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)

According to South Korean media The Elec’s report, due to strong demand from Chinese chip manufacturers and wafer foundries, the shortage of photomasks in the market has not eased, and it is anticipated that prices will rise in 2024.

The report notes that most photomask manufacturers, including Japan’s Toppan, DaiNippon Printing, and the U.S.’s Photronics, are currently operating at full capacity with a utilization rate of 100%. Some Chinese chip companies are even willing to pay additional fees to expedite delivery schedules.

In the field of integrated circuits, the function of a photomask is similar to the “film” in a traditional camera. With the collaboration of exposure and development processes in photolithography machines and photoresist, the pre-designed patterns on the photomask are transferred to the photoresist on the substrate, enabling mass production through image replication.

Photomasks play an indispensable role in the semiconductor chip manufacturing process, especially in advanced processes where more intricate circuit patterns require multiple layers of photomasks to aid production. For example, mature processes may require around 30 photomasks, while the latest advanced processes might demand as many as 70 to 80 photomasks to handle.

Currently, Chinese foundry giant SMIC employs Deep Ultraviolet (DUV) technology to produce 7nm chips. Compared to Extreme Ultraviolet (EUV), DUV requires more photomasks for the fabrication of multiple circuit patterns.

Toppan Printing, in its latest quarterly financial report covering July to September, anticipates a continual increase in demand for photomasks throughout 2023. DaiNippon Printing expressed agreement with this assessment in its half-year financial report for the period from April to September.

The graphic dimensions, precision, and manufacturing technology requirements of semiconductor photomasks continue to increase, with only a 3% domestication rate for high-end photomask versions in China. In the preparation of photomasks, the Chinese semiconductor photomask industry faces a situation where high-end equipment and materials are dominated by foreign manufacturers.

In the photomask industry chain, the upstream sector primarily involves equipment, substrates, light-blocking films, and chemical reagents; the midstream sector is photomask manufacturing, and the downstream sector includes chips, flat panel displays, touchscreens, circuit boards, and more.

The urgent demand for domestic substitutes for photomask versions is apparent, and the revenue scale of Chinese photomask manufacturers still has a considerable gap compared to leading overseas manufacturers.

(Photo credit: Toppan)