According to a report from Nikkei News, under the decisive leadership of late Chairman Lee Kun-hee, South Korean company Samsung Electronics had continuously grown and expanded. However, as per the same report, with current leadership showing reluctance to take risks, Samsung has fallen behind competitors like Apple and TSMC.

Under the leadership of late Chairman Lee Kun-hee, Samsung consistently adjusted its product portfolio and reorganized its businesses, becoming a global leader in areas such as TVs, chips, displays, and mobile phones during the 2000s. However, in the decade, Samsung’s revenue and operating profit have remained largely flat, highlighting internal structural issues and a lack of reform.

Reportedly, a Samsung researcher proposed a plan to enhance chip production yield but was told by the supervisor that the proposal cannot be approved without prior examples.

The researcher explained that the reason pursuing this idea specifically is because there were no precedents to follow. Additionally, despite receiving top compensation at Samsung, the same researcher has claimed to be unable to pursue its desired work in recent years.

Most senior managers at Samsung are hired on an annual basis, and those who fail to produce results quickly will not be renewed. In this cutthroat environment, managers urge subordinates to deliver results quickly, leaving engineers with little time to dedicate to research and development projects.

A South Korean engineer who transitioned from Samsung to SK Hynix expressed that compared to Samsung’s elite culture that does not tolerate failure, SK Hynix’s corporate culture encourages employees on the front lines to face new challenges. They emphasized that SK Hynix can’t compete with Samsung without actively adopting new ideas.

Reportedly, this organizational culture at SK Hynix has yielded results in the high-bandwidth memory (HBM) market, with close ties to NVIDIA, surpassing Samsung’s advantages. Samsung has held the top spot in the global DRAM market for over 30 years but faced setbacks due to misjudging the prospects of AI.

Per TrendForce’s data, the three major HBM manufacturers held market shares are as follows: In 2023, SK Hynix and Samsung each held around 47.5%, while Micron’s share was roughly 5%. Still, forecasts indicate that SK Hynix’s market share in 2024 will increase to 52.5%, while Samsung’s will decrease to 42.4%.

Samsung’s declining competitiveness extends beyond memory. The company’s smartphone shipments led globally for over a decade but were surpassed by Apple last year. The reduction in Samsung’s smartphone shipments has also affected the sales of Samsung products used in phones, such as chips and displays.

On the other hand, Samsung set a goal in 2019 to become a global leader in system chips by 2030, but it has consistently lagged behind TSMC. Additionally, with the U.S. government seeking to bring chip manufacturing back to American soil, Intel is also entering the foundry business, putting Samsung under pressure from both TSMC and Intel.

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.

Read more

• [News] Samsung Reportedly Commits to Advanced Packaging, Targets Over USD100 Million in Related Revenue This Year
• [News] Samsung Reportedly Establishes New HBM Team, Looking to Improve AI Chip Yield

(Photo credit: Samsung)

Weak demand in mature process has triggered another wave of foundries’ price reductions. According to a report from Economic Daily News citing industry sources, some foundries have been continuously adjusting their quotes for mature process downward by single-digit percentages (4% to 6%) this quarter.

With mature process production capacity continuing to expand in China, it is reportedly estimated that prices may decrease further in the second quarter, leading to a cumulative reduction of around 10% for the first half of the year.

Overview of Foundries’ Price Reductions in Mature Process

According to the same report citing sources, IC design companies that previously tape out to Chinese foundries primarily focused on driver ICs. However, recently, some power management IC companies have gradually increased orders to Chinese foundries. Currently, the price difference between foundry services in Taiwan and China can be as high as 20% to 30%.

Regarding this wave of price reductions in mature process, an unnamed sources from the IC design industry cited by the report disclosed that the price reduction for Taiwanese foundries is at least in the low single-digit percentage range (1% to 3%), while for Chinese foundries, it is in the mid-single-digit percentage range (4% to 6%). If the order volume is large, prices can be negotiated even lower, or different discount methods may be available.

Reportedly, as Chinese foundries continue to increase their production capacity for mature process, supported by subsidies from the Chinese government, they maintain considerable flexibility in pricing strategies. As long as customers are willing to provide a certain quantity of orders, prices above the variable costs can be negotiated. Therefore, there is indeed room for further price reductions in the second quarter.

