DRAM Spot Market:

The current decline in spot prices is also one of the reasons for TrendForce’s relatively conservative forecast. Spot prices have been falling for several weeks. Apart from weak channel demand, TrendForce has also observed that memory module manufacturers are experiencing a continuous rise in inventory levels. Spot traders, on the whole, are now feeling the pressure to sell off their stocks. As a shortage of cash flow becomes more noticeable, sellers continue to cut prices in order to drive sales.

TrendForce forecasts that the gap between spot and contract prices will widen for modules. Since spot prices serve as a leading indicator for the overall price trend, this latest development is unhealthy for the market. The average spot price of mainstream chips (i.e., DDR4 1Gx8 2666MT/s) fell by 0.26% from US$1.921 last week to US$1.916 this week.

NAND Flash Spot Market:

Channel traders are now holding onto an excessive amount of inventory, which led to sluggish transactions, while the lack of usual aggressive replenishment on inventory after Lunar New Year has even forced certain spot traders to start considering on the possibility of truncation. 512Gb TLC wafer spots remain unchanged in prices this week at US$3.764.

Intel revealed on the 2nd that its manufacturing business’s operational losses deepened, dealing a significant blow to Intel’s attempts to surpass TSMC and regain its leading position.

According to Reuters, Intel stated that its manufacturing division incurred a $7 billion loss in 2023, a more severe downturn than the $5.2 billion loss in the previous year, with revenues reaching $18.9 billion, a 31% decrease from the previous year.

In the same report, Intel CEO Pat Gelsinger admitted that 2024 would be the year of worst operating losses for the company’s wafer fabrication business, with the break even expected by 2027.

The primary causes for the losses were attributed to bad decisions, including opposition to using ASML EUV equipment a year ago. The cost of this equipment could exceed $150 million but is more cost-effective than earlier chip manufacturing equipment.

Gelsinger believes that due to these mistakes, Intel has outsourced approximately 30% of its wafer production to external contract manufacturers like TSMC, with a goal to reduce this share to about 20%.

Intel plans to invest $100 billion in constructing or expanding chip factories across four states in the United States and convincing other companies to use Intel’s manufacturing services. Consequently, Intel has begun segregating its wafer foundry business into an independent division and financials, heavily investing to catch up with TSMC and Samsung.

According to TrendForce’s previous report on the fourth quarter of 2023, global semiconductor foundry revenue rankings showed that Intel Foundry Services (IFS), which ranked ninth globally in the third quarter of 2023, was pushed out of the top ten by PSMC and Nexchip due to factors such as the transition between old and new CPU generations and lackluster inventory momentum. At the same time, the top three semiconductor foundries globally were TSMC, Samsung, and GlobalFoundries.

(Photo credit: Intel)

Taiwan experienced consecutive earthquakes measuring 7.2 and 6.5 on the Richter scale this morning. According to the Hsinchu Science Park Bureau, foundries such as TSMC and UMC, along with panel manufacturer Innolux in Zhunan, have partially shut down operations as a preventative measure. Additionally, IC testing house King Yuan Electronics and Polyimide Film manufacturer Taimide Tech have evacuated all staff from their Gongluo plant.

An earthquake with a magnitude of 7.2 on the Richter scale occurred at 7:58 AM Taiwan time on the 3rd, with the epicenter located 25 kilometers south-southeast of Hualien.

The regions densely populated with semiconductor and panel factories, Taichung City and Hsinchu County, experienced a maximum seismic intensity of level 5, while Hsinchu City and Tainan City reached a maximum seismic intensity of level 4.

The Hsinchu Science Park Bureau reported that TSMC and UMC in Zhunan have partially shut down for precaution, Innolux Corporation in Zhunan also partially ceased operations, while all employees at King Yuan Electronics and Taimide Tech have been evacuated. Display maker AUO, as well as semiconductor supply chain companies Macronix, PSMC and UMC in Hsinchu Science Park are operating normally.

