From 2020 to 2025, the compound annual growth rate (CAGR) of 12-inch equivalent wafer capacity at the world’s top ten foundries will be approximately 10% with the majority of these companies focusing on 12-inch capacity expansion, which will see a CAGR of approximately 13.2%, according to TrendForce’s research. In terms of 8-inch wafers, due to factors such as difficult to obtain equipment and whether capacity expansion is cost-effective, most fabs can only expand production slightly by means of capacity optimization, equating to a CAGR of only 3.3%. In terms of demand, the products primarily derived from 8-inch wafers, PMIC and Power Discrete, are driven by demand for electric vehicles, 5G smartphones, and servers. Stocking momentum has not fallen off, resulting in a serious shortage of 8-inch wafer production capacity that has festered since 2H19. Therefore, in order to mitigate competition for 8-inch capacity, a trend of shifting certain products to 12-inch production has gradually emerged. However, if shortages in overall 8-inch capacity is to be effectively alleviated, it is still necessary to wait for a large number of mainstream products to migrate to 12-inch production. The timeframe for this migration is estimated to be close to 2H23 into 2024.

PMIC and Audio Codec gradually transferred to 12-inch production, alleviating shortage of 8-inch production capacity

At present, mainstream products produced using 8-inch wafers include large-sized panel Driver IC, CIS, MCU, PMIC, Power Discrete (including MOSFET, IGBT), Fingerprint, Touch IC, and Audio Codec. Among them, there are plans to gradually migrate Audio Codec and some more severely backordered PMICs to the 12-inch process.

In terms of PMICs, other than certain PMICs used in Apple iPhones already manufactured at 12-inch 55nm, most mainstream PMIC processes are still at 8-inch 0.18-0.11μm. Burdened with the long-term supply shortage, IC design companies including Mediatek, Qualcomm, and Richtek have successively planned to transfer some PMICs to 12-inch 90/55nm production. However, since product process conversion requires time-consuming development and verification and total current production capacity of the 90/55nm BCD process is limited, short term relief to 8-inch production capacity remains small. Effective relief is expected in 2024 when large swathes of mainstream products migrate to 12-inch production.

In terms of Audio Codec, Audio Codecs for laptops are primarily manufactured on 8-inch wafers, and Realtek is the main supplier. In the 1H21, the squeeze on capacity delayed lead times which affected notebook computers shipments. Although the stocking efforts of certain tier1 customers proceeded smoothly in the second half of the year, these products remained difficult to obtain for some small and medium-sized customers. At present, Realtek has partnered with Semiconductor Manufacturing International Corporation (SMIC) to transfer the process development of laptop Audio Codecs from 8-inch to 12-inch 55nm. Mass production is forecast for mid-2022 and is expected to improve Audio Codec supply.

In addition to PMIC/Power Discrete, another mainstream product derived from 8-inch manufacturers is the large-sized panel Driver IC. Although most fabs still manufacture 8-inch wafers, Nexchip provides a 12-inch 0.11-0.15μm process technology used to produce large-sized Driver ICs. As production capacity at Nexchip grows rapidly, the supply of this product has been quite smooth. However, TrendForce believes that this is a special case. Mainstream large-sized Driver ICs are still manufactured on 8-inch wafers and there is no trend to switch to 12-inch wafers.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

The Chinese city of Xi’an has been placed under lockdown due to a local outbreak of the Delta variant, although it remains uncertain as to when the lockdown will end, according to TrendForce’s latest investigations. Samsung operates two memory fabs in Xi’an, both of which are responsible for the manufacturing of high-layer count 3D NAND Flash products, and wafer inputs at the two fabs account for 42.5% of Samsung’s total NAND Flash production capacity and 15.3% of the global total. At the moment, the lockdown of the city is not expected to have a notable impact on these fabs.

