Taiwanese semiconductor foundries are facing price pressure in mature process as demand remains sluggish, according to a report from the Economic Daily News. Sources indicate that local foundries are offering discounts on mature process orders in Q4, marking a shift from the relatively stable pricing seen in Q3. Prices could continue to decline into the first quarter of next year, marking two consecutive quarters of downward pressure.

United Microelectronics Corp. (UMC), Vanguard International Semiconductor Corp. (VIS), and Powerchip Semiconductor Manufacturing Corp. (PSMC) are the key players in Taiwan’s mature process foundry space. UMC told the Economic Daily News that its Q3 pricing remained stable, with Q4 details to be revealed in its next earnings call. Vanguard also said it would disclose its Q4 outlook during its earnings release.

The report notes that VIS previously indicated the competitive pricing environment would ease this quarter, with utilization rates improving to around 70% or higher. The company expects utilization rates to rise to 70-80% next year, though whether they reach the higher end will depend on demand.

However, the pricing pressure in Taiwan’s mature foundry processes stems largely from weak demand for power management ICs and driver ICs, with some prices expected to decline by single-digit percentages over two quarters. Notably, Chinese foundries, which had previously been aggressive in cutting prices, have held firm this time, contrasting with the more flexible pricing strategies of their Taiwanese counterparts.

An unnamed source in the driver IC industry cited by the Economic Daily News said that some Taiwanese foundries are willing to offer single-digit percentage price cuts in Q4 to maintain utilization rates, while Chinese foundries are less inclined to lower prices.

Another industry source attributed Chinese foundries’ reluctance to cut prices to improved utilization rates and the fact that previous rounds of price cuts had already created a significant gap between their pricing and that of Taiwanese competitors.

According to the report, negotiations over mature process pricing are ongoing, with volume playing a key role in securing discounts. Some microcontroller unit (MCU) makers revealed that certain foundries are offering project-based discounts of single-digit percentages for large orders in Q4, while keeping base prices steady.

The industry is currently negotiating pricing for the first quarter of next year, with expectations that some foundries may continue to lower prices, though likely not by a significant margin.

(Photo credit: UMC)

According to the latest customs data, China’s polysilicon import volume in August 2024 were 4,532 tons, a month-on-month increase of 55.13%. Among them, the import volume from Germany was 3829.3 tons, accounting for 84.50% of the total import volume.

Compared with the data in July, it increased by 117.67% month-on-month, which was the largest importer of polysilicon in China that month. The import volume from Malaysia was 417.6 tons, accounting for 9.21% of the total import volume, a month-on-month decrease of 59.30%. Polysilicon imported from the above two countries accounted for 93.71% of the total imports. The rebound in polysilicon imports in August was mainly due to overseas manufacturers stocking up in China. Therefore, it is speculated that silicon imports will decline slightly in September.

The average import price of polysilicon in August was 23.92 US dollars/kg, down 1.81% from the previous month. The average import prices from the two major import source countries were 23.87 US dollars/kg (Germany) and 16.70 US dollars/kg (Malaysia), with prices falling 11.05% and 13.29% respectively. It is the first time for import prices to fall in recent months. It is forecasted that early high-price urgent orders have basically been fulfilled in August, and imported silicon prices will mainly remain flat in September.

According to the latest customs data, China’s polysilicon export volume in August 2024 was 4042.7 tons, a month-on-month decrease of 30.21%. Among them, the export volume to Vietnam was 1,596 tons, accounting for 39.48% of the total export volume. The export volume to Malaysia was 1,128 tons, accounting for 27.90% of the total export volume, and the polysilicon exported to the above two places accounted for 67.38% of the total volume.

In August, China’s exports showed a significant increase in exports to the EU, while exports to ASEAN countries weakened. The policy of photovoltaic installation subsidies in Europe is a potential reason for the improvement in demand in places such as the Netherlands. Export progress to Malaysia and other ASEAN countries has declined due to tight shipping capacity and port congestion. In addition, the uncertainty caused by the US election has also inhibited the growth of exports to ASEAN countries.

In August, the average prices of the two major exporting countries were 7.18 US dollars/kg for Vietnam and 9.73 US dollars/kg for Malaysia, with a month on month increase of 24.57% and 6.18%, respectively.

