TSMC is significantly expanding its production, continuously increasing its facilities. On August 15, as per a report from Liberty Times Net, the company announced that it had signed a contract with panel manufacturer Innolux to purchase its plant and associated facilities located in the Southern Taiwan Science Park.

The building’s total area exceeds 96,000 square meters, with a transaction value of NTD 17.14 billion, which is much lower than the rumored market price of over NTD 20 billion. TSMC announced that the facility will be used for operations and production.

Innolux recently announced the sale of 4th Plant in Tainan (5.5-generation LCD panel plant). A previous report from Economic Daily News once cited rumors, claiming that both Micron and TSMC have been actively exploring the acquisition.

Moreover, it was also reported that TSMC offered a price 20% higher than the base price, with plans to use the facility to expand its advanced process or advanced packaging capacity.

According to Liberty Times Net citing sources at the Southern Taiwan Science Park, TSMC’s original plant is located in the northwest part of the park, while the newly acquired Innolux plant is situated in the southwest, so they are not adjacent.

TSMC had previously purchased a plant from Hannstar and demolished and rebuilt it, as the planning of panel plants differs from that of fabs. TSMC also acquired a plant from E-Ton Solar Tech in the Southern Taiwan Science Park, which is currently being used as an intelligent warehouse.

Based on Innolux’s post-capital-reduction share capital of NTD 79.8 billion, the sale is expected to contribute around NTD 1.84 per share in earnings.

Read more

• [News] Innolux’s 4th Plant in Tainan Reportedly to be Secured by TSMC
• [News] Innolux Confirms Sale of Tainan Plant 4, with Micron & TSMC Reportedly in the Bidding Stage

(Photo credit: Innolux)

According to a report from the Financial Times, SoftBank Group has decided to move away from its plan to collaborate with Intel on producing AI chips to compete with NVIDIA and is now reportedly focusing on discussions with TSMC.

The same report, citing sources, reported that the partnership between SoftBank and Intel fell through because Intel struggled to meet SoftBank’s requirements. SoftBank reportedly attributed the collapsed talk to Intel’s inability to meet their demands for production volume and speed.

The report noted as well that this fallout occurred before Intel’s announcement of releasing its official announcement on its Q2 (April-June) earnings in early August. Notably, in response to a significant drop in its performance, Intel planned to lay off about 15,000 employees and suspend shareholder dividends.

Moreover, the report further cited rumors claiming that SoftBank has shifted its focus to discussions with TSMC; however, no agreement has been reached so far.

Reportedly, Intel, SoftBank and TSMC have all declined to comment on the situation.

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(Photo credit: Intel)

According to a report from the South China Morning Post, the U.S. export controls, which are restricting China’s access to advanced chips and technology, have intensified China’s efforts to replace global semiconductor manufacturing equipment. However, industry sources have indicated that China still faces significant bottlenecks in this area.

The report mentions that Chinese semiconductor equipment companies like NAURA and AMEC are leading efforts to encourage local foundries to adopt domestic equipment.

Notably, sources cited in the same report also reveal that there is an unwritten rule among Chinese semiconductor fabs that locally-made tools should account for 70% of their production lines.

Per a report by TrendForce, Chinese manufacturers have achieved a self-sufficiency rate of 15% or higher in materials for mature processes, such as silicon wafers, photomasks, photoresists, electronic gases, and wet chemicals. However, items with a self-sufficiency rate still below 15% include photolithography equipment, photomasks, and EDA.

AMEC’s chairman and CEO, Gerald Yin Zhiyao, stated that China is expected to achieve a basic level of self-sufficiency in chip production equipment by this summer, something that was unimaginable just a few years ago.

He acknowledged that while there are still gaps in quality and reliability, China’s semiconductor supply chain can indeed achieve self-sufficiency. This, he suggested, is further evidence that U.S. export controls may have accelerated the development of China’s chip industry.

However, the report also pointed out that China remains constrained in one critical area: lithography technology, which is subject to the most stringent export controls.

Dutch company ASML is the sole supplier of Extreme Ultraviolet (EUV) systems, essential for producing advanced chips, and is also the main supplier of Deep Ultraviolet (DUV) systems needed for mature process chips.

President of foundry China Resources Microelectronics, Li Hong, stated that in 2023, only 1.2% of the lithography systems used by Chinese foundries was purchased from local suppliers.

In the second quarter of this year, ASML’s shipments to Chinese customers totaled EUR 2.35 billion, accounting for nearly half of its global sales. This indicates that China continues to rely heavily on ASML’s equipment in the legacy nodes, which is not subject to U.S. sanctions.

Paul Triolo, senior vice-president for China and technology policy lead at the U.S. consulting firm Albright Stonebridge Group, noted that the significant purchases of DUV lithography systems from ASML by Chinese companies highlight that SMEE, a major Chinese lithography equipment manufacturer, still lags behind ASML in reliably producing lithography systems for 28nm and below processes.

However, lithography technology is not the only bottleneck China faces. Li Hong also noted that the local supply ratios for ion implantation and inspection and metrology systems is only 1.4% and 2.4%, respectively.

As per Chinese customs data, the value of ion implantation systems imported by China in 2023 increased by 20% year-on-year to USD 1.3 billion.