Nevertheless, the municipal government has been authorized to enforce very severe restrictions on the movements of people and goods in and out of the city during this lockdown. While Samsung has finished arranging most of the memory product shipments for the period from the end of 2021 to middle of January next year, the company could face logistical issues related to the Xi’an lockdown in the near future and experience delays in shipments. Samsung’s clients, in turn, could have difficulties planning their procurement activities because deliveries of memory components are not in accordance with the originally set dates. Additionally, the same logistical issues could cause delays in the deliveries of production-related materials to Samsung’s fabs in Xi’an. However, the fabs have sufficient inventory to continue normal production over the next several months.

On the other hand, Xi’an is a strategically important location for both Samsung’s NAND Flash production and Micron’s memory packaging and testing operations. TrendForce’s investigations indicate that the lockdown will likewise have no impact on Micron’s packaging and testing operations, although potential issues with logistics still remain to be seen. In any case, while memory packaging and testing capacities in Xi’an account for a relatively low share of the company total, the lockdown may potentially affect spot prices of DRAM products in the short run.

Short-term DRAM and NAND Flash spot prices may bump up

In terms of pricing, the spot price of NAND Flash has not fluctuated significantly due to the lockdown event. Both buyers and sellers hold significant inventory in the current spot market. Recent trading volume has been weak and price fluctuations have been small. TrendForce will continue to observe subsequent reactions in the NAND Flash spot market and does not rule out the possibility of a short-term price bump due to the expected psychological impact triggered by the lockdown event.

In terms of NAND Flash contract pricing trends moving forward, since production is unaffected, TrendForce still maintains its original opinion, forecasting that average pricing in 1Q22 will fall by 10-15%. However, because the impact of logistics is difficult to predict, the purchasing side may have to increase orders from other suppliers, further fueling a bargain-seeking mentality. The possibility of seeing a flattening in the amplitude of contract price declines for various NAND Flash products in the first quarter of next year cannot be ruled out.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Although the demand for end products related to the stay-at-home economy slowed down as many countries saw rising vaccination rates and were partially lifting social distancing restrictions, the decline in foundry orders from this source was more than offset by the traditional peak season for smartphones, according to TrendForce’s latest investigations. At the same time, OEMs for notebook (laptop) computers, networking devices, automotive electronics, and IoT devices kept vigorously building up their inventories because the earlier capacity crunch in the foundry market was constraining them from reaching their shipment targets. Because of these developments, demand continued to outstrip supply in the foundry market during 3Q21. As for foundries, they have been gradually taking on new production capacity in the recent period and gaining from the ongoing rise in the ASP. Thanks to robust demand, new production capacity, and rising wafer prices, the quarterly total foundry revenue rose by 11.8% QoQ to reach a new record high of US$27.28 billion for 3Q21. This result indicated nine consecutive quarters of revenue growth.

Top four foundries posted double-digit revenue growth for 3Q21 due to peak season for smartphones; SMIC’s revenue growth was slightly limited by restrictions imposed on its capacity expansions

TSMC raised its quarterly revenue by 11.9% QoQ to US$14.88 billion as it benefited from the release of new iPhone models. The foundry remained firmly at the top of the ranking in 3Q21. Regarding TSMC’s revenue generation by node, the combined revenue share of the 7nm and 5nm nodes has already surpassed 50% and is still expanding thanks to continued demand for smartphone chips and HPC chips. Samsung raised its revenue by 11% QoQ to US$4.81 billion for 3Q21 and sat firmly in second place. The revenue growth was attributed to several factors. First, the releases of new smartphone models during the second half of the year has spurred the demand for SoCs and DDIs. Second, fab Line S2 in Austin has returned to its normal level of revenue contribution following the recovery from the winter storm that struck Texas in the earlier part of this year. Third, fab Line S5 in Pyeongtaek has activated its newly added production capacity. And finally, the revenue result for 2Q21 was a low base for comparison and thus led to a rather impressive performance for 3Q21.

