On February 28th, as per the ams OSRAM’s press release, it has announced the unexpected cancellation of its Micro LED key project. The company will reevaluate its related strategies and provide initial estimates of the impact on its mid-term operations.

As ams OSRAM announced the unexpected cancellation of its key Micro LED project, it has prompted the company to reevaluate its Micro LED development strategy, as per TechNews’ report, speculation has arisen regarding the collaboration with Apple to introduce Micro LED technology into the Apple Watch Ultra 3. The cancellation may signify the end of this collaboration.

The first Apple Watch featuring a Micro LED display was originally scheduled for release in 2026, with rumors suggesting a potential delay to 2027 or later due to high costs. However, ams Osram’s recent announcement to cancel the Micro LED project undoubtedly sends shockwaves through the industry, casting a shadow over the integration of Micro LED technology into watches or other devices.

Unexpected Cancellation of the Micro LED Project

The ams OSRAM’s press release indicates that the management board of ams OSRAM has been informed of the unexpected cancellation of its Micro LED key project. Consequently, it has decided to re-assess its Micro LED development strategy, especially concerning the 8-inch LED fab in Kulim, Malaysia.

Upon preliminary estimation, ams OSRAM anticipates recording non-cash impairment losses of EUR 600 to 900 million related to Micro LED assets and goodwill in the first quarter of 2024. Currently, ams OSRAM is engaged in discussions with relevant clients.

This implies the changes to the capitalization of ams OSRAM’s investment into Micro LED R&D and the reduced subsidies from public funding schemes. These changes will impact ams OSRAM’s operational profitability (adjusted EBIT) for the fiscal year 2024, with estimated effects ranging from EUR 30 to 50 million.

In the information disclosed, ams OSRAM did not provide detailed specifics about the Micro LED project. Further information will be closely monitored by the industry. From the perspective of the Micro LED industry, there are still technological bottlenecks to overcome, such as chip efficiency, yield rates in mass transfer, achieving full colorization, and the immaturity of supporting industries. Cost reduction has yet to be effectively achieved, which may be one of the reasons for the project’s cancellation.

Micro LED Watch Project Not Necessarily Cancelled, Opportunities for Taiwanese and Korean Manufacturers?

Nevertheless, Apple has not abandoned discussions with other chip manufacturers, implying that the Micro LED watch project may continue. Taiwan and South Korea still maintain corresponding supply chains to support this, with downstream operations involving LG Display (LGD) in backplane and module production.

TrendForce points out that Ennostar has past experience collaborating with Apple, and PlayNitride is also a leading global Micro LED manufacturer. Furthermore, PlayNitride is part of the AU Optronics Group and can provide Micro LED watch chips and backplane transfer technology.

However, for now, the termination of the collaboration between Apple and ams Osram may also prompt other manufacturers to consider the risks of engaging in new partnerships with Apple. Apart from the initial substantial investment required, once the collaboration begins, Apple will actively seek out second suppliers, which are all aspects that need careful consideration.

From the current Micro LED supply chain outlook, TrendForce indicates that Micro LED has four main applications: large displays, wearables, automotive, and near-eye displays.

Samsung leads in large displays, and there is significant market anticipation for Micro LED smartwatches. AU Optronics continues to focus on Micro LED watches, but with a lack of synchronous brand influence, overall interest and development willingness from manufacturers may decrease compared to other brands.

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(Photo credit: ams OSRAM)

The semiconductor supply chain is accelerating its globalization strategy. On February 29th, PSMC announced its collaboration with Tata Electronics in India to construct the country’s first 12-inch fab in Dholera, Gujarat. The construction of the fab is expected to commence within this year.

According to Tata’s press release, following the approval from the Indian government for Tata Group and PSMC to establish India’s first fab in Dholera, Gujarat, the investment for the fab is estimated at INR 91,000 crores (roughly USD 11 billion) and will generate over 20,000 direct and indirect skilled jobs in the region . The preliminary plan outlines a monthly production capacity of 50,000 wafers.

Cited from PSMC’s press release, Frank Huang, Chairman of PSMC, pointed out that Tata Sons Group is India’s largest and internationally-renowned company. India not only has the world’s largest population, it also has a huge domestic market. At this critical moment of the global restructuring of high-tech supply chain, the cooperation between PSMC and Tata Sons Group is indeed timely.

Randhir Thakur, CEO of Tata Electronics, stated as follows, “We will be able to serve our global customers’ requirements for supply chain resilience and meet the growing domestic demand.”

As per PSMC’s press release, Tata Electronics plans to produce power management IC, display driver IC as well as microcontrollers and high-performance computing logic at the Dholera 12-inch fab, in order to enter the automotive, computing and data storage, wireless communications, artificial intelligence and other application end markets.

