In the Q2 earnings call today (July 18th), TSMC Chairman and CEO C.C. Wei introduced the concept of “Foundry 2.0,” redefining the foundry industry to further include sectors like packaging, testing, mask making, and others, the latest report by Technews noted.

C.C. Wei pointed out that under this new definition, TSMC’s foundry market share was 28% in 2023, and the foundry industry is expected to grow by 10% in 2024, while TSMC’s share will increase further. According to data from TrendForce, under the original definition of foundry, TSMC’s market share was 61.2%.

On the other hand, the semiconductor giant projects the entire semiconductor market, excluding memory, to grow by 10% in 2024.

TSMC’s CFO and spokesperson Wendell Huang explained that the reason for TSMC to propose “Foundry 2.0” is due to the involvement of IDM manufacturers in the foundry market, which has blurred the boundaries of the traditional foundry industry.

Moreover, C.C. Wei highlighted the strong demand for TSMC’s 3nm and 5nm processes. Thanks to the strong demand from AI and smartphones for advanced nodes, Wei believes that 2024 will be a strong year for TSMC. Meanwhile, the company also expects this year’s financial forecast and revenue to increase by 24-26% (mid-20%).

TSMC’s 3nm process accounted for 15% of wafer sales revenue in the second quarter of 2024, while 5nm and 7nm accounted for 35% and 17%, respectively. Overall, revenue from advanced processes (7nm and below) reached 67% of total wafer sales revenue for the quarter.

Read more

• [News] TSMC Projects 7.5% Q3 Revenue Growth, Adjusts Full-Year CAPEX Range
• [News] TSMC Reports Strong Q2 Financial Results, with 3nm Accounting for 15% of Shipments

(Photo credit: TSMC)

As reported by TechNews, a media partner of TrendForce, Southeast Asia and India, equipped with the advantages of demographic dividends, strategic geographic positioning, manufacturing capabilities, and rapidly growing economic markets, have undoubtedly emerged as the preferred destinations for the technology industry amidst the global supply chain transition prompted by geopolitical factors.

As supply chains actively seek production bases beyond China and governments introduce incentive programs and policy restrictions for localized supply, various Southeast Asian countries have become key hubs for different sectors. Vietnam has become a focal point for consumer electronics manufacturing such as laptops, watches, and headphones, while Thailand has become a preferred choice for automotive-related supply chains. Thailand and Malaysia host assembly bases for servers, and India is set to become a crucial hub for mobile phone production.

Apart from the movement of end-product assembling, the shift in the semiconductor supply chain has also garnered attention. With TSMC, Samsung, and Intel relocating wafer fabrication plants to the United States, Europe, and other regions, a significant cluster of semiconductor backend testing and packaging has been forming in Malaysia.

What Advantages Does Malaysia Offer to Attract Multinational Semiconductor Companies’ Investment, and What Is the Current Industry Landscape?

Firstly, Malaysia boasts higher education standards than neighboring countries. Among ASEAN nations, only Singapore and Malaysia employ the British legal system, providing a competitive edge for many companies’ location choices. Secondly, in terms of language proficiency, Malaysian citizens predominantly use English, Mandarin, and Malay, facilitating smooth communication with global enterprises.

Thirdly, Malaysia is home to two major ports—Port Klang and Port of Tanjung Pelepas—both ranked among the world’s top 15 ports, with substantial container handling capacity and global reach.

Lastly, the state of Penang stands as a semiconductor hub for Malaysia, having nurtured the semiconductor industry for several decades and holding a technological lead. Often referred to as the “Silicon Valley of the East,” Penang has primarily focused on producing chips for electronics, computers, and mobile phones. However, with the growing adoption of electric vehicles, the demand for automotive chips has surged. Concurrently, the green energy trend has propelled the need for solar panels and renewable energy sources. This optimistic outlook for the semiconductor industry has once again attracted numerous companies to establish facilities and expand production capacity.

Current State of Malaysia’s Semiconductor Industry

Looking at the recent dynamics of corporations over the past two years, the trend is evident that Malaysia is evolving into a center for semiconductor backend testing and packaging. Major global players have announced plans to establish or expand operations in Penang. Intel, for example, announced a $6.46 billion investment in Malaysia in 2021, focusing on advanced packaging capabilities in Penang and Kedah.

Texas Instruments declared its intent to construct semiconductor testing and packaging plants in Kuala Lumpur and Malacca, with a total investment of up to $2.7 billion. Infineon is investing $5.45 billion to expand existing facilities, producing silicon carbide and entering the electric vehicle sector. Bosch Group is investing $358 million in stages to strengthen its semiconductor supply chain position in Penang. ASE Technology Holding, also began construction on a new testing facility in Penang at the end of last year.

With the influx of semiconductor giants, Malaysia’s position in the semiconductor industry has become increasingly critical. The distinct production base trends, aligned with the strengths of various Southeast Asian countries, have become clear. The restructuring of supply chains and the transformation of production centers undoubtedly remain the focus and challenge for global companies.

(Photo credit: ASE)