UMC made significant gains in 3Q21 because the activation of new production capacity for its 28/22nm nodes led to an increase in wafer input for OLED driver ICs and other components. This also caused a rise in its blended ASP. UMC’s revenue went up by 12.2% QoQ to US$2.04 billion for 3Q21. With a growth rate that surpassed the top two ranking leaders, UMC retained third place by overtaking GlobalFoundries in the ranking for the first time in 1Q20, and its lead has been gradually widening since then. GlobalFoundries posted a QoQ increase of 12% in revenue to US$1.71 billion for 3Q21 and kept fourth place in the ranking. To address the worldwide chip shortage, GlobalFoundries has announced a series of capacity expansions and greenfield projects this year. Existing plants including Fab1 in Dresden and Fab8 in Malta (which is a town in the state of New York) will take on new production capacity. New plants will also be built in Singapore and Malta. It is worth noting that the capacity expansions and greenfield projects that GlobalFoundries has revealed so far for this year will be financed via a public-private partnership model. GlobalFoundries will be leveraging funding from governments and advance payments from its clients to reduce the pressure of rising capital expenditure and ensure that the new production capacity will operate at a high utilization rate in the future.

SMIC increased its revenue by 5.3% QoQ to US$1.42 billion for 3Q21 and was ranked fifth. Two reasons were behind the revenue growth. First, there is a stable level of demand for its PMICs, Wi-Fi chips, MCUs, and RFICs. Second, SMIC has been steadily raising wafer prices. It is also worth pointing out that SMIC has been adjusting its product mix and client base due to geopolitical factors. Growing consistently over the quarters, the share of Chinese clients in SMIC’s client base came to almost 70% in 3Q21. Under the impetus of the semiconductor policies of the Chinese government, SMIC will continue to give priority to the demand from domestic clients. Hence, the portion of foreign clients in its incoming orders will gradually shrink relative to that of domestic clients.

Second- and third-tier foundries posted higher revenue growth rates compared with first-tier counterparts because of strong demand for mature nodes

HuaHong Group posted a QoQ increase of 21.4% in revenue to US$799 million for 3Q21, thereby taking sixth place in the ranking. HuaHong continues to raise its ASP as it production capacity is expected to be fully loaded through the whole 2021. This development, together with the successful capacity expansion undertaken at its Fab7 in Wuxi, contributed to the above-expected revenue result for the foundry. PSMC’s revenue growth continued to pick up pace in 3Q21 thanks to the general rise in wafer prices and the robust demand for the main categories of chip products (e.g., DDIs, PMICs, CIS, and power discretes such as MOSFETs and IGBTs). PSMC raised its quarterly revenue by 14.4% QoQ to US$525 million and was ranked seventh.

After surpassing Tower Semiconductor in the ranking for the first time in 2Q21, VIS maintained its strong growth momentum by posting a QoQ increase of 17.5% in revenue to US$426 million in 3Q21 on account of several factors. First, VIS increased its products shipments through capacity expansion. Furthermore, VIS was able to optimize its product mix and raise its ASP. It secured eighth place in the ranking. Occupying ninth place in the ranking, Tower Semiconductor’s performance exceeded expectations for 3Q21 with its revenue climbing 6.9% QoQ to US$387 million. Tower’s revenue generation mainly benefited from the stable demand related to RF-SOI chips, industrial sensor chips, and PMICs.

Taking the tenth place in the ranking, DB HiTek registered a 15.6% QoQ increase in revenue to a record high of US$283 million for 3Q21 because of the rising ASP. In the past year, DB HiTek kept its capacity utilization rate at almost 100%. To raise its overall output, the foundry has decided to focus its expansion efforts on its existing wafer production lines. As a result, its production capacity has been increasing slightly since 2Q21. The additional production capacity will effectively contribute to its revenue generation in 4Q21.