Regarding mature process, IC design companies cited in the report mention that the high-demand 28-nanometer process still faces supply shortages and may even see price increases. However, for the 40-nanometer and 55-nanometer processes, where the increase in production capacity outpaces the return of demand, price reductions are essentially the only option.

With China’s significant investment in mature nodes, it is positioned at a time when the global chip industry is poised for recovery. According to a recent TrendForce’s data, China currently has 44 operational fabs, with an additional 22 under construction. By the end of 2024, 32 Chinese fabs will expand their capacity for 28-nanometer and older mature chips.

TrendForce predicts that by 2027, China’s share of mature process capacity in the global market will increase from 31% in 2023 to 39%, with further growth potential if equipment procurement progresses smoothly.

However, compared to the proactive pricing strategies adopted by Chinese foundries, Taiwanese foundries have been relatively firm in their pricing.

For example, TSMC emphasizes that while it has faced significant pricing pressure from counterparts in China recently, the company is not prepared to engage in a price war. Instead, it anticipates seizing opportunities to attract orders from European and American clients. TSMC aims for moderate growth this year.

Regarding IC pricing, IC design companies cited by the report acknowledge that although their IC production costs have decreased, customers also demand price reductions. Caught between customers and foundries, both of which are larger in scale than IC design companies, it is difficult to predict how well operations will perform this year amidst ongoing challenges.

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• [News] China’s ICs Imports Decrease in 2023, Chinese Manufacturers Focus on Mature Processes

(Photo credit: TSMC)

2020 was undoubtedly a milestone year in the development of TSMC, the leading semiconductor foundry. According to a report from TechNews, TSMC’s global expansion has reached locations in China, the United States, Japan, and Germany, solidifying its goal of being a “long-term and trustworthy provider of technology and capacity.”

On February 24th, TSMC will hold an opening ceremony for the Kumamoto plant, which is scheduled to commence production by the end of the year. With the opening of the Kumamoto plant, let’s review TSMC’s global expansion plan:

Arizona, United States

In May 2020, TSMC officially announced the selection of Arizona, United States, as the location for constructing an advanced process fab.

Initially planned to invest USD 12 billion, the facility aims to build a N5 process fab with a monthly capacity of 20,000 wafers. Construction was scheduled to commence in 2021, with mass production slated to begin by the end of 2024, creating approximately 1,600 job opportunities in the local area. Subsequently, in 2022, TSMC announced plans to start N4 advanced process production at the Arizona fab to meet market demands.

In December 2022, the second phase of construction began at the fab in Arizona, United States. It is expected to commence production using N3 process technology by 2026. The total investment for both phases amounts to approximately USD 40 billion, creating 4,500 jobs opportunities at TSMC.

Upon completion of both phases, the combined annual capacity will exceed 600,000 wafers, with the market value of end products estimated to exceed USD 40 billion. This project ranks as one of the largest foreign direct investment projects in US history.

However, due to the delay in the first phase’s production timeline from the end of 2024 to the first half of 2025, the production schedule for the second phase will also be postponed to start after 2027.

Kumamoto, Japan

In October 2021, TSMC, in collaboration with its customer Sony Group’s wholly-owned subsidiary, Sony Semiconductor Solutions, announced the establishment of a subsidiary called Japan Advanced Semiconductor Manufacturing (JASM) in Kumamoto, Japan. Sony Semiconductor Solutions plans to invest approximately USD 500 million to acquire up to 20% of the shares of JASM.

Following this, Denso, a major Japanese automotive components manufacturer, also announced its investment in JASM. TSMC further increased its investment in the Kumamoto plant, raising the investment amount to nearly JPY 1 trillion.

It plans to introduce 12/16-nanometer processes in addition to the originally planned 22/28-nanometer processes, with a monthly capacity reaching 55,000 wafers. This project has received commitments of support from the Japanese government, with an expected subsidy of approximately JPY 476 billion.

It was previously rumored that one of the shareholders of JASM, Sony Semiconductor, was urged by its customer, Apple, to expedite the production of image sensors (CIS) at the Kumamoto plant. Consequently, trial production began even before the opening of the Kumamoto plant. However, TSMC responded that the production timeline remains according to plan and is scheduled to commence before the end of 2024.