The bureau also stated that electricity supply in various parks within Hsinchu Science Park is normal. However, there are anomalies in the water supply at the  Biomedical Science Park and Tongluo Science Park, which are currently under investigation; all other parks and construction sites within Hsinchu Science Park are operating as usual.

In another statement by the Southern Taiwan Science Park Bureau, Innolux’s Plant B, TSMC’s Fab 18, and Hannstar in the Southern Taiwan Science Park recorded a seismic intensity of level 4, while Innolux’s Plant F in Kaohsiung measured a seismic intensity of level 3. Companies within the area reported no impact.

For further updates on the aftermath and damage assessment, please follow TrendForce News closely.

(Photo credit: USGS)

Amid the overwhelming wave of Artificial Intelligence, the importance of advanced process chips is becoming increasingly prominent. Currently, the 3nm process is the most advanced node in the industry. Meanwhile, manufacturers such as TSMC, Samsung, Intel, and Rapidus are actively promoting the construction of 2nm wafer fabs. TSMC and Samsung previously planned to mass-produce 2nm chips in 2025, while Rapidus to begin trial production in 2025.

2nm Wafer Fabs to Complete Construction as Soon as this Year?

Recently, the Semiconductor Equipment and Materials International (SEMI) announced that it is expected that both TSMC and Intel will potentially complete the construction of 2nm wafer fabs by the end of this year.

Intel is anticipated to be the first to achieve commercialization of 2nm chips. The Intel PC CPU Arrow Lake product will utilize the 2nm process node. TSMC’s 2nm process is expected to be applied in Apple’s iPhone AP chips. Subsequently, TSMC’s 2nm capacity will soar up.

According to a report from Commercial Times the installation of equipment for TSMC’s 2nm process is accelerating. TSMC’s Fab20 P1 plant in Hsinchu, Baoshan is scheduled to install equipment in April this year, with pilot production expected to commence in 2H24 and small-scale production in 2Q25.

As for Intel, ASML already delivered the world’s first High Numerical Aperture (NA) EUV EXE:5200 to Intel in late 2023, supporting the latter in producing 2nm chips. Later, Intel kicked-start the calibration of lithography machine, which has been well on track.

Samsung and Rapidus all Set to Move

In terms of Samsung, its previously announced technology roadmap indicates that it will first mass-produce 2nm process chips for mobile terminals starting in 2025, followed by high-performance computing (HPC) products in 2026. It plans to expand to automotive chips by 2027.

Rapidus is setting up a 2nm chip fab in Chitose City, Hokkaido, Japan. Its pilot production line is scheduled to start operation in April 2025, aiming to commence mass production in 2027.

Recently, it’s reported that in order to promote the development of advanced wafer fabs in Japan, several Japanese manufacturers will supply products to Rapidus. Among them, Dai Nippon Printing (DNP) will begin mass production of masks for 2nm chips at its Fukuoka plant and other operations in Japan in 2027, which will be provided to Rapidus.

In addition to DNP, Japanese company TOPPAN Holdings is also collaborating with IBM to develop masks for 2nm chips and achieve mass production by 2026, and Rapidus is reportedly the purchaser. Moreover, companies like Tokyo Ohka Kogyo (TOK), JSR, Shin-Etsu Chemical are also expected to be the suppliers of Rapidus.

1nm Chip Plans Brought to Light

Following 2nm, 1nm chip will be the next target for wafer fabs. In light of manufacturers’ plans, the industry is expected to see mass production of 1nm-level chips from 2027 to 2030.

TSMC plans to reach the A14 node (1.4nm) in 2027 and the A10 node (1nm) in 2030. Recent reports from Economic Daily News indicated that TSMC intends to establish a factory in the Science Park of Taibao City, Chiayi County in central Taiwan to produce 1nm chips.

Samsung anticipates to launch the 1.4nm process by late 2027. It is reported that Samsung’s SF1.4 (1.4 nm) process can increase the number of nanosheets from 3 to 4, which is expected to significantly improve performance and power consumption.