Moving into 4Q21, although foundries have undertaken various capacity expansions and greenfield projects, their new production capacity that has been activated this year is already completely booked. The new fabs that foundries have announced will need some time to get built and fully set up, so the chip shortage on the whole will unlikely ease off anytime soon. On the demand side, sales have weakened a bit for TVs and other end products associated with the stay-at-home economy. However, the hardware and infrastructure demand related to 5G, Wi-Fi 6, and IoT continues to gain momentum. Moreover, OEMs for consumer electronics are still stocking up on components in preparation for the year-end holiday sales. Based on the latest examination of incoming foundry orders, TrendForce finds that foundries will continue to operate at fully-loaded capacity. Due to the undersupply situation, the overall ASP of the foundry market has also been climbing. Meanwhile, foundries have been optimizing their product mixes to boost their financial performances. Taking account of this and other aforementioned developments, TrendForce believes that revenue growth will continue for the top 10 foundries in 4Q21. However, 4Q21 will also see more moderate growth compared with the previous quarter because there is a shortage of peripheral ICs made using mature process nodes. Additionally, demand has slacked a bit for some SoC products.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

As the global vaccination rate rose, and border restrictions in Europe and North America eased, social activities also began to enter a period of recovery, with the consumer electronics market seemingly ready for the arrival of the traditional peak season in 2H21, according to TrendForce’s latest investigations. At the same time, however, the global supply chain was affected by delays in maritime transport, skyrocketing shipping costs, and component shortages, in addition to already-prohibitive price hikes for certain components in 1H21. Given the parallel rise in both material and manufacturing costs, the market for end products has not undergone the expected cyclical upturn in 2H21. Even so, the overall demand for and shipment of smartphones, notebook computers, and monitors experienced QoQ increases in 3Q21, thereby driving up businesses for major OSAT (outsourced semiconductor assembly and test) companies. For 3Q21, the revenues of the top 10 OSAT companies reached US$8.89 billion, a 31.6% YoY increase.

Certain major OSAT companies experienced a slight dip in their capacity utilization rates due to the ongoing shortage of key components including chips and substrates, as well as the electricity rationing that limited both energy intensity and energy consumption in Jiangsu, Zhejiang, and Guangdong at the end of September. Nevertheless, this dip has had virtually no impact on the OSAT industry because certain OSAT companies shifted their operations to substrate-less packaging technologies and reallocated the previously affected capacities. Hence, TrendForce is bullish on the performance of the OSAT industry in 4Q21.

Market leaders ASE and Amkor registered revenues of US$2.15 billion and US$1.68 billion, which represent YoY increases of 41.3% and 24.2%, respectively, for 3Q21. While both companies had some of their capacities hindered due to the shortage of chips, lead frames, and substrates, ASE had its lead times further extended given that its Suzhou-based fab was affected by China’s power rationing. Notably, as the demand for packaging and testing smartphone APs, network chips, and automotive chips remains strong in 4Q21, ASE and Amkor will continue to expand in the 5G, IoT, and AI end-product markets in 2022.

SPIL is currently aiming to strengthen the R&D operations for advanced packaging technologies at its new fab in Erlin, Changhua, since it will be unlikely to compensate for the loss of smartphone AP packaging business from Huawei in the short run. SPIL’s revenue for 3Q21 reached US$1.04 billion, a 15.6% YoY increase. While KYEC previously suffered lowered capacity utilization due to the COVID-19 pandemic, it has since made a gradual recovery and registered a revenue of US$323 million, a 28.5% YoY increase, for 3Q21, thanks to testing orders for 5G chips from Qualcomm and MediaTek. PTI, on the other hand, primarily benefitted from its DRAM packaging and testing business. The company posted a revenue of US$802 million, a 24.0% YoY increase, for 3Q21. Nonetheless, PTI’s memory packaging capacity will likely undergo a sharp decline going forward, as Intel gradually finalizes the sale of its Dalian fab to SK Hynix by 2025, and the agreement between Micron and PTI regarding the assembly and testing services PTI provides at Micron’s Xi’an fab expires in 2Q22. In response, PTI reallocated some capacities at its new fab in Hsinchu to other strategic priorities such as CIS packaging and FOPLP technologies in 3Q21.