Recently, TSMC announced a new project in collaboration with its Japanese partners Sony Semiconductor, Denso Corporation, and Toyota Motor Corporation to invest in JASM and construct a second fab, scheduled to commence operations by the end of 2027.

TSMC stated that in response to customer demand, construction of the second JASM fab in Japan is slated to begin by the end of 2024. The expansion of production capacity is also expected to optimize the overall cost structure and supply chain efficiency of JASM.

In the future, the two fabs under JASM will enable a total monthly production capacity of over 100,000 12-inch wafers, providing 40-nanometer, 22/28-nanometer, 12/16-nanometer, and 6/7-nanometer processes for automotive, industrial, consumer, and high-performance computing (HPC) applications.

Capacity planning may be adjusted according to customer demand, with the Kumamoto plant directly creating a total of over 3,400 high-tech job opportunities. Through the investment, TSMC, Sony Semiconductor, Denso Corporation, and Toyota Motor Corporation hold approximately 86.5%, 6.0%, 5.5%, and 2.0% of the JASM shares, respectively.

Dresden, Germany

In August 2023, TSMC, along with Robert Bosch GmbH, Infineon Technologies AG, and NXP Semiconductors N.V., jointly announced plans to invest in the European Semiconductor Manufacturing Company (ESMC) located in Dresden, Germany, to provide advanced semiconductor manufacturing services.

TSMC stated that the ESMC represents a significant step forward in the construction of a 12-inch fab to support the future capacity demands in the rapidly growing automotive and industrial markets. The final investment decision is subject to confirmation of government subsidies.

This project is developed within the framework of the European Chips Act. Following approval by regulatory authorities and meeting other conditions, TSMC will hold a 70% stake in the joint venture, while Bosch, Infineon, and NXP will each hold a 10% stake. The fab will be operated by TSMC.

TSMC emphasized that the fab planned for this project is expected to utilize TSMC’s 28/22-nanometer Complementary Metal-Oxide-Semiconductor (CMOS) technology and 16/12-nanometer FinFET processes, with a monthly capacity of approximately 40,000 12-inch wafers.

Through advanced FinFET technology, the aim is to further strengthen the semiconductor manufacturing ecosystem in Europe and create approximately 2,000 direct high-tech job opportunities. ESMC aims to commence construction of the fab in the second half of 2024, with production slated to begin by the end of 2027.

Continuing Advancements in Advanced Processes in Taiwan

In addition to its overseas expansions, TSMC continues to advance its most cutting-edge processes and advanced packaging technologies in Taiwan.

Given the strong demand for N3 process technology over the years, TSMC is expanding the N3 process capacity at its Tainan Science Park. Additionally, in preparation for the commencement of mass production of N2 process technology in 2025, TSMC plans to establish multi-stage N2 process technology capacity in the science parks of Hsinchu and Kaohsiung.

In Hsinchu’s Baoshan area, the first phase has been completed, and TSMC’s Global R&D Center has been in use since 2023. Baoshan Phase Two will serve as the base for TSMC’s N2 process technology.

Additionally, TSMC plans to construct two 2-nanometer advanced process fabs in Kaohsiung. The related land pollution remediation projects are expected to be completed by the end of 2024.

Finally, regarding the urban planning amendment for the expansion of the Central Taiwan Science Park Phase II, which concerns TSMC’s layout for constructing 2-nanometer fabs, TSMC also indicated that the review progress by the Taichung Science Park Administration is proceeding as scheduled.

This development will allow the land in the Central Taiwan Science Park to be handed over to TSMC for use as early as 2024, enabling subsequent commencement of the construction of the fabs.

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• [News] Intel Foundry Unveils its Expanded Process Roadmap for AI Era at Direct Connect 2024 Event
• Strategic Collaboration Between Intel and UMC to Optimize FinFET Foundry Market with Existing Resources, Says TrendForce

(Photo credit: Intel)

On February 21st, Intel Foundry Direct Connect 2024 took place in San Jose, USA. During the conference, Intel announced the launch of Intel Foundry, a system-level foundry tailored for the AI era. They unveiled seven new process nodes beyond 2024, including the next-generation Intel 14A and 14A-E processes, which utilize High-NA EUV equipment.

In the reconstruction of Intel, Gelsinger had also articulated a vision to establish a world-class foundry and become a major chip capacity provider in the United States and Europe. Now, three years later, this vision is becoming a reality.

