As the U.S. Department of Commerce finalizes subsidies for Intel and TSMC, the two major semiconductor manufacturers will enter a new competitive landscape in the United States.

In preparation for these new challenges and with the first fab trial production imminent, sources cited by a report from Liberty Times has revealed that TSMC will dispatch Vice President of Manufacturing Operations, Arthur Chuang, to oversee the Arizona site in May. He will collaborate with TSMC’s vice president of fab operations Dr. Y.L. Wang, signaling TSMC’s accelerated efforts to establish and produce at U.S. fabs concurrently, aiming to achieve a competitive advantage in advanced manufacturing processes in the United States.

Arizona Fab to Begin Trial Production of 4,000 Wafers by Month’s End

Following the confirmation of subsidies for Intel and TSMC by the U.S. Department of Commerce, subsidies for Samsung are also rumored to be announced soon. Industry sources cited in the report from Liberty Times believe that the United States, through these subsidies promoting domestic chip manufacturing and with major clients gathering, will become the primary battlefield for investment in advanced manufacturing processes.

However, with high production costs and the need to rebuild supply chains, TSMC has adjusted its strategy following a series of setbacks at its first fab. After more than a year of installation work, the fab is nearing completion and preparing to embark on a new phase with trial production of approximately 4,000 wafers using 4-nanometer processes by the end of this month. The target is to ramp up production by the first half of 2025, making this facility the most advanced semiconductor fab in the United States.

TSMC’s U.S. fab is facing new challenges as it continues to build and produce concurrently. According to the same report citing industry sources, unlike the previous director-level executive overseeing operations at the U.S. fab, TSMC will be assigning a vice president-level executive to lead the site, with experienced fab construction veteran Arthur Chuang slated for a long-term assignment in the United States starting in May.

Arthur Chuang holds a Ph.D. in Civil Engineering from National Taiwan University and joined TSMC 35 years ago as an equipment engineer. He transitioned to fab operations over 25 years ago and has overseen the construction of nearly 20 fabs, including Fab 15 in Tainan, Fab 18 in Southern Taiwan, and the advanced 2-nanometer fab sites in Hsinchu and Kaohsiung.

TSMC’s second semiconductor fab in the United States is currently under construction, with plans announced on April 8th to commence production of next-generation 2-nanometer process technology in 2028. Additionally, a third fab is scheduled to begin mass production of 2-nanometer or more advanced process technologies by the end of 2030.

The total area of TSMC’s U.S. fab is 1,100 acres, which is more than half of its area in the Hsinchu Science Park. Estimates from the supply chain suggest that this site could accommodate up to six fabs, indicating that TSMC’s expansion plans may go beyond just building a third fab. If collaboration with U.S. partners proceeds smoothly, further expansion is also possible in the future.

TSMC’s Kumamoto Fab Phase 2 to Commence Construction by Year-End, Production Set for 2027

Additionally, TSMC’s Japan Kumamoto Fab (JASM) announced yesterday that its Phase 2 facility will be located adjacent to Phase 1 on the east side, covering an area of approximately 320,000 square meters, which is about 1.5 times the size of Phase 1. Construction is scheduled to commence by the end of this year, with production expected to start by the end of 2027.

TSMC is scheduled to hold an earnings call on April 18th, and ahead of the conference, positive news has emerged regarding the new US fab. It is anticipated that the related topics will also be the focus of attention on the day of the conference.

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• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab
• [News] TSMC’s US Fab Reportedly Eyeing for Early Mass Production

(Photo credit: TSMC)

The GPU shortage issue has reportedly been alleviated. Per a report from Economic Daily News, it has led to a significant improvement in delivery times for major server brands like Dell. Delivery times have decreased from 40 weeks at the end of last year to a normal cycle of 8-12 weeks now, and sometimes even shorter.

Dell is reportedly capitalizing on the opportunities in artificial intelligence (AI), according to the same report citing Terence Liao, General Manager of Dell Taiwan, who indicated on April 9th that the company is experiencing strong server orders and demand in the Taiwanese market. This surge is primarily due to the robust AI needs within Taiwan’s corporate sector.

As for the previously challenging GPU shortage issue affecting the industry, delivery times have significantly improved this year following the expansion of CoWoS (Chip-on-Wafer-on-Substrate) capacity.