The industry holds high expectations for photonic chips, which play a crucial role in data centers, especially in high-bandwidth and energy-efficient data transmission. With the growing demand for efficient data processing driven by the rise of artificial intelligence, cloud computing, and IoT devices, the research and development of photonic chips have become increasingly urgent.

China’s First Photonic Chip Pilot Line Launched in Wuxi

On September 25th, the first domestic photonic chip pilot line built by the Wuxi Photonic Chip Research Institute of Shanghai Jiao Tong University was officially launched. After the pilot line becomes operational, it is expected to reach an annual production capacity of 10,000 wafers. The first PDK will be released in the first quarter of 2025, providing external chip fabrication services.

The photonic chip pilot platform covers an area of 17,000 square meters, integrating research, production, and services. It is equipped with more than 100 top-tier international CMOS process machines, supporting a full closed-loop process for lithium niobate photonic chips, from lithography, thin film deposition, etching, wet processing, cutting, measurement, to packaging. The platform also supports other material systems like silicon and silicon nitride.

Jinan Achieves World’s First 12-Inch Lithium Niobate Crystal

in May of this year, Shandong Hengyuan Semiconductor Technology Co., Ltd. in Jinan successfully developed a 12-inch (300mm diameter) large-sized optical-grade lithium niobate crystal.

Shandong Hengyuan Semiconductor has been dedicated to the R&D of optoelectronic materials such as lithium niobate and lithium tantalate, as well as piezoelectric materials. Through technological advancements, the company has started mass production of 6-8 inch Z-axis and X-axis optical-grade lithium niobate crystals. Within three years, Hengyuan plans to increase its annual wafer production to 250,000 units.

Chinese Scientists Develop Mass-Produced New “Optical Silicon” Chips

In early May, the research team led by researcher Ou Xin at the Shanghai Institute of Microsystem and Information Technology, Chinese Academy of Sciences, made a breakthrough in the preparation of lithium tantalate heterogeneously integrated wafers and high-performance photonic chips. They successfully developed a new type of “optical silicon” chip that can be mass-produced. The research results were published in Nature on May 8th.

Tsinghua University Team Releases AI Photonic Chip

In August, Tsinghua University announced that the research group led by Professor Fang Lu from the Department of Electronic Engineering and the team led by Academician Dai Qionghai from the Department of Automation pioneered a fully forward intelligent optical computing training architecture. They developed the “Taiji-II” optical training chip, enabling efficient and precise training of large-scale neural networks in optical computing systems. This research, titled “All-Forward Training of Optical Neural Networks,” was published in Nature.

The previously released Taiji-I, in April, achieved 879 T MACS/mm²area efficiency and 160 TOPS/W energy efficiency, marking the first time optical computing was applied to complex AI tasks such as natural scene recognition with thousands of categories and cross-modal content generation.

Chinese Team Successfully Develops Fully Programmable Topological Photonic Chip

In late May, the “Extreme Optics Innovation Research Team” from Peking University’s School of Physics, in collaboration with Researcher Yang Yan from the Institute of Microelectronics, Chinese Academy of Sciences, proposed and realized a fully programmable topological photonic chip based on large-scale integrated optics.

The chip built on a reconfigurable integrated optical micro-ring array, integrates 2,712 components in an area of just 11mm x 7mm. It successfully achieved the world’s first fully programmable optical artificial atomic lattice. The researchers also experimentally validated multiple topological phenomena on a single-chip platform, including dynamic topological phase transitions, multi-lattice topological insulators, statistical topological robustness, and Anderson topological insulators.

Has the new semiconductor manufacturing equipment capable of rivaling ASML’s EUV lithography machines been shipped? Canon has announced that it will deliver its latest lithography platform, the FPA-1200NZ2C nanoimprint lithography (NIL) system for semiconductor manufacturing, to the Texas Institute for Electronics (TIE), a semiconductor consortium based in Texas, according to its press release.

It is worth noting that in October, 2023, the Japanese tech giant became the first company in the world to commercialize a semiconductor manufacturing system utilizing NIL technology, which creates circuit patterns using a different approach than traditional projection exposure technology, the press release notes. Now it has officially sealed the deal with a new client.