Intel’s latest foundry roadmap shows that the Intel 14A (1.4nm-level) node will put into production in 2026, and Intel 10A (1nm-level) will start development or production in late 2027.

Contract chip manufacturer United Microelectronics Corp has partnered with Intel to develop a 12-nanometer technology platform and will commence production at three Intel facilities in Arizona, USA. According to a report by Nikkei, mass production for chips destined for communication and other applications is slated to begin in 2027

During an interview at the Intel IFS Direct Connect event in February, Jason Wang, Co-President of UMC, stated that both UMC and Intel are pioneering innovative collaboration models. They aim to provide customers with foundry services with competitive pricing through vertical specialization. The two companies will leverage complementary advantages to accelerate the development timeline and expand their global presence.

The foundry market is generally divided into advanced chips and mature chips. Advanced chips, which constitute the brains of smartphones and other devices, are predominantly led by TSMC and Samsung Electronics.

In the realm of mature chips, around 10 companies from Taiwan, China, South Korea, and the United States are competing for the demands of telecommunications equipment, Vehicular communication systems, and other technology manufacturers.

Intel is changing its vertically integrated business model to compete with TSMC and Samsung in contract manufacturing demands.

In March of this year, the US government announced that Intel would receive up to USD 8.5 billion in subsidies for the development of advanced chips. By collaborating with UMC on mature chips, Intel may focus more resources on cutting-edge technologies like 1.4nm.

For UMC, partnering with Intel enables it to mass-produce chips that are more advanced than its mainstream 22nm to 28nm products. Obtaining production facilities in the United States will also help the company win North American clients, as revenue from this region currently accounts for less than 30% of its total.

TSMC is also constructing a semiconductor plant in Arizona, utilizing US assistance to produce advanced 4nm chips. In contrast, the collaboration between UMC and Intel will focus on relatively mature chips.

UMC has long been one of the pillars of the semiconductor industry in Taiwan. Established in 1980, seven years before TSMC, the company has been vying for the position of industry leader until the 2000s.

During the 2010s, UMC lagged behind TSMC in advanced chip development, as the latter made significant investments in the semiconductor market following the global financial crisis. Since then, UMC has reportedly put more emphasis on mature chips.

The company is currently at a turning point. Benefiting from the global chip shortage, its performance continued to grow from 2020 to 2022. However, as of December 2023, annual revenue declined by 20% to 222.5 billion New Taiwan dollars ($6.9 billion), marking the first decrease in four years. This is approximately one-tenth of TSMC’s revenue.

UMC’s downturn in 2023 also signifies an intensification in mature process technologies, especially as Chinese semiconductor enterprises’ mature process technologies and equipment remain unaffected by US export restrictions. In an effort to overcome US restrictions, China is heavily investing in mature process.

Per data from TrendForce, China’s share of mature chip production at 28nm and above is expected to increase from the current 31% to 39% by 2027, as production volumes grow.

Joanne Chiao stated that semiconductors for applications such as general sensors and display controllers are expected to face fierce price competition.

On the other hand, UMC continues to face competition from Taiwanese foundries. TSMC plans to produce mature chips at a new plant in Japan by the end of 2024 and at a plant in Germany by the end of 2027. With subsidies from the Japanese and German governments, TSMC will form joint ventures with buyer customers to ensure stable production capacity.

Powerchip Semiconductor Manufacturing Corporation (PSMC) announced at the end of February its plans to assist Tata Group in building a chip plant in India. PSMC stated that it would provide intellectual property for the project without investment, aiming to generate licensing revenue.

Read more

• [News] Rumors Regarding Price Reductions in Mature Process for Foundries Emerge, Signaling a Further Decrease in Prices in Q2
• [News] China’s ICs Imports Decrease in 2023, Chinese Manufacturers Focus on Mature Processes

(Photo credit: UMC)