Terence Liao mentioned that towards the end of last year, there was indeed a tight supply of NVIDIA’s H100 GPUs, leading to Dell’s delivery times averaging around 40 weeks and competitors experiencing even longer delays of up to 52 weeks. However, starting from February this year, GPU supply has notably improved. For Dell in Taiwan specifically, delivery times have returned to a normal cycle of 8-12 weeks, and sometimes even shorter.

With the GPU shortage issue eased, Dell Taiwan openly acknowledges that they currently have a high volume of server orders and strong demand, largely driven by Taiwan’s enterprises seeking AI solutions. Terence Liao analyzed that, from the perspective of the Taiwan market, industries actively adopting AI include manufacturing, healthcare, government, finance, and telecommunications sectors.

As per Dell’s GenAI Pulse Survey, 78% of IT decision-makers express anticipation for AI-driven solutions to unleash potential within enterprises, viewing AI as a means to enhance productivity, streamline processes, and reduce costs.

Moreover, from a corporate budget perspective, the allocation for AI servers has increased from around 10% in the past to approximately 20% currently. This shift indicates a heightened commitment within the Taiwanese industry towards investing in AI.

Terence Liao emphasized that the demand for AI servers primarily comes from Cloud Service Providers (CSPs) and general enterprises. While CSPs still represent a significant portion of this demand, Dell is particularly pleased to see an increase in demand from general enterprises.

Previously, TrendForce underscores that the primary momentum for server shipments this year remains with American CSPs. However, due to persistently high inflation and elevated corporate financing costs curtailing capital expenditures, overall demand has not yet returned to pre-pandemic growth levels. Global server shipments are estimated to reach approximately. 13.654 million units in 2024, an increase of about 2.05% YoY. Meanwhile, the market continues to focus on the deployment of AI servers, with their shipment share estimated at around 12.1%.

Read more

• Global Server Shipments Expected to Increase by 2.05% in 2024, with AI Servers Accounting For Around 12.1%, Says TrendForce
• [News] SSD Prices Keep Rising

(Photo credit: Dell)

Following grants to Intel and TSMC, the US administration reportedly plans to announce next week a USD 6 to 7 billion subsidy to Samsung for constructing a semiconductor fab in Taylor, Texas, aimed at increasing chip production capacity.

According to sources cited by Reuters, this funding initiative, set to be announced by U.S. Commerce Secretary Gina Raimondo, will back four projects at Samsung’s site in Taylor, Texas. These projects include a previously disclosed USD 17 billion chip manufacturing plant, along with an additional plant, an advanced packaging facility, and a research center.

Furthermore, the plan involves Samsung’s investment in another undisclosed location. As part of the deal, Samsung’s investment in the U.S. is projected to more than double, exceeding USD 44 billion.

In 2022, the U.S. Congress passed the CHIPS and Science Act, allocating USD 52.7 billion for research and manufacturing grants, alongside USD 75 billion in government loans, aimed at boosting American semiconductor production and reducing reliance on China and Taiwan. As per the Semiconductor Industry Association (SIA), the U.S. share of global semiconductor manufacturing capacity declined from 37% in 1990 to 12% in 2020.

Samsung is poised to become the third-largest recipient of subsidies under the semiconductor act, following TSMC. The US administration is set to provide USD 6.6 billion in aid to TSMC, which plans to build a third chip plant in Arizona with a total investment of USD 65 billion.

According to the latest information released by TSMC, Arizona’s first fab is on track to begin production leveraging 4nm technology in first half of 2025. The second fab will produce the world’s most advanced 2nm process technology with next-generation nanosheet transistors in addition to the previously announced 3nm technology, with production beginning in 2028.

The third fab will produce chips using 2nm or more advanced processes, with production beginning by the end of the decade. Each of the three fabs, like all of TSMC’s advanced fabs, will have cleanroom area approximately double the size of an industry standard logic fab.

Previously, the U.S. government announced that Intel would receive USD 8.5 billion in federal subsidies and USD 11 billion in loans. Intel is planning to invest USD 100 billion across four states in the U.S. for building and expanding fabs, and is also seeking an additional USD 25 billion in tax credits.