As key countries worldwide continue actively building their own semiconductor supply chains, TSMC has taken the lead in initiating globalization efforts. UMC, through its collaboration with Intel to develop a 12-nanometer process platform, not only advances in process technology but also expands its presence into the United States.

On the other hand, after entering the Japanese market last year, PSMC further declared yesterday its partnership with Tata to establish India’s first 12-inch fab. This marks the first time a Taiwanese semiconductor foundry has entered the Indian semiconductor supply chain.

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(Photo credit: PSMC)

According to a report by TechNews citing an article from the international column Project Syndicate, Burn Lin, former R&D Vice President of TSMC, Chintay Shih, former President of the Industrial Technology Research Institute, and Chang-Tai Hsieh, an Academia Sinica member and economics professor at the University of Chicago Booth School of Business, collaborated on an article titled “How America’s CHIPS Act Hurts Taiwan.”

In the article, they collectively elucidated how US semiconductor subsidies weaken TSMC’s strength, rendering the entire semiconductor industry more vulnerable. Additionally, they expressed concern that if China were to blockade or invade Taiwan, the supply chain would become compromised.

The US CHIPS and Science Act, aiming to address this issue with a USD 52 billion subsidy, seeks to encourage semiconductor manufacturers to relocate to the United States. However, according to the report addressing on the design of the bill, its objectives may not be achievable and could even weaken Taiwan’s most crucial industry, posing a threat to Taiwan’s security.

Concerns Arise Over Chip Act Threatening Taiwan’s Security

Currently, the semiconductor industry is dominated by specialized companies distributed globally. TSMC specializes in contract manufacturing, focusing primarily on high-end chips. Other important companies include AMD, NVIDIA, Qualcomm, ASML, Tokyo Electron, and Arm.

Specialization in the industry offers two major benefits.

Firstly, each part of the global supply chain can concentrate on its core expertise and advance further, benefiting other supply chains. Secondly, the production capacity of each link in the global supply chain increases, enhancing resilience against demand shocks.

The cost of specialization is that the industry becomes vulnerable to supply shocks. This issue is not unique to Taiwan; all segments of the supply chain face potential bottlenecks.

However, unlike other segments, Taiwan is reportedly confronted with territorial claims from China. Therefore, the United States and Japan have offered substantial subsidies for TSMC’s relocation. TSMC is constructing new factories in Kumamoto, Japan, and Phoenix, Arizona, in the United States.

Currently, Fab 1 in Kumamoto has been completed according to plan, and many of TSMC’s suppliers have also set up shop there. However, the Arizona plant is substantially behind schedule, and fewer TSMC suppliers have followed suit to establish operations in the United States.

Moreover, TSMC’s experience at its Portland plant in Washington state over the past 25 years has raised doubts about the prospects of the Arizona plant. TSMC struggled to find competitive workers there; even with identical training and equipment, production costs in the U.S. were still 50% higher than in Taiwan. Therefore, TSMC chose not to expand its Portland plant further.

Still, the fundamental issue lies in the fact that while American workers are skilled in chip design technology, they lack the skills required for chip manufacturing, which is crucial in this field.

The article further mentions that TSMC’s Phoenix plant will continue to struggle because there is a shortage of American workers with the skills necessary for semiconductor manufacturing.

As warned by TSMC’s founder, Morris Chang, in 2022, seeking economic security by relocating semiconductor manufacturing to the United States is an expensive exercise in futility. Furthermore, while the USD 52 billion subsidy from the United States may seem substantial, it is insufficient to establish a self-sufficient semiconductor ecosystem in Phoenix.

Additionally, the article points out that Taiwan’s industrial planners have deliberately chosen a niche market built upon existing manufacturing advantages, without attempting to replicate the model of the leading Intel at that time, due to the scarcity of Taiwanese workers with the necessary design skills. Similarly, Japan’s subsidies for TSMC are likely to succeed because Japan already possesses an ample supply of skilled manufacturing workers.

The article also highlights three major risks brought about by the US chip act at the end:

Firstly, if TSMC shifts its focus and loses its investment in innovation, the biggest losses will be incurred by its customers and suppliers, most of which are American companies.

Moreover, it may hinder AI development, as this field largely relies on TSMC-manufactured advanced chips. Consequently, TSMC may reduce its investment in production capacity in Taiwan, reducing the entire semiconductor industry’s ability to withstand demand shocks.

Lastly, TSMC may lose its way and risk being replaced by other companies, losing its leadership position in the field of advanced semiconductor manufacturing.

Well-Intentioned US Chip Act with Poor Design May Ultimately Harm Taiwan’s Economy

The commentary suggests that despite the well-intentioned nature of the US chip act, its design is flawed. Instead of establishing a sustainable semiconductor manufacturing cluster in the United States, it may result in long-term damage to TSMC and ultimately harm Taiwan’s economy.

