Due to the impact of international situations and uncontrollable factors, the global semiconductor supply chain is undergoing a shift. According to a report from WeChat account DRAMeXchange, the Southeast Asian region, with its advantages in labor and development conditions, has become the preferred location for major global companies. Countries such as Malaysia, India, and Singapore have been targeted by many manufacturers, who are rapidly setting up operations to secure a foothold.

On June 5, Taiwan-based contract chipmaker Vanguard International Semiconductor Corp. (VIS) announced to team up with Netherlands-based semiconductor supplier NXP Semiconductors N.V. to set up a joint venture, VisionPower Semiconductor Manufacturing Company (VSMC), and build a 12-inch fab in Singapore.

The fab will have an investment of approximately USD 7.8 billion. VIS will invest USD 2.4 billion and take a 60% stake, with NXP to invest USD 1.6 billion and a 40% share. The fab will be operated by VIS.

Besides, both parties have promised to allocate a total of USD 1.9 billion of long-term capacity security deposit and usage fees, with the remaining funds (Loans included) to be provided by third parties.

VSMC will run as an independent wafer manufacturing service provider, offering a certain proportion of its capacity to both partners. By 2029, the fab’s monthly 12-inch wafer capacity is expected to reach 55,000 pieces, which is projected to create around 1,500 jobs in Singapore. Following the successful mass production of the first fab, both sides will consider building a second one.

This fab will use 130nm to 40nm technologies to produce mixed-signal, power management, and analog products for markets including automotive, industrial, consumer electronics, and mobile terminals. Relevant technology licensing and transfers are expected to come from TSMC. VSMC will commence construction of the first fab in 2H24 , pending approval from relevant regulatory authorities, and it is expected to start mass production in 2027.

Currently, VIS has five 8-inch fabs, respectively located in Taiwan and Singapore. Three of them are based in Hsinchu (Taiwan) and one in Taoyuan (Taiwan). In 2023, the average monthly capacity was about 279,000 8-inch wafers.

On this collaboration with NXP, VIS Chairman Fang Leuh stated that both parties wish to own a 12-inch fab as they currently only have 8-inch fabs. More than half of the new fab’s capacity has already reserved upon long-term commitments from customers, including NXP. He also noted that setting up a fab in Singapore offers several advantages.

Since VIS is held by TSMC, industry experts believe that the establishment of the new VIS fab is driven in part by the need to meet the demands of TSMC’s mature process customers. Mature processes above 90nm account for a small single-digit percentage of TSMC’s revenue but retaining all customers is also necessary to match orders from various manufacturing capacities.

As such, VIS will take over TSMC’s customer orders. Influenced by multiple factors, the order transfer effect is expanding, and VIS has recently received new orders from several customers, like Qualcomm and MPS. That means order transfer effect in 2H24 has become evident.

It is worth noting that Singapore is being seen as a critical hub of the Asian semiconductor industry. It currently boasts a complete semiconductor industry chain, covering design, manufacturing, packaging, test, equipment, materials, and distribution, with more than 300 semiconductor-related companies already established.

According to another report from WeChat account DRAMeXchange, multitudes of semiconductor companies, including Texas Instruments, STMicroelectronics, Infineon, Micron, GlobalFoundries, TSMC, UMC, VIS, and ASE, have set up branches or expanded production in Singapore.

Read more

• [News] TSMC Affiliate VIS and NXP to Invest USD 7.8 Billion for 12-Inch Fab in Singapore, Expected Mass Production by 2027
• Taiwanese Chipmakers Expand Overseas to Capitalize on Geopolitical Shifts and De-Sinicization Benefits, Says TrendForce

(Photo credit: VIS)

According to a report from Reuters, Malaysian Prime Minister Anwar Ibrahim announced the National Semiconductor Strategy on May 28th, which includes providing at least USD 5.3 billion in financial support and training 60,000 semiconductor engineers, aiming to make Malaysia a global chip hub.

Over the next 5 to 10 years, at least MYR 25 billion (roughly USD 5.33 billion) will be allocated to cultivate chip talent and strengthen local businesses, with funding from Malaysia’s sovereign wealth funds such as Khazanah Nasional.

As per the semiconductor strategy, Malaysia plans to train 60,000 talents covering all aspects of chip manufacturing, including IC design, packaging, and testing. Universities and enterprises will participate in the training, and the government will also support local engineers in engaging in chip design IP.