Major Chinese OSAT companies JCET and Hua Tian continued to benefit from China’s pursuit of domestic semiconductor substitutes. The two companies expanded their supply of OSAT services for 5G smartphones, base stations, automotive chips, and consumer electronics. As a result, JCET and Hua Tian registered revenues of US$1.25 billion and US$502 million, representing YoY growths of 27.5% and 57.6%, respectively, for 3Q21. Owing to strong sales by its client AMD this year, TFME recorded a revenue of US$636 million, an impressive 59.8% YoY increase, which represents the highest revenue growth among the top 10 OSAT companies in 3Q21.

Although ChipMOS and Chipbond, which specialize in packaging and testing display panel driver ICs, were affected by the slight drop in small-sized TV panel shipment in 3Q21, they were able to compensate for this loss owing to the gradual increase in packaging and testing demand for such driver ICs as TDDI and DDI. This increase can primarily be attributed to the growing demand for mid- and large-sized TV panels, as well as the ramp-up of OLED smartphone panels, which certain smartphone models began to adopt. For 3Q21, ChipMOS and Chipbond grew their respectively revenue by 32.5% YoY and 29.5% YoY to about US$257 million and US$255 million. At the same time, as IC design companies from the upstream supply chain redirected certain orders to ChipMOS and Chipbond in response to China’s power rationing at the end of September, these two companies will likely reach new revenue records in 4Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

As the COVID-19 pandemic wreaked havoc on the global electronics supply chain, the packaging and testing operations of mid-range and high-end chips were subsequently confronted with prolonged lead times. This can primarily be attributed to the fact that IC substrate suppliers were unable to raise output or expand their production capacities in the short run in order to meet the skyrocketing volume of client orders. Hence, products that are packaged using BGA (Ball Grid Array), Flip Chip, or SiP technologies, all of which require the use of IC substrates, had their lead times lengthened. Certain IC design companies are therefore considering the feasibility of packaging technologies that do not require substrates.

Regarding the trend of advanced packaging development, technologies such as 2.5D/3D IC, SiP, and FOPLP (Fan-out Panel Level Packaging) remain the current mainstream R&D targets. Given the ongoing shortage of semiconductor components, including IC substrates, FOPLP, in particular, has garnered the most attention among the aforementioned three packaging technologies as it can be operated without substrates. At present, most OSAT companies and other chipmakers have successively invested in FOPLP-related technological and manufacturing development in order to capitalize on potential new commercial opportunities.

Despite FOPLP’s advantage of packaging chips across large areas, technological development remains problematic

Regarding the history of FOPLP development as well as the technology’s evolution going forward, its earliest roots can be traced to existing packaging applications including Flip Chip and BGA. As end-products continued to experience performance upgrades, leading to the number of I/O pins being insufficient for meeting the increase in performance demand, new types of wafer-level packaging technologies such as Fan-in and Fan-out subsequently emerged to fulfill the packaging demands of mid-range chips, high-end chips, and other emergent applications.

Although Fan-in and Fan-out packaging technologies are able to effectively raise the number of I/O pins, they also result in a substantial increase in manufacturing costs compared to previous-generation technologies such as Flip Chip and BGA. For both 8-inch wafers and 12-inch wafers, packaging costs have only been on a very slight downtrend. That is why the packaging industry has placed a top priority on simultaneously lowering production costs while raising the number of chips packaged at once. Hence, FOPLP technology has emerged in response to this demand for large-area packaging technology.

Regarding the actual implementation of FOPLP, a potential solution may be found in wafer-level packaging RDL (Redistribution Layer) designs, such as chip first or chip last. It should be noted that chip first FOWLP or chip last FOWLP processes do in fact serve as feasible concepts for FOPLP development. However, the FOPLP process involves stacking massive amounts of packaging materials and chips together, and their combined weight may lead to such issues as panel warpage. In addition, it remains difficult to maintain a consistent uniformity and yield rate during the FOPLP process, meaning further collaborations and optimizations on the parts of OSAT companies and semiconductor equipment suppliers are necessary for FOPLP to succeed going forward.

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