According to the news from ChinaTimes, the semiconductor market is experiencing a slowdown, with Taiwan’s three major mature process wafer foundries UMC, VIS, and PSMC all reporting reduced revenues in August. VIS and UMC both posted lower revenues compared to the previous month, while PSMC managed a slight 1.2% monthly increase in August. However, this increase still falls within this year’s relatively low range. Industry experts anticipate that the semiconductor industry will maintain a subdued market outlook in the latter half of this year, with a potential recovery likely delayed until the first half of the next year.

The semiconductor industry began its correction in the second half of last year. Initially, there was optimism for inventory adjustments to conclude within four quarters by the end of this year’s second quarter, anticipating a demand rebound in the latter half of the year. However, since the second quarter, semiconductor manufacturers have grown pessimistic due to slower downstream inventory depletion and weak end-user demand. This is reflected in third-quarter revenues for mature process wafer foundries, which are expected to remain flat or slightly decline based on August revenues. A robust recovery in the fourth quarter is unlikely, suggesting that industry-wide recovery is likely postponed until the first half of next year.

UMC saw consecutive monthly revenue growth from February to July. However, following five consecutive increases, the company experienced a slight decrease in revenue in August. TSMC previously stated in a conference that the current market recovery falls short of expectations, with an unclear outlook for wafer demand. It anticipates a 3~4% quarter-on-quarter decrease in wafer shipments in the third quarter, which aligns with the market’s expectations for a slight decline in August revenue.

UMC forecasts a 3~4% quarter-on-quarter decrease in wafer shipments in the third quarter, a 2% quarter-on-quarter increase in the average wafer price in USD, a low single-digit percentage decrease in the average gross margin, and an approximate 65% capacity utilization rate. Overall, industry insiders expect TSMC to face slight downward pressure on third-quarter revenue.

VIS reported July revenue reaching NT$3.596 billion, marking a new high for the first seven months of the year. However, its August revenue showed a decline, with a 2.23% month-on-month decrease to NT$3.516 billion. This is significantly different from the typical revenue growth momentum observed during the third-quarter peak season in previous years. Cumulative revenue for the first eight months of this year also decreased by 34.54% compared to the same period last year.

VIS anticipates a 4~6% quarter-on-quarter increase in wafer shipments in the third quarter, with a capacity utilization rate similar to that of the second quarter, around 60%. The average selling price (ASP) is expected to remain stable. However, due to increased production costs and depreciation expenses, the gross margin is estimated to decline to 25~27% in the third quarter, putting more pressure on profitability compared to revenue.

As for PSMC, although its August revenue saw a slight 1.2% month-on-month increase, the company has maintained around NTD 3.4 billion in monthly revenue from June to August, which is considered a low level compared to the second quarter when monthly revenue was approximately NTD 3.8 billion. The third quarter is expected to continue to exert downward pressure on revenue compared to the previous quarter. The company has also previously stated that it does not rule out the possibility of a quarterly loss in its core business during the third quarter.

(Source: https://www.chinatimes.com/newspapers/20230911000124-260202?chdtv)

According to a report by Taiwan’s Commercial Times, the semiconductor market is expected to slow down this year. PSMC Chairman Frank Huang stated that it is estimated that the current wave of semiconductor inventory clearance will not be completed until the end of the first quarter of next year, and the overall market conditions for next year are still not expected to rebound strongly.

When asked about the mature wafer fabs in mainland China aggressively capturing market share this year with low prices, Frank Huang emphasized that this was anticipated. He further stated that PSMC is planning to launch affordable AI chips primarily targeting the consumer market next year, completely differentiating them from Nvidia’s high-priced products. Given the large scale of the consumer market, he expressed optimism regarding future shipment growth.

Huang emphasized that PSMC’s planned AI chips with AI functionality are like miniature computers. Currently, international chip manufacturers offer AI chips with unit prices as high as $200,000, making them impossible for widespread adoption in the consumer market. Therefore, the AI chips PSMC plans to launch next year will have lower prices and will be specifically tailored for the massive consumer market. He gave examples, including affordable AI features being integrated into toys and household appliances. Toys, for instance, will be able to recognize their owners and engage in voice interactions.