Prime Minister Anwar revealed that Malaysia intends to establish at least 10 local  companies in design and advanced packaging for chips. If Malaysia wants to attract investment from global chip giants, cultivating more local semiconductor talent is crucial, especially as the country aims to enhance its advanced chip manufacturing capabilities.

The Malaysian government aims to attract at least MYR 500 billion (roughly USD 106.5 billion) in funds through domestic direct investment (DDI) and foreign direct investment (FDI) into fields such as chip design, advanced packaging, and manufacturing equipment.

Amidst the U.S.-China rivalry and other geopolitical tensions, global companies are seeking to diversify their supply chains. Facing competition between the U.S. and China, Malaysia is reportedly keen to maintain a neutral position in the semiconductor supply chain landscape.

Malaysia began engaging in the semiconductor industry over 50 years ago. According to the Malaysian Investment Development Authority (MIDA), the country currently provides 13% of global testing and packaging.

In December 2021, U.S. chip giant Intel announced an investment of over USD 7 billion to build a chip packaging and testing plant in Malaysia, expected to start production this year. Last year, German semiconductor giant Infineon announced an investment of EUR 5 billion to establish the world’s largest 200mm silicon carbide power chip plant in Malaysia over the next five years.

Read more

• [News] Overseas Expansion of Testing and Packaging Facilities – Japan, Malaysia, and Singapore Emerge as Top Choices
• [News] Nikkei Highlights Japan’s Chip Subsidies Exceeding GDP Ratio of US, Germany, and France

(Photo credit: ASE Group)

To enhance the supply chain capabilities in Europe and strengthen outsourced backend manufacturing operations in the region, major automotive and power semiconductor manufacturer Infineon announced an expanded partnership with semiconductor packaging and testing services provider Amkor Techology. According to the official press release of Infineon, the two companies will establish a new packaging and testing center in Porto, Portugal, with operations expected to commence in the first half of 2025.

Through this agreement, Infineon and Amkor will further strengthen their partnership and expand the semiconductor assembly and testing business model while enhancing the resilience of the European semiconductor supply chain.

Amkor’s facility in Porto, Portugal specializes in semiconductor packaging, assembly, and testing. As part of the reported expansion, cleanroom production lines will be established. Infineon is expected to provide product design and development expertise, as Infineon already operates a large service center in Porto with over 600 employees.

Infineon noted that the establishment of this production center will allow for further expansion of business in Portugal and reinforce the importance of Europe as a semiconductor manufacturing base. This initiative is anticipated to enhance regional manufacturing flexibility and supply security for customers.

On another front, Infineon recently announced a memorandum of understanding with HD Korea Shipbuilding & Offshore Engineering (HD KSOE), a company dedicated to developing environmentally friendly and low-carbon shipping technologies using electricity and hydrogen power. Together, they will leverage power semiconductor technology to jointly develop emerging marine engines and electrification of mechanical systems, accelerating the realization of low-carbon shipping.

In this collaboration, Infineon will provide technical support and guidance to HD KSOE in terms of power semiconductor modules and system solutions. Infineon will also share information on semiconductor trends relevant to maritime applications. The goal of HD KSOE is to enhance the reliability and performance of ship propulsion and drive technologies through this partnership, promoting environmental sustainability through maritime electrification initiatives.

(Photo credit: Infineon)

In recent years, the tech industry has pivoted around two keywords, low carbonization and digitization, marking significant areas of growth. Semiconductor companies are eagerly investing and acquiring ventures, particularly in response to the emerging new energy industry chain driven by the low-carbon trend.

At the recent Infineon OktoberTech™ event, David Poon, Senior Vice President and President of Greater China Region at Infineon, outlined the company’s ambitious goals. By the end of 2030, Infineon aims to secure a 30% market share in the SiC market, targeting an annual revenue exceeding USD 7.6 billion. As per a report from 21jingji, Infineon also holds a positive outlook on the overall market growth of third-generation semiconductors.

The current landscape sees widespread application of third-generation semiconductors like SiC and GaN in new energy vehicles, charging stations, energy storage, and other products. Major industry players are actively entering this dynamic market. As a dominant force in power semiconductors, Infineon not only announced SiC expansion plans earlier this year but also acquired GaN Systems in October.