The newly introduced Intel Foundry is a rebranded and restructured organizational model. Gelsinger emphasizes that Intel is not merely fixing a company but “establishing two vibrant new organisations”: Intel Foundry and Intel Products. Intel Foundry is dedicated to serving both internal and external customers on a large scale, establishing a supply chain to ensure capacity.

Gelsinger stated that Intel Foundry is striving to become the world’s second-largest foundry by 2030. According to TrendForce’s data statistics for the third quarter of 2023, the world’s top three foundries were TSMC, Samsung, and GlobalFoundries, with Intel Foundry Services (IFS) ranking ninth at the time.

• Process Innovation

During the conference, Intel expanded its process technology roadmap, introducing the evolution versions of Intel 14A and several specialized nodes.

Intel also confirmed that its “Four Years, Five Process Nodes” roadmap is progressing steadily, and it will be the first to offer backside power delivery solutions in the industry. Intel expects to regain process leadership by 2025 with the Intel 18A process node.

The new roadmap includes evolved versions of Intel 3, Intel 18A, and Intel 14A technologies. For instance, Intel 3-T is optimized for 3D advanced packaging designs through silicon via technology and is expected to be production-ready soon.

Intel also highlighted its progress in mature process nodes, such as the newly announced 12-nanometer node developed in collaboration with UMC in January.

Regarding this collaboration, TrendForce believes that this partnership, which leverages UMC’s diversified technological services and Intel’s existing factory facilities for joint operation, not only aids Intel in transitioning from an IDM to a foundry business model but also brings a wealth of operational experience and enhances manufacturing flexibility.

Intel’s foundry plans to introduce a new node every two years and evolve node versions along the way, helping customers improve their products through Intel’s leading process technology.

Source: Intel

Additionally, Intel Foundry announced the addition of FCBGA 2D+ in the technical portfolio of Intel Foundry Advanced System Packaging and Testing (Intel Foundry ASAT). This combination will include FCBGA 2D, EMIB, Foveros, and Foveros Direct technologies.

• Microsoft Becomes Intel’s 18A New Client

Intel’s client have reportedly expressed support for Intel’s systemic foundry services. Satya Nadella, Chairman and CEO of Microsoft, announced during the Intel Foundry Direct Connect conference that Microsoft plans to utilize Intel’s 18A process to manufacture a chip designed by the company.

Satya Nadella stated, “We are in the midst of a very exciting platform shift that will fundamentally transform productivity for every individual organization and the entire industry.”

Nadella further mentioned, “To achieve this vision, we need a reliable supply of the most advanced, high-performance and high-quality semiconductors. That’s why we are so excited to work with Intel Foundry, and why we have chosen a chip design that we plan to produce on Intel 18A process.”

Intel Foundry has amassed a substantial number of client design cases across various processes, including Intel 18A, Intel 16, and Intel 3, as well as Intel Foundry ASAT, which encompasses advanced packaging.

Overall, the anticipated lifetime deal value for Intel Foundry in wafer manufacturing and advanced packaging surpasses USD 15 billion.

• IP and EDA Suppliers

IP (Intellectual Property) and EDA (Electronic Design Automation) partners Synopsys, Cadence, Siemens, Ansys, Lorentz, and Keysight have announced that tools and IP are ready to help foundry customers accelerate advanced chip designs based on Intel’s 18A process, featuring the industry-first backside power delivery solution. Furthermore, these partners have confirmed the availability of their EDA and IP solutions across various Intel node families.

Additionally, several suppliers have announced plans to collaborate on assembly technologies and design flows for Intel’s EMIB 2.5D packaging technology. These EDA solutions will ensure Intel can swiftly develop and deliver advanced packaging solutions to its customers.

Intel has also unveiled the “Emerging Business Initiative” (EBI), which involves collaboration with Arm to provide advanced foundry services for System-on-Chip (SoCs) based on the Arm architecture. This initiative aims to support startups in developing technology based on the Arm architecture by offering essential IP, manufacturing support, and financial assistance. It provides an important opportunity for both Arm and Intel to foster innovation and development in the industry.

• Systematic Foundry

Intel’s system-level foundry model offers optimization from factory networks to software. Intel and its ecosystem provide continuously improving technologies, reference designs, and new standards, enabling customers to innovate at the system level.