Canon states that with reduced power consumption and cost, NIL lithography equipment enables patterning with a minimum linewidth of 14 nm, equivalent to the 5 nm node that is required to produce most advanced logic semiconductors currently available. In addition to producing 5 nm logic chips, with further improvements, it is expected to be capable of manufacturing 2 nm products as well.

Citing an interview with Kazunori Iwamoto, Deputy General Manager of Canon’s Optical Equipment Division by Nikkei, a report by MoneyDJ notes that Canon aims to sell “a dozen units each year within 3 to 5 years”.

According to Canon’s explanation, in contrast to conventional photolithography equipment, which transfers a circuit pattern by projecting it onto the resist coated wafer, the new product does it by pressing a mask imprinted with the circuit pattern into the resist on the wafer like a stamp.

Because its circuit pattern transfer process does not go through an optical mechanism, fine circuit patterns on the mask can be faithfully reproduced on the wafer.

According to MoneyDJ, Canon has been collaborating with Japan’s major mask manufacturers, Dai Nippon Printing (DNP) and Kioxia, which was still Toshiba’s subsidiary at that time, to develop NIL technology for the past decade.

Citing Canon CEO Fujio Mitarai’s previous remarks with the Japan Times in 2023, MoneyDJ notes that Canon’s NIL technology provides small semiconductor manufacturers with the opportunity to produce advanced chips that are currently dominated by large corporations, with the price probably be “one digit less” than ASML’s extreme ultraviolet (EUV) lithography systems.

According to Mitarai, the power consumption of NIL equipment is only one-tenth that of EUV machines. While NIL may be difficult to replace EUV, he believes it will create new opportunities and demand, and many customers have already expressed interest.

Read more

• [News] Canon’s Nano-imprint Lithography Reduces Production Costs for Advanced Processes, Narrowing the Gap with ASML

(Photo credit: Canon)

The wild journey of Intel has yet to end, as tech giants have been approaching the company for potential acquisitions. In addition to Qualcomm, UK-based Arm is also said to inquire the possibility of acquiring the struggling chipmaker’s product division, according to the latest report by Bloomberg.

However, the report notes that Arm was informed by Intel that the division is not for sale, according to a source familiar with the situation.

Around mid-September, Intel settled down plans for restructuring after the board meeting, and revealed schemes to transform its foundry business into an independent unit with its own board. The strategy will allow its foundry business to explore independent sources of funding.

In April, Intel disclosed the financials for the foundry business for the first time, with an operating loss of USD 7 billion in 2023, a previous report by CNBC stated.

Arm, according to Bloomberg, showed little interest in Intel’s manufacturing operations. Instead, it reportedly expressed the intention to acquire Intel’s product division, which sells chips for PCs, servers, and networking equipment, though the request was turned down afterwards.

The move did make sense. With an 88% stake owned by SoftBank, Arm generates a significant portion of its revenue from selling chip designs to smartphone-related clients, including Qualcomm, Samsung and Amazon.

According to Bloomberg, Arm CEO Rene Haas targets to gain a foothold in various applications, such as personal computers and servers, in which Intel still takes a lead. A report by Reuters in June notes that Haas aims to capture 50% of PC market in five years.

If the company were to partner with Intel, it would reportedly enhance its market reach, while accelerate the shift toward selling more of its own products, Bloomberg observes.

Unlike Intel, which remains a bystander in the AI boom, Arm is considered to be a main beneficiary of the wave. After being acquired by Japan’s SoftBank in 2016 in a USD 32 billion deal, it went public in September, 2023, on Nasdaq, with a market valuation around USD 54 billion. A year after, its stock price has nearly tripled, with a market value exceeding USD 150 billion.

Representatives for both Arm and Intel declined to comment, Bloomberg notes.

On the other hand, another report by Financial Times, cited by MoneyDJ, reveals that Intel and the U.S. government are on track to finalize the USD 8.5 billion subsidy in direct funding under the CHIPS Act by the end of this year.

According to the reports, the two parties are working to complete the technical negotiations that have been ongoing for several months, while Intel is also undertaking large-scale cost-cutting measures. An insider familiar with Intel indicated that it wouldn’t be surprising if the negotiation results were announced around the upcoming presidential election.

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• [News] A Quick Roundup of Intel’s Five Core Businesses: Key Moves to Watch Next
• [News] Update on Potential Investors of Intel: Apollo Rumored in; Broadcom Temporarily out

(Photo credit: ARM)