A research report by Guohai Securities indicates as well that Chinese fabs rely heavily on metrology systems from companies like KLA, Applied Materials, and Japan’s Hitachi.

KLA reportedly holds a 50% global market share in inspection and metrology equipment.

An industry source cited in the report mentioned that the local supply ratio in the inspection and metrology sector is relatively low, with local substitution primarily occurring in lower-end products.

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• [News] China Lists Semiconductor Self-Reliance Challenges, Excluding Lithography Equipment
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(Photo credit: ASML)

According to a report from Commercial Times, despite ongoing turbulence in the semiconductor industry, including Intel’s capital expenditure cuts and reported bottlenecks in NVIDIA’s B-series GPU, TSMC’s leading position in the industry may remain unshaken.

The sources cited in the report note that the issues with the B-series GPU, stemming from mask replacements to enhance chip stability, have been quickly resolved by the foundry.

The sources cited in the report believe that NVIDIA’s Blackwell started production at the end of the second quarter. To improve stability, NVIDIA replaced some masks, causing about a two-week production delay. The redesign has been completed, and large-scale production will proceed in the fourth quarter.

The same source do not believe it will affect TSMC’s CoWoS revenue, as the idle two-week capacity will be filled by the equally strong demand for H100.

On the other hand, Intel’s CPUs are reportedly facing issues as well. As per the company’s statement, the 13th and 14th generation Intel Core desktop systems are experiencing instability due to a microcode algorithm resulting in incorrect voltage requests to the processor.

Although the company has provided a two-year warranty extension and real-time updates to fix the errors, concerns about design flaws and manufacturing process issues still exist.

In 2024, Intel’s new platforms, Arrow Lake and Lunar Lake, will have their CPU tiles produced using TSMC’s 3nm process, accelerating the production schedule. Lunar Lake and Arrow Lake are expected to ship officially by the end of the third and fourth quarters of this year, respectively.

With the support of the 3nm technology, these measures are expected to alleviate market concerns.

The sources cited by Commercial Times estimate that TSMC’s competitor Intel has begun to strictly cut costs, reducing capital expenditures by 20%. This could affect key capabilities in mass production and defect resolution in wafer manufacturing.

Therefore, sources cited by the report believe that TSMC’s leading position remains difficult to challenge in the short term.

Read more

• [News] TSMC Pushes for FOPLP Mass Production by 2027, Reportedly Eyeing on Innolux’s Plant
• [News] TSMC Reportedly Forms a Team on FOPLP Development, with Mini Line on the Road

(Photo credit: TSMC)

A previous report from Economic Daily News once reported that, Innolux is set to sell its 4th Plant in Tainan (5.5-generation LCD panel plant), which was closed in 2023. Moreover, the report has cited rumors in the market, claiming that both Micron and TSMC have been actively exploring the acquisition.

Eariler on August 1st, the latest report from MoneyDJ further suggests that TSMC is almost certain to secure the deal, primarily to expand its CoWoS capacity. Regarding this matter, neither company has commented on these market rumors.

On July 30, Innolux announced its plan to dispose of the TAC plant-related real estate at the Southern Taiwan Science Park (STSP) D section, so as to bolster operational funds. To expedite the process and meet business needs, the board authorized Chairman Jim Hung to negotiate terms and sign relevant contracts with potential buyers.

Reportedly, the sale price must not be lower than the asset’s book value in the most recent financial statements, taking into account professional valuation reports and market information.

The recent trend of FOPLP (Fan-Out Panel Level Packaging) is said to have fueled speculation and discussions about Innolux’s plant sale, leading to rumors that TSMC is on the verge of announcing the purchase.

Yet, per MoneyDJ, TSMC’s current FOPLP applications in the AI field primarily involve stacking on rectangular substrates, integrating them into 2.5D and 3D packages. Initially, TSMC prefers to complete the entire FOPLP process in-house, integrating the front-end and back-end technologies of the 3D fabric platform.

For Innolux, besides gaining considerable non-operating income, this opportunity also raises the prospect of future collaboration.

Notably, this rumored move comes as construction at TSMC’s first P1 plant in the Southern Taiwan Science Park’s Chiayi Campus was halted due to the discovery of potential archaeological remains.

With P1 construction paused, TSMC has prioritized the construction of the second plant (P2). However, current capacity is very tight, and the time required to complete and ramp up P2 to mass production may not meet customer demand. The long-term substantial demand has driven TSMC to seek additional suitable locations in advance.

It is indicated by MoneyDJ that though TSMC’s Chiayi plant is currently facing delays due to the archaeological site issue, Chiayi is still planned to be a major hub for CoWoS production in the long term, with six phases planned. Previously, the company had considered expanding SoIC (System on Integrated Chips) production in Yunlin, but has recently decided to put those plans on hold.

Overall, the latest industry estimates suggest that CoWoS monthly capacity could reach about 35,000 to 40,000 wafers this year. On 2025, if outsourcing to packaging and testing subcontractors is included, capacity could potentially exceed 60,000 wafers, or even more next year.

Read more

• [News] Innolux Confirms Sale of Tainan Plant 4, with Micron & TSMC Reportedly in the Bidding Stage
• [News] TSMC Halts Chia-Yi Plant Construction Due to Relic Found, Quickly Initiates Preparation for 2nd Plant

(Photo credit: Innolux)