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)

According to a report from Bloomberg, Jun Young-hyun, head of Samsung’s chip business, recently sent a stern warning to employees about the need to reform the company’s culture to avoid falling into a vicious cycle.

Jun stated that the recent improvement in Samsung’s performance was due to a rebound in the memory market. To sustain this progress, Samsung must take measures to eliminate communication barriers between departments and stop concealing or avoiding problems.

Earlier this week, Samsung announced its Q2 earnings, showcasing the fastest net profit growth since 2010. However, Jun Young-hyun highlighted several issues which may undermine Samsung’s long-term competitiveness.

He emphasized the need to rebuild the semiconductor division’s culture of vigorous debate, warning that relying solely on market recovery without restoring fundamental competitiveness would lead to a vicious cycle and repeating past mistakes.

Samsung is still striving to close the gap with its competitors. The company is working to improve the maturity of its 2nm process to meet the high-performance, low-power demands of advanced processes. Samsung’s the first-generation 3nm GAA process has achieved yield maturity and is set for mass production in the second half of the year.

In memory, Samsung is beginning to narrow the gap with SK Hynix in high-bandwidth memory (HBM). According to Bloomberg, Samsung has received certification for HBM3 chips from NVIDIA and expects to gain certification for the next-generation HBM3e within two to four months.

Jun emphasized that although Samsung is in a challenging situation, he is confident that with accumulated experience and technology, the company can quickly regain its competitive edge.

Read more

• [News] Samsung Sees Solid Demand for 3nm in 2H24, Aiming a Ninefold Increase in AI/HPC Sales by 2028
• [News] Samsung’s Q2 Profits Soar to USD 7.5 Billion, Seeing Strong Demand for HBM, DDR5 and Server SSD in 2H24

(Photo credit: Samsung)

According to a report by the Commercial Times, while TSMC, the global foundry leader, has established a plant in Kikuyo, Kumamoto City, Kyushu. ASE Technology Holdings (ASE), a giant in packaging industry, is setting up a plant in Kitakyushu as well. With these developments, Japan’s semiconductor production could potentially integrate both front-end and back-end processes, forming a cluster within Kyushu.

This development could lead to a revival of Kyushu’s semiconductor industry, once known as the “Silicon Island” in Japan, attracting more semiconductor supply chain companies to the region.

The report further notes that related equipment and inspection company, including MA-tek, semiconductor transmission and storage solutions provider Gudeng Precision, and semiconductor material distributor Topco Technologies Corp. (Topco) have all established bases in Kumamoto.

MA-tek, a leader in semiconductor inspection and analysis services, established its first Japanese laboratory in 2019 and a second one in Kumamoto in 2023. Since their establishment, these laboratories have consistently achieved growth rates higher than the company average.

With the rise of AI applications, many Japanese clients have AI chip development projects, leading to increased demand for MA-tek’s materials analysis (MA) and advanced process inspection services.

To capitalize on advanced process and packaging opportunities brought by AI, the company MAT has decided to increase its capital expenditure this year to between NTD 1.2 billion and NTD 1.4 billion.

These funds will be used to expand and upgrade the testing equipment and laboratory facilities in Nagoya and Kumamoto, and to establish a third laboratory in Hokkaido, which is expected to start contributing to revenue in Q1 2025.

On the other hand, Gudeng Precision is also planning to build a new plant in Kurume in Q2 this year, located between Fukuoka and Kumamoto, with a planned area of approximately 3,000 ping (about 10,000 square meters).

Gudeng Precision’s investment in Kurume, Japan, including equipment procurement, is estimated at about NTD 400 million to NTD 450 million. Construction is expected to begin by the end of this year, with production slated to start by the end of 2025.

Read more

• [News] TSMC’s JASM Kumamoto Plant 2 Greenlit, Construction Expected to Commence by Year’s End
• [News] Kumamoto Vying for TSMC’s Third Fab, Looking to Build Semiconductor Hub

(Photo credit: JASM)

Semiconductor giants like Intel, TSMC, Samsung and Micron have received huge amount of grants from the U.S. government, funded through the CHIPS and Science Act. However, chip making equipment maker Applied Materials is said to be in a different scenario. According to reports by Bloomberg and Tom’s Hardware, the company’s application to gain U.S. funding for a USD 4 billion R&D center in Silicon Valley was rejected by U.S. Department of Commerce.