Huang mentioned that, because they are targeting affordability and mass appeal, these AI chips will be produced using a 28-nanometer process and are expected to contribute to revenue through formal shipments next year. With a focus on the consumer market, Huang is optimistic about the future shipments and business contributions of these AI chips.

According to the news from Money UDN, amid a tough semiconductor market, once-stable long-term contracts for silicon wafer makers have turned uncertain. A major Taiwanese foundry seeks price cuts in upcoming contracts from a Japanese supplier. Intense negotiations are ongoing, potentially affecting industry dynamics and pricing strategies due to the Japanese suppliers’ pivotal role in the supply chain.

Market insiders suggest silicon wafer makers may resist price reductions due to their vital role in foundries. Reports hint at foundries’ challenges and the ripple effects on critical materials suppliers.

Globally, Japan’s Shin-Etsu and SUMCO are top silicon wafer suppliers, trailed by Taiwan’s GlobalWafers, Germany’s Siltronic, and South Korea’s SK Siltron. And Taiwan SUMCO joint venture with Formosa Plastics Group as “Formosa Sumco Technology”, and other companies like Wafer Works. With over 30% market share, Shin-Etsu leads, closely followed by SUMCO, combining for around 55% to 60% global share.

Taiwan’s foundries include TSMC, UMC, VIS, and PSMC, among others. TSMC, with a global market share exceeding 50%, holds a leading position in the industry.

Silicon wafers are essential raw materials for semiconductor foundries, integrated device manufacturers (IDMs), and memory manufacturers. Presently, the standard duration for silicon wafer long-term contracts ranges from three to 8 years, specifying annual supply and demand quantities. In the previous semiconductor boom, these long-term contracts often featured escalating prices year by year.

Semiconductor market shifts led to reduced foundry capacity use, heightening tensions with silicon wafer makers’ clients. Delays emerged in the last quarter, leading to agreements between manufacturers and clients. This trend has persisted into the first half of this year. Silicon wafer industry insiders acknowledge slow end-market demand recovery and relatively high client inventories.

Amidst this situation of overflowing inventories, reports indicate that a major Taiwanese silicon wafer foundry is requesting Japanese silicon wafer suppliers to not only agree to further delays in this year’s contracted shipments but also to lower prices for next year. However, no formal agreement has been reached by the silicon wafer manufacturers at this stage.

A juridical person suggests that the negotiations are currently at a deadlock, and the situation might become clearer in the fourth quarter. If the silicon wafer manufacturers eventually concede, they are unlikely to publicly admit it, in order to prevent other clients from seeking similar adjustments and causing wider disruptions.

Market insiders also reveal that the Japanese silicon wafer manufacturers facing price reduction demands are currently operating relatively well and are adopting a firm stance. From the perspective of the foundries, they are hoping for support from their supply chain partners to alleviate the pressure. Normal silicon wafer inventories typically span two to three months, yet certain silicon wafer foundries are already grappling with high inventory levels, particularly for 8-inch wafers, which might persist throughout this year.

(Source: https://money.udn.com/money/story/5612/7366962)

Leading semiconductor companies are making significant strides in global expansion with the announcement of two new fabrication facilities. TSMC is set to greenlight a factory in Germany, while GlobalFoundries plans to establish its first 12-inch wafer plant in Singapore.

TSMC’s Bold Move: Germany’s Green Light

TSMC from its presence in the USA, China (Shanghai and Nanjing), to Japan (Kumamoto City), TSMC’s global manufacturing footprint is expanding. Reuters reported on August 7 that TSMC’s board is inclined to approve the construction of a plant in Dresden, Germany. The German government pledges a substantial 5 billion euros (about $5.49 billion USD) to support the facility. However, the German Ministry of Economy refrains from commenting on the matter.

TSMC has been negotiating with the Saxony German state since 2021 to establish a collaborative FAB plant. In partnership with Bosch, Infineon, and Onsemi, TSMC aims to utilize the Dresden plant primarily for automotive chip production. Pending board approval, this venture could involve financing discussions with Berlin, ultimately requiring European Commission endorsement. TSMC, Intel, and Wolfspeed stand out among chip manufacturers seeking government assistance for European manufacturing ventures.

GlobalFoundries Poised to Build 12-Inch Wafer Plant in Singapore

According to udn.com, GlobalFoundries is set to make a substantial investment in the establishment of a 12-inch wafer fabrication plant in Singapore. The project’s funding could exceed NT$100 billion (approximately $3.2 billion USD). Reports suggest that this Singaporean facility will focus on producing 28-nanometer chips, with a potential completion date as early as 2026.