Stuart Pann, Senior Vice President of Intel Foundry, stated, “We are offering a world-class foundry, delivered from a resilient, more sustainable and secure source of supply, and complemented by unparalleled systems of chips capabilities. Bringing these strengths together gives customers everything they need to engineer and deliver solutions for the most demanding applications.”

• Global, Resilient, More Sustainable, and Trustworthy Systematic Foundry

In terms of sustainability, Intel aims to be the leading foundry in the industry. In 2023, Intel’s global factories achieved a preliminary estimate of a 99% renewable energy usage rate.

At the Intel Foundry Direct Connect conference, Intel reiterated its commitment to reaching 100% renewable energy usage, water positive status, and zero landfill waste by 2030. Additionally, Intel emphasized its commitment to achieving net-zero Scope 1 and Scope 2 greenhouse gas (GHG) emissions by 2040 and net-zero upstream emissions of Scope 3 GHG by 2050.

Read more

• Strategic Collaboration Between Intel and UMC to Optimize FinFET Foundry Market with Existing Resources, Says TrendForce
• [News] NVIDIA Expands Advanced Packaging Supply Chain with Intel’s Inclusion, Diverting Orders from TSMC

(Photo credit: Intel)

The latest financial reports for 4Q23 from six leading global semiconductor foundries signal optimism for the semiconductor industry’s recovery in 2024.

In 2023, the semiconductor sector underwent significant adjustments. As the industry worked towards normalizing its inventory levels amidst ongoing high inflation risks, the short-term market outlook remained unclear. #TrendForce has analyzed the latest financials from these six foundries to provide insights into what 2024 might hold for the industry.

TSMC

TSMC reported a slight YoY revenue decrease of 1.5% to US$19.62 billion in 4Q23, though it saw a 13.6% increase from the previous quarter. With an anticipated CAGR of 15–20%, TSMC’s 2024 capital expenditures are expected to be between $28 billion and $32 billion.

The company forecasts more than 10% growth in the semiconductor market (excluding memory) and around 20% growth in the wafer fabrication sector for 2024.

Samsung Electronics

Samsung Electronics’ 4Q23 consolidated revenue fell 3.81% YoY to ₩67.78 trillion. Its DS division reported revenues of ₩21.69 trillion but faced an operating loss of ₩2.18 trillion.

Despite the challenges, Samsung is focusing on advancing 3nm and 2nm GAA process technologies, expecting a revival in smartphone and PC demand in 2024 to rejuvenate the foundry market to its former prosperity.

Intel

Intel’s 4Q23 earnings saw a 10% revenue increase to $15.406 billion, with its foundry business, Intel Foundry Services, jumping 63% to $291 million in revenue.

Despite seasonal demand slumps in its core PC and server segments, Intel’s AI chips have accumulated $2 billion in orders, with sales forecast to improve in the second half of the year.

Global Foundries

GlobalFoundries reported a 12% revenue drop in 4Q23 to $1.85 billion, with a net income of $356 million. The company anticipates 1Q24 revenues to range between $1.5 billion and $1.54 billion, primarily due to the current industry-wide chip inventory adjustments.

Nevertheless, GlobalFoundries expects its 2023 automotive market revenue to surpass $1 billion, forecasting continued growth into 2024.

UMC

UMC disclosed a 19% YoY decrease in 4Q23 revenues to $1.79 billion. The company cited an extended semiconductor industry inventory adjustment period due to a challenging global economic climate, leading to a slight reduction in wafer shipments and capacity utilization. UMC expects a gradual uptick in wafer demand through 1Q24.

SMIC

SMIC reported a modest increase in 4Q23 revenues to $1.68 billion, with a 0-2% growth projection for 1Q24. Despite last year’s cyclical lows and competitive pressures, SMIC anticipates its 2024 revenue growth will at least match the industry average, with capital expenditures mirroring those of 2023.

TrendForce had earlier forecasted a delayed recovery in the end-market by the fourth quarter of 2023. However, they noted that inventory stocking by Chinese Android firms for the year-end sales rush—particularly for mid-to-low-end 5G and 4G smartphone application processors—alongside the influence of new Apple iPhone releases, might surpass initial expectations.

This indicates that the revenues of the world’s top ten semiconductor foundries are poised for growth, potentially surpassing the growth rates observed in the third quarter.

(Photo credit: Samsung)