Times, citing Wallstreetcn, SMIC’s financial report indicated that its wafer sales in the third quarter increased by 38% year-over-year to 2.122 million units. Additionally, the company added a monthly production capacity of 21,000 12-inch wafers in the third quarter, further optimizing its product structure and increasing the average selling price.

The Commercial Times report pointed out, citing Wallstreetcn, in terms of revenue composition, the revenue share from 8-inch wafers dropped by 4.5 percentage points from the previous year to 21.5%, while the revenue share for 12-inch wafers reached 78.5%.

According to another report by Reuters, SMIC is primarily known for producing mature node chips for standard electronic devices. However, the company is also involved in manufacturing advanced chips for Huawei’s high-end smartphones, including the Mate 60, launched last August, and the Pura 70 series, released in April.

According to a report from Wccftech, it was rumored that SMIC is able to produce 5nm chips for Huawei this year, without the need for extreme ultraviolet (EUV) lithography machines manufactured by Dutch company ASML, but later it was indicated that Huawei’s next Kirin SoC for the Mate 70 Series will still be limited to the 7nm process but will utilize a more refined “N+3” node, according to another report by Wccftech.

Read more

• [News] Huawei’s Mate 70 Will Reportedly Use a Kirin SoC Made with SMIC’s 7nm Node instead of 5nm
• [News] SMIC Reportedly to Manufacture 5nm Chips for Huawei Without EUV Machinery

Driven by the massive demand for AI chips, advanced packaging is in short supply, and the development of three major advanced packaging technologies CoWoS, SoIC, and FOPLP is booming. In addition, two major billion-dollar projects in China have made recent progress, further advancing the region’s advanced packaging and testing industry.

According to estimates from TrendForce, revenue from 2.5D packaging services offered by foundries is expected to grow by over 120% annually by 2025. Although this segment will account for less than 5% of overall foundry revenue, its importance is steadily increasing.

HT-Tech and Tong Fu Advance Billion-Dollar Advanced Packaging Projects

On September 22, the second phase of the HT-Tech Nanjing Integrated Circuit Advanced Packaging and Testing Industrial Base project broke ground in the Pukou District of Nanjing.

The first phase of this project began production in July 2020, achieving a production value of 2.9 billion yuan in 2023. HT-Tech Group has decided to invest another 10 billion yuan to launch the second phase, aiming to build 200,000 square meters of factories and supporting facilities, introduce high-end production equipment, and create an internationally advanced integrated circuit packaging and testing production line. The products will be widely used in memory, RF, computing power, AI, and other fields.

In addition, two sub-projects of Tongfu’s advanced packaging base have also made progress. Construction of the Tongfu Tongda Advanced Packaging Base project has officially begun, and on the same day, the first piece of equipment for the second phase of Tongfu Tongke’s Memory project was installed.

The total investment in the Tongfu Tongda Advanced Packaging Base project is 7.5 billion yuan, covering 217 acres. The project is expected to be fully operational by April 2029, focusing on communications, memory, computing power, and other application areas, with a particular emphasis on multi-layer stacking, flip-chip, wafer-level, and panel-level packaging, all key products supported by national policy.

The second phase of the Tongfu Tongke Memory project adds 8,000 square meters of cleanroom space, and once operational, will provide 150,000 wafers per month. Additionally, 160 million yuan will be invested in equipment, primarily critical for the mass production of high-end products such as embedded FCCSP and uPOP, better meeting the domestic demand for high-end memory products in mobile phones, solid-state drives, servers, and more.

Progress in Advanced Packaging by TSMC, Amkor, and ASE

After purchasing the fourth factory of Innolux in Southern Taiwan Science Park (STSP) in mid-August, TSMC has swiftly begun construction, aiming to have the first phase of the new factory and equipment ready before the Chinese New Year in 2025. TSMC has integrated the new facility into its CoWoS production plan, striving to double total capacity by 2025.