The reports note that Applied Materials had announced plans to build the facility a year ago, as it tried to seek government subsidies through the CHIPS and Science Act. The facility was scheduled for completion in 2026.

However, according to sources familiar with the matter, Commerce Department officials turned down the plan on Monday, stating that project did not meet the eligibility criteria, Bloomberg reports. This decision marks a major setback for the company’s efforts to establish a significant facility in Silicon Valley, which it aims to develop next-generation chip making tools.

In addition, though it is reported that as there are over 670 companies with interests in the gaining the fund under the CHIPS and Science Act, and the Commerce Department has warned that limited resources will force it to reject many applications, the rejection of Applied Materials’ project is particularly unexpected. For it is a U.S. semiconductor company, and the project closely aligns with the Biden administration’s goals of revitalizing the domestic semiconductor industry.

It is worth noting that though the U.S. keeps tightening the export controls on the semiconductor sector, major chip equipment makers seem to become increasingly dependent on the Chinese market. From February to April, China accounted for 43% of the total sales of Applied Materials, a 22 percentage point increase YoY.

Applied Materials has reportedly received subpoenas from the US Securities and Exchange Commission as well as the US Attorney’s Office of the District of Massachusetts in February, and said to be under investigation for allegedly sending equipment to SMIC, China’s leading chip maker, through South Korea without export licenses.

The CHIPS and Science Act, signed into law in August 2022, allocated approximately USD 280 billion in new funding to enhance domestic chip making research and development.

Previously, the U.S. government announced that Intel would receive USD 8.5 billion in federal subsidies and USD 11 billion in loans. On the other hand, US administration is set to provide USD 6.6 billion and USD 6.4 billion in aid to TSMC and Samsung, respectively.

Read more

• [News] US Reportedly Expands Investigation into Applied Materials, Possibly due to Concerns of Shipments to SMIC
• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls

(Photo credit: Applied Materials)

Intel not only reported earnings and forecasts that fell short of Wall Street expectations but also announced plans to cut more than 15% of its workforce, halt dividend payments for Q4 2024 (October-December), and reduce its full-year capital expenditure forecast by more than 20%.

According to Intel’s official announcement, its Q2 (April-June) earnings: adjusted earnings per share were $0.02, far below the analyst estimate of $0.10; revenue decreased by 1% year-over-year to USD 12.83 billion, missing the market expectation of USD 12.94 billion; and adjusted gross margin was 35.4%

During Q2, Intel’s Client Computing Group, responsible for producing PC processors, saw its revenue increase by 9% year-over-year to USD 7.41 billion, meeting the market expectation of USD 7.42 billion. However, the revenue from the Data Center and AI Group fell by 3% year-over-year to USD 3.05 billion, missing the market expectation of USD 3.14 billion.

Intel stated that sales of PC chips capable of handling AI tasks exceeded internalAI expectations, with shipments expected to surpass 40 million units in 2024.

Looking ahead to Q3, Intel forecasts revenue between USD 12.5 billion and USD 13.5 billion and an adjusted loss per share of $0.03. According to a report from Reuters citing an LSEG survey, analysts had originally predicted Q3 revenue to reach USD 14.35 billion with an adjusted earnings per share of $0.31. Intel’s adjusted gross margin for the quarter is expected to be 38%.

Intel CEO Pat Gelsinger stated that the latest layoff plan will affect about 15,000 employees. This is the largest single layoff action tracked by tech layoff monitoring site Layoffs.fyi since it began operations in March 2020. Intel currently employs around 110,000 people, meaning over 15% of its workforce will be impacted.

Gelsinger further pointed out that Intel must align its cost structure with the latest operational model and fundamentally change the way the company operates. He indicated that Intel’s revenue growth has not met expectations and has not yet benefited from powerful trends such as AI.

According to Intel’s statement, Intel will suspend dividend payments starting in Q4 until cash flow improves significantly. Since 1992, Intel has consistently paid dividends without interruption.

Intel has also decided to reduce its total capital expenditure budget for new plants and equipment in 2024 by over 20% to between USD 25 billion and USD 27 billion. The estimated total capital expenditure for 2025 will be between USD 20 billion and USD 23 billion.

Read more

• [News] Intel Hires Micron Executive to Lead Its Foundry Business
• [News] Intel Suspended Investment in French and Italian Chip Plants

(Photo credit: Intel)