It was reported earlier that during Samsung Electronics’ fourth-quarter financial announcement in 2023, the company revealed that its foundry division had secured orders for 2-nanometer AI chips. However, at the time, Samsung did not disclose the name of the relevant customer. Now, according to a report from the Business Korea, the customer is the Japanese AI startup Preferred Networks.

The report indicates that Preferred Networks, which placed an order with Samsung’s foundry division for 2-nanometer AI chips, was founded in 2014 and is in the field of AI deep learning development.

The company has attracted significant investments from major Japanese industrial enterprises such as Toyota, NTT, and Fanuc. The order placed with Samsung’s foundry division for 2-nanometer AI chips also includes HBM and advanced packaging.

As per Samsung’s previous roadmap, the 2-nanometer SF2 process is set to debut in 2025. Compared to the second-generation 3GAP process at 3 nanometers, it offers a 25% improvement in power efficiency at the same frequency and complexity, as well as a 12% performance boost at the same power consumption and complexity, while reducing chip area by 5%.

As stated in Samsung’s Foundry Forum (SFF) plan, Samsung will begin mass production of the 2nm process (SF2) in 2025 for mobile applications, expand to high-performance computing (HPC) applications in 2026, and further extend to the automotive sector and the expected 1.4nm process by 2027.

According to previous reports, the leading foundry TSMC has already disclosed the test results of its 2-nanometer prototype process to major clients such as Apple and NVIDIA, with the goal of commencing mass production by 2025. Apple is set to become TSMC’s inaugural customer for the 2-nanometer process, positioning TSMC at the forefront of competition in the 2-nanometer advanced process technology.

However, according to a previous report from the Financial Times, Samsung is preparing to attract customers to place orders for its 2-nanometer process at lower prices. The move is expected to compete for a portion of Qualcomm’s flagship chip production, as Qualcomm, a major customer of TSMC, may consider shifting some of its flagship chip production to Samsung’s 2-nanometer process.

Read more

• [News] Samsung’s Discount Strategy Challenges TSMC as the Battle for 2nm Orders Heats Up
• [News] Intense Competition in Advancing Processes at the 2nm by Samsung, Intel, and TSMC

(Photo credit: Samsung)

Apple’s product line is rumored to set for a significant upgrade. According to a report from Economic Daily News, the next-generation M4 and A18 processors, slated for iPads, MacBooks, and iPhones, are expected to increase the number of built-in AI computing cores, leading to a substantial growth in orders to TSMC. Consequently, TSMC’s production volume for its enhanced 3-nanometer process this year is forecasted to surge by over 50% compared to last year.

As per a report cited by the Economic Daily News, Apple, recognizing the significant AI trend, is not only significantly enhancing the AI computing power of the M3 and A17 processors this year, but also increasing the number and efficiency of AI computing cores in the next-generation M4 and A18 processors. The AI application adoption rate across all product lines is expected to greatly increase.

Apple is strengthening the AI computing performance of its terminal devices and significantly increasing the computational power of its in-house processors, resulting in a simultaneous substantial increase in orders to TSMC.

The report further cited sources indicating that Apple’s orders for TSMC’s enhanced 3nm process this year are rumored to increase by over 50% compared to last year, solidifying its position as TSMC’s largest customer.

In addition to increasing orders for TSMC’s wafer production, reportedly, Apple has also secured a significant amount of advanced packaging capacity from TSMC. Industry sources cited by the Economic Daily News has indicated that Apple primarily places orders with TSMC for advanced packaging processes such as InFO and CoWoS, which are 2.5D advanced packaging technologies.

This year, there is a possibility that Apple will push its advanced packaging requirements to the highest price and difficulty level, such as the 3D structure SoIC advanced packaging.

TSMC, reportedly, is expanding its production capacity for the 3nm family and advanced packaging this year to meet the large orders from major clients such as Apple, NVIDIA, and AMD in the coming years.

As per TrendForce’s data, the 3nm process alone contributed 6% to TSMC’s Q3 revenue, with advanced processes (≤7nm) accounting for nearly 60% of its total revenue.

TSMC had previously announced during its earnings call that its capital budget for this year is expected to fall between USD 28 billion to USD 32 billion, with 70% to 80% allocated for advanced processes, 10% to 20% for specialty processes, and the remaining 10% for advanced packaging, testing, and mask production.

Read more

• [News] NVIDIA Expands Advanced Packaging Supply Chain with Intel’s Inclusion, Diverting Orders from TSMC
• [News] TSMC’s Primary Client for 2nm Chips Expected to be Apple, Set to Debut with iPhone 17 Lineup Next Year

(Photo credit: TSMC)

US Commerce Secretary Gina Raimondo has announced on February 5th that the Commerce Department would distribute substantial subsidies to chipmakers investing in the US within the next two months. The subsidy recipients are expected to include companies like TSMC and Intel.

As per a report from Reuters, Raimondo discussed the progress of subsidies under the US CHIPS and Science Act. “We’re in the process of really complicated, challenging negotiations with these companies. In the next six to eight weeks, you will see several more announcements. That’s what we’re striving for,” she stated.

Raimondo did not specify which chipmakers she is negotiating with, but she mentioned in an interview cited by Reuters,”These are highly complex, first-of-their-kind facilities. The kind of facilities that TSMC, Samsung, Intel are proposing to do in the United States — these are new-generation investments — size, scale complexity that’s never been done before in this country.”