TSMC expects CoWoS capacity to continue expanding rapidly through 2026, with an annual compound growth rate of over 50% from 2022 to 2026.

In terms of expanding CoWoS capacity, TSMC is also strengthening its cooperation with OSAT (Outsourced Semiconductor Assembly and Test). It is reported that TSMC has outsourced the critical CoW process in the front-end and the WoS process in the back-end to SPIL (a subsidiary of ASE Technology Holding) and Amkor.

At Amkor, the company has reportedly completed investments to expand the 2.5D advanced packaging capacity at its K5 factory in Songdo, Incheon, South Korea, tripling its capacity compared to the second quarter of last year.

At ASE, plans are underway for the Central Taiwan Science Park’s main plant and its second factory. Additionally, ASE’s wholly-owned subsidiary SPIL recently repurchased the Tanzi Factory. Furthermore, existing factories, such as the one in Zhongshan, are being reallocated. Once the cleanrooms are complete, equipment installation will begin, increasing capacity by at least 20%.
、
(Photo credit: TSMC)

In mid-August, TSMC had signed a contract with panel manufacturer Innolux to purchase its plant and facilities located in southern Taiwan, eyeing to further expand its advanced packaging capacity. According to a report by China Times, the fab, designated as the AP8 facility, is expected to start production in the second half of 2025.

More importantly, the fab will not only provide foundry services but also the eagerly needed capacity for advanced 3D Chip on Wafer on Substrate (CoWoS) IC packaging services, the report notes.

The move will be critical for TSMC to meet the surging demand for the advanced packaging capacity for AI servers, according to the report. Its future capacity will reportedly be nine times that of AP6, TSMC’s advanced packaging fab in Zhunan.

Outbidding Micron, TSMC secured the plant with a transaction value of NTD 17.14 billion, which is much lower than the rumored market price of over NTD 20 billion. Citing sources from the supply chain, the report suggests that the main reason TSMC acquired Innolux’s fab was to bypass the time-consuming environmental assessment process.

Unlike the advanced packaging fab in Chiayi, central Taiwan, which has to be started from scratch, the newly-acquired facility only requires internal modifications. Within a year, TSMC can finish the job of equipment installation, and begin the production afterwards.

Sources cited by the report note that orders for related equipment manufacturing are already underway, with deliveries expected starting in April next year. While the process of trial production may take an additional quarter, the AP8 facility is expected to start production in the second half of 2025.

During an investor conference in mid-April, TSMC Chairman C.C. Wei stated that he anticipates the company’s CoWoS capacity to more than double in both 2024 and 2025. He noted later in July that TSMC targets to reach the balance between supply and demand by 2026.

According to analysts cited by the report, TSMC’s CoWoS capacity, though still remains in short supply, could exceed 32,000 wafers per month by the end of this year. With the additional outsourced capacity, the total CoWoS capacity may approach 40,000 wafers per month. By the end of 2025, TSMC’s CoWoS monthly capacity is projected to reach around 70,000 wafers.

Citing remarks by Jun He, TSMC Vice President of Operations and Advanced Packaging Technology and Service, TSMC’s CoWoS capacity is expected to achieve a compound annual growth rate (CAGR) of over 50% from 2022 to 2026. The foundry giant will also accelerate its pace on constructing fabs, shortening the typical 3-to-5-year timeline to within 2 years to meet customer demand.

Read more

• [News] TSMC Took Another Step in Advanced Process Expansion

(Photo credit: TSMC)

While Samsung Electronics is said to be delivering an oversea workforce cut up to 30%, a report from Korean media outlet Business Korea on September 11th has added that persistent issues with its 2nm yield rate have led Samsung to decide to withdraw personnel from its Taylor, Texas plant, signaling another setback for its advanced wafer foundry business.