Industry experts note that GlobalFoundries’ move to set up a 12-inch facility in Singapore implies a significant shift in the competitive landscape. TSMC, UMC, PSMC, and GlobalFoundries – the four major semiconductor foundries – will all possess 12-inch production capabilities. Additionally, each of these companies has international expansion plans for such facilities. Notably, TSMC’s ventures span across the USA and Japan, UMC, and GlobalFoundries are both targeting Singapore, while PSMC’s strategy involves establishing a plant in Japan in collaboration with local partners.

Major Manufacturers Expand Against the Current Downturn

TSMC has been proactive in its expansion strategy, unveiling plans for ten new facilities in the past two years. These include 5 wafer plants and 2 advanced packaging facilities in Taiwan, alongside 3 overseas wafer plants. Despite the industry’s current challenges, TSMC’s expansion momentum remains strong, driven by a heightened focus on global manufacturing diversity.

TSMC is well aware of the potential risks tied to significant expansion efforts. In its latest annual report, the company acknowledges that expanding on a global scale demands substantial resources, highlighting possible challenges like rising costs, workforce shortages, disasters, land scarcity, cyber threats, government support, cultural differences, intellectual property protection, and tax variations.

Expanding during a semiconductor downturn has become a strategic approach for the foundry players. Typically, a fab construction takes 2 to 4 years, with equipment installation lasting 0.5 to 1 year and production ramp-up stretching 1 to 2 years. Looking ahead, semiconductor foundries are gearing up for a fresh wave of capacity release throughout 2024 and 2025.

Despite the industry’s ongoing slump, encouraging signs suggest that the downturn might be reaching its conclusion. Industry experts are cautiously optimistic, anticipating the arrival of the next upswing in the cycle.

(Source: https://mp.weixin.qq.com/s/4Xu_uc58kG85E_6R4Y3qhQ)

According to sources cited by Nikkan Kogyo Shimbun, TSMC intends to commence the construction of the second fab in Kikuyo-cho, Kumamoto Prefecture, Japan, in April 2024, with the goal of commencing production before the end of 2026.

It is worth mentioning that news about TSMC’s plan to build its second fab in Japan had already surfaced earlier this year. In January, TSMC’s CEO, CC Wei, revealed that the company was considering establishing a second chip manufacturing facility in Japan. In June, TSMC’s Chairman, Mark Liu, also mentioned during a shareholders’ meeting that the Japanese government expressed a desire for TSMC to continue expanding its investments in Japan, while TSMC was still evaluating the construction of the second fab in the country.

Regarding TSMC’s establishment of a fab in Japan, TrendForce indicated that TSMC has played an instrumental role in fostering the growth of Japan’s semiconductor industry as Japanese fabs are unable to handle manufacturing processes as advanced as 1Xnm. TrendForce posits that TSMC could potentially consider setting up a 7nm production line in Phase 2 of JASM to cater to Japan’s demand for advanced technology. Yet, the ongoing market slowdown necessitates a long-term appraisal before implementing any expansion strategies.

In addition to TSMC, more than 20 new wafer fabs are scheduled for completion in the coming years, despite the industry being in a downturn. According to TrendForce’s statistics report in January this year, there are over 20 planned new wafer fabs worldwide, including 5 in Taiwan, 5 in the United States, 6 in Mainland China, 4 in Europe, and 4 in Japan, South Korea, and Singapore combined.

Furthermore, numerous new wafer fab projects have been announced globally since the beginning of this year. For example, in February, Infineon and Texas Instruments both announced plans to construct new wafer fabs. Infineon plans to invest 5 billion euros to build a 12-inch wafer fab in Germany, while Texas Instruments intends to establish its second 300mm wafer fab in Lehi, Utah, USA. On July 5th, PSMC signed an agreement with SBI of Japan, proposing the establishment of a 12-inch wafer foundry.

Currently, semiconductor resources have become strategic assets. In addition to considering commercial and cost structures, wafer fabs must also account for government subsidy policies, meet customer demands for local production, and maintain supply-demand balance. TrendForce believes that future product diversity and pricing strategies will be key factors for the operation of wafer fabs.