Last month, as per Bloomberg cited industry sources in a report, plans for the United States to announce substantial chip subsidies by the end of March are revealed, targeting companies such as TSMC and Intel. The US CHIPS and Science Act reportedly includes a USD 39 billion manufacturing subsidy, providing 15% of the total cost for each independent project. Each fab can receive up to USD 3 billion in subsidies, along with loans, loan guarantees, and tax exemptions.

Read more

• [News] TSMC Reportedly Announcing Kumamoto Plant 2 in Japan, while U.S. Subsidies Expected by End of March
• [News] Subsidies from the U.S. Legislation “NAPMP” Potentially Expected to Cover IC Substrates

(Photo credit: TSMC)

TSMC officially gives the green light to the second fab in Kumamoto, Japan! On January 6th, TSMC, Sony Semiconductor Solutions Corporation (SSS), DENSO Corporation (DENSO), and Toyota Motor Corporation (Toyota) jointly announced further investment in TSMC’s Japanese subsidiary, Japan Advanced Semiconductor Manufacturing, Inc. (JASM).

The collaboration is expected to construct JASM’s second fab in Japan, dedicated to the 6/7-nanometer advanced process. The new facility is expected to commence operations by the end of 2027, with a total investment exceeding USD 20 billion, strongly supported by the Japanese government.

TSMC has stated that in this investment venture with JASM, TSMC, SSS, DENSO, and Toyota hold approximately 86.5%, 6.0%, 5.5%, and 2.0% of JASM shares, respectively. Toyota Motor Corporation is a new major shareholder following this capital increase, indicating its potential involvement in automotive electronics initiatives.

TSMC has further indicated that the construction of JASM’s second fab in Japan is set to commence at the end of 2024. The expansion in production capacity is expected to optimize overall cost structure and supply chain efficiency.

With two fabs in Kumamoto, TSMC anticipates in the press release that JASM’s total monthly production capacity will exceed 100,000 12-inch wafers, offering process technologies ranging from 40nm, 22/28nm, 12/16nm, to 6/7nm for automotive, industrial, consumer, and high-performance computing (HPC) applications. Capacity planning may be further adjusted based on customer demand.

For JASM’s first fab, it is planned to commence production by the end of the year. The initial facility, costing USD 8.6 billion, received subsidies of JPY 478 billion (approximately USD 3.23 billion) from the Japanese government.

The primary process of the first fab are 22/28nm and 12/16nm, with a monthly production capacity of around 50,000 12-inch wafers. Located in Kikuyo-cho, Kikuyo-gun, Kumamoto Prefecture, Kyushu, construction of the facility was announced in November 2021, ground was broken in April 2022, and construction was completed within two years.

JASM’s first fab is set to open on February 24, 2024, with mass production scheduled by the end of the year. The facility is a joint venture between Taiwan and Japan, with TSMC holding the majority of shares, Sony Semiconductor Manufacturing Corporation (SSMC) of Japan holding approximately 20%, and Toyota Group’s DENSO holding about 10%.

Read more

• [News] TSMC Reportedly Announcing Kumamoto Plant 2 in Japan, while U.S. Subsidies Expected by End of March
• [News] Multiple Fabs in Japan to Commence Production Post-2024 Boosting Industry

In late December 2023, reports surfaced indicating OpenAI CEO Sam Altman’s intention to raise funds to construct a semiconductor plant, ensuring a secure supply of AI chips.

According to a report from the Washington Post on January 24, 2024, Sam Altman has engaged with US congressional members to discuss the construction of the semiconductor plant, including considerations of timing and location, highlighting his increasingly fervent ambition to establish the facility.

TrendForce’s Insights:

• Rising AI Computing Demands Heighten Sam Altman’s Concerns About Chip Supply

The rapid emergence of AI-generated content (AIGC) undoubtedly stood out as a highlight of 2023, closely tied to the quality and efficiency of the large language models (LLMs) used. Take OpenAI’s ChatGPT, for instance, which employs the GPT-3.5 model released in 2020. With 175 billion training parameters, it surpasses its predecessor, GPT-2, by over 100 times, itself being over 10 times larger than the initial GPT from 2018.

In pursuit of better content quality, diversified outputs, and enhanced efficiency, the continuous expansion of model training parameters becomes an inevitable trend. While efforts are made to develop lightweight versions of language models for terminal devices, the cloud-based AI computing arena anticipates a continued expansion of language model training parameters, moving towards the “trillion” scale.

Due to the limited growth rate of AI chip performance, coping with the rapidly increasing model training parameters and the vast amount of data generated by the flourishing development of cloud-based AIGC applications inevitably requires relying on more AI chips. This situation continues to exert pressure on the chip supply chain.

Given that the demand for AI computing is escalating faster than the growth rate of chip performance and capacity, it’s understandable why Sam Altman is concerned about chip supply.

• Sam Altman to Seek Collaboration with Foundries for Plant Construction Goal

The construction of advanced process fabs is immensely costly, with estimates suggesting that the construction cost of a single 3nm fab could amount to billions of dollars. Even if Sam Altman manages to raise sufficient funds for plant construction, there remains a lack of advanced semiconductor process and packaging technology, not to mention capacity, yield, and operational efficiency.

Therefore, it is anticipated that Sam Altman will continue to seek collaboration with sfoundries to achieve his factory construction goal.

Looking at foundries worldwide, TSMC is undoubtedly the preferred partner. After all, TSMC not only holds a leading position in advanced processes and packaging technologies but also boasts the most extensive experience in producing customized AI chips.

While Samsung and Intel are also suitable partners from a localization perspective, considering factors like production schedules and yield rates, choosing TSMC appears to be more cost-effective.

(Photo credit: OpenAI)