Originally envisioned as a mass production hub for advanced processes below 4nm, the Taylor facility’s strategic location near major tech companies was intended to attract U.S. clients. However, despite rapid development, Samsung continues to face 2nm yield issues, resulting in performance and production capacity falling short of its main competitor, TSMC.

Reportedly, Samsung’s wafer foundry yield is below 50%, particularly in processes below 3nm, while TSMC’s advanced process yield is around 60-70%. This gap has widened the market share difference between the two companies.

As per a report from TrendForce, TSMC held a 62.3% share of the global wafer foundry market in the second quarter, while Samsung’s market share was only 11.5%.

Industry sources cited by Business Korea further added that Samsung’s Gate-All-Around (GAA) yield is around 10-20%, which is insufficient for handling orders and mass production. Such yields have forced Samsung to reconsider its strategy and withdraw personnel from the Taylor plant, leaving only a minimal number of staff.

Samsung Electronics had signed a preliminary agreement to receive up to KRW 9 trillion in subsidies from the U.S. Chips Act. However, a key condition for receiving the funding is that the plant must operate smoothly, and Samsung’s current difficulties put this agreement at risk.

Reportedly, Samsung Chairman Lee Jae-Yong personally visited major equipment suppliers like ASML and Zeiss, hoping to achieve breakthroughs in process and yield improvements. However, there have been no significant results so far, and it remains uncertain when personnel might be reassigned back to the Taylor plant.

Read more

• [News] Samsung Reportedly Buckling Under Pressure, with Plans to Cut Overseas Workforce by Up to 30%
• [News] Samsung Signals Will to Collaborate with Other Foundries on Basedie

(Photo credit: Samsung)

According to a report from Reuters citing sources, Samsung Electronics, the global leading manufacturer of smartphones, TVs, and memory, is said to be cutting up to 30% of its overseas workforce in certain departments.

Per the same report, sources revealed that Samsung has instructed its global subsidiaries to reduce sales and marketing staff by around 15% and management personnel by as much as 30%. The plan, set to be implemented by the end of this year, will affect jobs across the Americas, Europe, Asia, and Africa.

Additionally, other industry sources reportedly confirmed Samsung’s global layoff plan as well. However, details about the extent of the layoffs remain confidential, making it unclear how many employees will be affected and which countries or business units will be hit the hardest.

Amid these rumored layoffs, Samsung is grappling with increasing pressure on its key departments. In May, the company replaced the head of its semiconductor division to tackle the ongoing chip crisis, as it strives to catch up with competitor SK hynix in supplying high-end memory used in AI chipsets.

In the premium smartphone market, Samsung faces fierce competition from Apple and China’s Huawei, while it has also lagged behind TSMC in chip manufacturing.

A source pointed out that the layoffs are aimed at addressing the slowdown in global tech product demand due to the global economic downturn. Another source, however, mentioned that Samsung is looking to boost profits by cutting costs.

Per Reuters, Samsung has noted in a statement, claiming that some workforce adjustments in its overseas operations are routine measures aimed at improving efficiency. The company stated that these plans do not have specific targets and added that production staff would not be affected.

According to Samsung’s 2024 sustainability report, as of the end of 2023, the company employed 267,860 people, with over half (147,104 employees) located overseas. The report indicated that the majority of jobs were in manufacturing and development, with 25,136 employees in sales and marketing, and 27,887 in other areas.

Other sources cited by Reuters revealed that the global directive for layoffs was issued about three weeks ago. Samsung’s India operations have already offered severance packages to some mid-level employees who have left in recent weeks, with the total number of employees expected to leave the Indian subsidiary potentially reaching 1,000.

Samsung employs around 25,000 people in India, where the company generates an annual revenue of approximately USD 12 billion. Wage strikes are currently disrupting production in the country.

Read more

• [News] Samsung Partners with TSMC, Its Foundry Rival, on HBM4 Development
• [News] Samsung Signals Will to Collaborate with Other Foundries on Basedie

(Photo credit: Samsung)