Speaking of recent GaN acquisition, Poon expressed during an interview that the collaboration between the two companies would significantly propel Infineon’s development. They believe that GaN has reached a turning point, extending its applications beyond chargers to encompass diverse fields like energy storage, heralding a phase of substantial growth. A new round of competition is unfolding within the realms of the new energy field and the industrial ecosystem.

New Energy and Digitization as Growth Drivers

In terms of performance, Infineon achieved remarkable double-digit growth in the past year. According to the full-year financial report for the 2023 fiscal year (ending September 30, 2023), the company’s revenue reached USD 17.868 billion marking a 15% YoY increase, while profits surged by 30% to USD 4.819 billion.

Jochen Hanebeck, CEO of Infineon, acknowledged the company’s record-breaking revenue and profits in the 2023 fiscal year, despite acknowledging the persisting challenges in the operating environment.

On one hand, there’s a persistent structural growth momentum in renewable energy, electric vehicles (particularly in China), and the micro controller sector within the automotive industry. On the other hand, demand for applications in consumer goods, communications, computing, and the IoT is currently experiencing a temporary lull. Infineon anticipates continued revenue growth in the 2024 fiscal year, although the pace of growth is expected to moderate. The company is actively responding to market conditions, seizing opportunities for structural growth.

The new energy and digitization markets emerge as the new growth engines targeted by leading semiconductor companies like Infineon. With China at the forefront of the industry’s new landscape, Infineon is keen on tapping into new opportunities in the Chinese market.

In an interview, Poon remarked, “Looking at low carbonization, firstly, the growth in new energy vehicles is substantial. According to data from the China Association of Automobile Manufacturers (CAAM), from January to September 2023, the production and sales of new energy vehicles reached 6.313 million and 6.278 million units, respectively, with YoY increases of 33.7% and 37.5%. The semiconductor value in an electric vehicle has increased by about USD 950 compared to a traditional fuel vehicle, making this a significant driving force.”

He further emphasized, “The amounts of domestic new energy vehicle shipments and exports are robust. Additionally, the proliferation of charging stations in the country indicates clear prospects for this market. In other areas of new energy, such as photovoltaics, wind power, and energy storage, these are also growth drivers we are closely monitoring.”

New energy vehicles and renewable energy have evolved into the foundational pillars of the burgeoning low-carbon mega-industry. Simultaneously, within the digitization market, Infineon offers solutions related to data centers. “Apart from data centers, in domains like smart factories, smart cities, and smart homes, we provide digitization and low-carbon solutions to enhance efficiency. Digitization serves as a significant driving force,” highlighted Poon.

SiC and GaN Operating in Tandem

In the current landscape of the new energy market, third-generation semiconductors such as SiC and GaN have gained significant traction. Taking the more mature development of SiC as an example, although it is still undergoing iterative development, it has found extensive applications in the automotive field, experiencing rapid growth.

TrendForce predicts that the SiC power component market in the automotive sector will witness substantial growth, from USD 1.09 billion in 2022 to USD 3.98 billion in 2026, with a compound annual growth rate of 38%.

Presently, SiC faces supply shortages, prompting major makers to scale up production. Infineon, for instance, has announced a substantial expansion of its Kulim wafer fab in Malaysia, aiming to establish the world’s largest 8-inch SiC power wafer fab. Poon noted that the first phase is slated to commence production in mid-next year, with the second phase scheduled for production in 2027. This expansion is driven by the broad market demand for SiC across applications like AI, automotive, and new energy photovoltaics.

As per TrendForce, the collective market size of SiC power components in 2023 reached USD 2.28 billion, witnessing a notable 41.4% YoY growth. Projections suggest that by 2026, the SiC power component market could reach an impressive USD 5.33 billion, with the automotive sector’s SiC power component market poised to surge to USD 3.94 billion.

Besides Infineon, major players like Wolfspeed and STMicroelectronics are actively bolstering their production capacities. In June this year, STMicroelectronics announced plans to establish an 8-inch SiC device manufacturing joint venture with Sanan Optoelectronic in China. The commencement of production is anticipated in the fourth quarter of 2025, with full completion scheduled for 2028, involving a total construction cost of approximately USD 3.2 billion. Wolfspeed, in collaboration with the German automotive giant ZF Group, not only established a joint innovation laboratory for SiC but is also in the process of constructing a SiC device factory in Germany.