Regarding the rumored subsidy to Samsung, the U.S. Department of Commerce, Texas Governor Greg Abbott’s office, and Samsung have declined to comment on the matter.

Read more

• [News] TSMC Receives USD 6.6 Billion for Chipmaking from the US Government, Commits to Constructing Third Fab

The demand for large-capacity HDD products driven by the artificial intelligence market has caused overall HDD prices to surge. According to the latest updates, American memory giant Western Digital confirmed for the first time on April 8th that there is a supply shortage for both HDD and SSD. They issued formal customer letters notifying of ongoing price adjustments for NAND Flash and hard drive products.

Western Digital stated that the demand for both flash memory and hard drive products has exceeded expectations, leading to supply constraints. These challenges in the electronics industry’s supply chain further affect availability. This quarter, they will continue to adjust prices for flash memory and hard drive products, with some changes taking immediate effect.

These updates apply across the company’s entire product portfolio, and Western Digital indicated that pricing adjustments will be frequent in the future. Additionally, the company’s ability to handle unplanned demand and orders is quite limited, so any order changes require early notification. They also anticipate that unplanned demand may lead to extended delivery lead times.

TechNews’ report further point out that, combining current market reports, the overall price increase for HDDs has accumulated between 10% to 20% from the third quarter of 2023 to the first quarter of this year, due to memory manufacturers implementing production reduction strategies aimed at quantity-based pricing.

Industry sources cited by TechNews’ report anticipate that the tight supply situation for large-capacity HDD products will continue into this quarter and potentially extend throughout the year. Specifically, HDD prices are expected to continue rising in the second quarter of this year, with an anticipated increase of 5% to 10%.

As per TrendForce’s  data for 3Q23, Samsung maintained its position as the top global NAND flash memory manufacturer, commanding a significant market share of 31.4%. Following closely, SK Group secured the second position with a 20.2% market share. Western Digital occupied the third position with a market share of 16.9%, while Japan’s Kioxia held a 14.5% market share.

Read more

• [News] AI Market Growth Rescues HDD, Driving Half-Year Price Surge of 20%
• [News] SSD Prices Keep Rising

(Photo credit: Western Digital)

Earlier, Reuters reported that contract manufacturer Pegatron was in talks to sell its sole iPhone assembly plant in India to Tata Group, and discussions were in advanced stages. Regarding this matter, Pegatron told CNA reporters that this report was speculative and lacked evidence, declining to comment further.

According to a Reuters report on April 8, Pegatron was said to be considering selling its iPhone assembly plant located in Chennai, a major city in southern India, to Tata Group, India’s largest private enterprise. The negotiations were rumored to conclude within six months. If an agreement is reached, the two parties will establish a joint venture, with Tata Group holding a 65% stake to operate the plant, while Pegatron will retain a 35% stake and provide technical support.

Sources cited by Reuters also mentioned that Pegatron is building another iPhone assembly plant in the Chennai area, and discussions with Tata include acquiring control of this new facility. The negotiations between Tata and Pegatron are expected to conclude within six months, after which all Pegatron India plant employees will transition to the joint venture.

Amid rising geopolitical risks, tech giants are diversifying production away from China. Pegatron reduced its stake in its Kunshan plant to 37.5% in December, with Chinese Luxshare now leading. However, Pegatron emphasizes it won’t withdraw from China and plans to establish new facilities this year.

In recent years, Pegatron has been consistently expanding its global footprint, with expansions ongoing in Taiwan, Mexico, Indonesia, India, Vietnam, and other locations.

Currently, approximately 10% of Apple’s iPhone production capacity in India comes from Pegatron, with the vast majority of capacity originating from Foxconn’s iPhone assembly plant located in Karnataka.

Furthermore, Foxconn has the highest share in Apple’s current new iPhone assembly. Among the four iPhone 15 series models, only certain models like iPhone15 and iPhone15 plus are produced by Tata Group in India.

In January, Pegatron announced a USD 12 million investment to form a Malaysian subsidiary for consumer electronics. It’s also expanding its Mexican plant capacity, investing USD 75 million to boost its electric vehicle business.

(Photo credit: Apple)

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• [News] NAND Flash Market Landscape to Change?
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