A better approach for the United States, per the report, would be to protect its own economic security while strengthening Taiwan’s, committing to defend Taiwan, and building production capacity in countries like Japan. This strategy may be more prudent in the long run.

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(Photo credit: TSMC)

TSMC has announced the latest appointment of Senior Vice President of R&D Dr. Y.J. Mii and Senior Vice President of Operations Mr. Y.P. Chyn as Executive Vice Presidents and Co-Chief Operating Officers of TSMC today, per TSMC’s earlier press release.

According to the press release, following these appointments, the two Executive VPs and Co-COOs, as well as TSMC’s HR, Finance, Legal and Corporate Planning organizations, will report directly to Chief Executive Officer Dr. C.C.Wei. All other organizations will report to the two Executive VPs and Co-COOs. The new organizational structure will take effect on March 1, 2024.

As per TSMC’s introduction of its executives in the official website, Mr. Y.P. Chin joined TSMC when it was founded in 1987 and has made significant contribution to the Company’s product engineering capabilities throughout his career. He was Director of Fab 1 from 1997 to 1998, and in later positions supported yield improvement in all new generations of advanced technology, including the 28nm, 16nm, and 7nm nodes.

Mr. Y.P. Chin is Senior Vice President of Operations at Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). He is responsible for the operation and management of all fabs in Taiwan and overseas. He also co-leads TSMC’s Overseas Operations Office which is responsible for supporting the company’s global expansion and accelerating the organizational effectiveness of overseas operations.

On the other hand, Dr. Y.J. Mii joined TSMC in 1994 as a manager at Fab 3 and then joined the company’s R&D organization in 2001. In 2011, Dr. Mii was appointed Vice President of Research and Development and later he was promoted to Senior Vice President in November 2016.

In more than two decades of services at TSMC, Dr. Mii has contributed greatly to the development and manufacturing of advanced CMOS technologies in both Fab Operations and R&D. He successfully managed the development of 90nm, 40nm and 28nm technologies. By spearheading the research and development of 16nm, 7nm, 5nm, and beyond, he has helped maintain TSMC’s technology leadership in the foundry segment of the global semiconductor industry.

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• [News] Latest Overview on TSMC’s Global Expansion Initiatives

(Photo credit: TSMC)

Rapidus, a foundry company established through Japanese government-industry collaboration, aims to mass-produce 2-nanometer chips by 2027. According to Rapidus, Canadian artificial intelligence (AI) chip startup Tenstorrent is set to become Rapidus’ 2nm client.

On February 27th, Rapidus announced a collaboration with Tenstorrent to jointly develop and manufacture edge AI accelerators based on 2nm logic technology. Tenstorrent will be responsible for the design/development of the AI chips, while Rapidus will handle production utilizing its under-construction factory in Hokkaido.

Rapidus had announced its collaboration with Tenstorrent in November 2023 to accelerate the development of AI chips, and this collaboration now extends into the realm of manufacturing.

This marks the first public announcement by Rapidus of securing a client (contract manufacturing order) for the most advanced chips. However, Rapidus has not disclosed details such as production volume or financial terms.

Atsuyoshi Koike, President of Rapidus, stated at a press conference held on February 27th, “In the future, AI will be utilized in all products, and the ability to swiftly produce AI chips that meet customer demands is crucial for competitiveness.”

As per a report from Asahi News, Tenstorrent is currently collaborating with TSMC and Samsung. Tenstorrent’s CEO, Jim Keller, stated, “We will be producing various products. Many people are looking forward to our collaboration with Rapidus.”

Rapidus is expected to mass-produce logic chips of 2 nanometers or less by 2027. The first plant, “IIM-1,” located in Chitose City, Hokkaido, began construction in September 2023. The trial production line is scheduled to start in April 2025, with mass production slated to begin in 2027.

Per NHK’s report, At a press conference held in Chitose City on January 22nd, Junichi Koike announced that the construction of the 2-nanometer plant is proceeding smoothly, and the trial production line is scheduled to be operational by April 2025 as originally planned.

Regarding the construction of the plant, Koike stated, “There has been no delay even for a day; it is progressing according to schedule.” He also mentioned that they are also considering the construction of a second and third plant in the future.

After the groundbreaking ceremony held in September 2023, the foundation work for Rapidus’ 2-nanometer factory was mostly completed by December at the same year. Construction of the above-ground factory building commenced in January this year (2024). The framework of the factory is expected to be completed by April or May this year, with the factory anticipated to be completed by December this year (2024).

Established in August 2022, Rapidus was jointly founded by eight Japanese companies, including Toyota, Sony, NTT, NEC, Softbank, Denso, Kioxia (formerly Toshiba Memory Corporation), and Mitsubishi UFJ, who invested collectively in its establishment.

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(Photo credit: Rapidus)