According to TrendForce, The GaN market is primarily propelled by consumer electronics, with a core emphasis on fast charging. Other consumer applications include audio, wireless charging, power, and consumer products. However, many companies have already shifted their focus to industrial markets such as data centers, renewable energy, and the new energy vehicle market, with numerous companies persistently conducting R&D in this direction.”

Overall, semiconductor giants are strategically navigating both SiC and GaN, intensifying efforts in the realm of third-generation semiconductors and fortifying a more comprehensive industrial chain.
(Image: Infineon)

What started as a groundbreaking acquisition in the SiC/GaN third-generation semiconductor and power semiconductor sector came to a satisfying conclusion on October 24th.

In March 2023, the leading power semiconductor manufacturer, Infineon, announced its plan to acquire GaN Systems, a top Canadian producer of GaN chips, for $830 million. After over half a year of negotiations and regulatory approvals, the transaction officially closed on October 24, 2023. With this, GaN Systems is now officially part of Infineon, and the synergistic effect of this powerhouse alliance is set to make a significant impact.

Currently, Infineon boasts a workforce of 450 GaN technology experts and holds more than 350 GaN technology patents. GaN Systems, on the other hand, ranks among the world’s top five GaN power device manufacturers. According to TrendForce’s “2023 GaN Power Device Market Analysis Report-Part 1,” GaN Systems held a 12% market share based on revenue in 2022, securing the fifth spot globally. In addition, GaN Systems made early inroads into the high-growth automotive power semiconductor market and secured orders from renowned automaker BMW.

From a technological, application, customer base, and market influence perspective, it’s evident that the acquisition of GaN Systems complements Infineon’s position in compound semiconductor and power semiconductor market. This collaboration creates synergies that significantly benefit Infineon.

As Infineon stated, this move further expands their leadership in the power semiconductor sector and substantially reduces the time to market for new products. Both companies complement each other in terms of intellectual property, a deep understanding of applications, and well-established customer project planning, providing a highly favorable environment for Infineon to meet the demands of various rapidly growing applications.

The landscape of the GaN power semiconductor market may undergo significant changes

In the future, the competition landscape within the entire compound semiconductor market, especially in the GaN power semiconductor sector, is likely to undergo significant changes, marking the onset of an integration phase in industry chain competition.

As for the GaN power component market, up until 2023, Infineon had not secured a position among the world’s top manufacturers. However, following the merger, Infineon is poised to join the top ranks. Based on 2022 data, TrendForce’s estimate indicate that the combined market share of both companies could reach 15%, on par with EPC’s 2022 market share of 15%, and there is a potential for surpassing it in the future.

For the compound semiconductor market, it’s worth noting that, in addition to acquiring GaN Systems this year, Infineon has been making further inroads into the GaN field. In simple terms, its involvement in the GaN power semiconductor market is continuously strengthening.

In May of this year, Infineon announced its participation in a collaborative European research project named “ALL2GaN,” joined by 45 partner organizations, with a project budget of €60 million. The project is focused on developing integrated GaN power designs from chips to modules, primarily catering to applications in telecommunications, data centers, and server facilities. Infineon leads the ALL2GaN project, with other participants including imec, a Belgian microelectronics research center, Nexperia, Ericsson, and other enterprises.

Through accumulating expertise from this project, Infineon’s influence in the European GaN power semiconductor field is expected to further enhance. In the Asian market, Infineon operates a factory in Malaysia, with a current focus on SiC (Silicon Carbide). GaN Systems has established offices in Shenzhen and Taiwan, demonstrating an increased commitment to the Asia-Pacific region.

GaN Systems has also reinforced its presence in the European and American markets. Firstly, its Canadian headquarters in Ottawa has undergone a threefold expansion. Secondly, GaN Systems has inaugurated a new design center in Dallas, Texas, gradually expanding its business scope in North America and Europe, while comprehensively advancing its global expansion plan.

Considering these developments, Infineon is poised to conduct its global operations more effectively, gaining a more influential role in the GaN power semiconductor market. This is expected to lead to a gradual increase in business scale and market share.

Furthermore, the collaboration between these two industry giants is set to catalyze the industrialization of GaN, particularly in high-power applications such as automotive and data centers. According to TrendForce’s estimates, the global GaN power component market is projected to grow from $180 million in 2022 to $1.33 billion by 2026, with a remarkable compound annual growth rate of 65%. With proactive efforts from industry leaders like Infineon and GaN Systems, power applications are poised to become the primary growth engine in the GaN domain, accelerating the overall expansion of the GaN market size.