Akira Amari, a Japanese lawmaker and leader of the parliamentary association to promote semiconductor strategy, reveals that Japan is gearing up to allocate a subsidy of up to 900 billion yen for the second-phase expansion of TSMC’s Kumamoto fab. The plan involves transitioning from the 22/28 nm and 12/16 nm processes to the more advanced 7 nm process. Once completed, Japan is anticipated to emerge as the leading semiconductor supply hub globally.

Media reports suggest that the cabinet amendment is expected to allot a total of 1.9 trillion yen for semiconductor subsidies in Japan. Japanese companies are slated to receive 590 billion yen, while TSMC’s second-phase expansion project in Kumamoto is in line for the highest subsidy of 900 billion yen, surpassing the market’s earlier projection of 760 billion yen.

Highlighting the unprecedented nature of this subsidy, Amari underscores the imperative of ensuring companies’ operational profitability. Japan envisions becoming a pivotal player in the semiconductor supply chain. Furthermore, contingent on the development scenario, the government is committed to evaluating subsidy reductions, with a pledge to support various schemes for establishing Japan as a long-term semiconductor hub.

As of now, the construction of TSMC’s first-phase fab in Kumamoto is advancing rapidly, with the total workforce anticipated to surpass a thousand. The team is preparing for a timely production launch in 2024.

Although the Kumamoto fab’s announcement and construction preceded that of the U.S. Arizona fab, set to commence production in 2025, TSMC’s Kumamoto fab is garnering robust support from official Japanese channels and partners including SONY Semiconductor Solutions and Denso. The fab is set to utilize 22/28 nm and 12/16 nm processes, with a total capital expenditure of 8.6 billion USD. The Japanese Ministry of Economy, Trade and Industry(METI) granted approval for a subsidy of 476 billion yen in June 2022, which represents approximately 40% of total capital expenditure is supported by the subsidy.

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• [News] Japanese Lawmaker Confirms Additional ¥900 Billion Subsidies for TSMC’s Kumamoto 2nd Fab
• [News] TSMC’s Global Expansion: Progress in New US, German, and Japanese Fabs

On November 7th, Intel held its “Intel Innovation Taipei 2023 Technology Forum”, with CEO Pat Gelsinger highlighting the healthy state of PC inventory. He also expressed optimism about the injection of several more years of innovative applications and evolution in PCs through AI. 

Intel Aims to Ship over One Hundred Million AI PC within the Next Two Years

Gelsinger expressed that the PC inventory has reached a healthy level, and he is optimistic about the future growth of AI PCs, which are equipped with AI processors or possess AI computing capabilities. He anticipates that AI will be a crucial turning point for the PC industry.

Additionally, Gelsinger stated that the server industry may have seemed uneventful in recent years, but with the accelerated development of AI, it has become more exciting. AI is becoming ubiquitous, transitioning from the training phase to the deployment phase, and various platforms will revolve around AI.

Gelsinger expressed his strong confidence in Intel’s position in the AI PC market, expecting to ship over one hundred million units within two years.

Intel’s Ambitious Expansion in Semiconductor Foundry Landscape

Intel is actively promoting its IDM 2.0 strategy, with expectations from the industry that the company, beyond its brand business, has advanced packaging capabilities to support semiconductor foundry operations. In the future, Intel is poised to compete with rivals such as TSMC and Samsung.

Gelsinger noted that some have viewed Intel’s plan of achieving five technical nodes in four years as “an ambitious endeavor.” However, he emphasized that Intel remains committed to its original goal of advancing five process nodes within four years.

The company’s foundry business has received positive responses from numerous potential customers, and while it may take three to four years for significant expansion, the advanced packaging aspect may only require two to three quarters to get on track.

This transformation marks a significant shift for the company, setting new standards in the industry. Intel is making steady progress in its four-year plan to advance five nodes, and Moore’s Law will continue to extend. The construction of Intel’s new factories is also ongoing.

According to Intel’s roadmap, Intel 7 and Intel 4 are already completed, Intel 3 is set for mass production in the latter half of this year, and Intel 20A and 18A are expected to enter mass production in the first and second halves of next year, respectively.

Regarding this roadmap, according to NIKKEI Asia’s report, Gelsinger also mentioned at the forum that for the 18A process, they currently have many test wafers in production. Additionally, the development of 18A has been completed, and it is progressing rapidly towards the production phase.

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• [News] Intense Competition in Advancing Processes at the 2nm by Samsung, Intel, and TSMC

(Photo credit: Intel Newsroom)

During the Snapdragon Summit 2023 in October, Qualcomm made a big announcement by introducing the Snapdragon X Elite chip, built on TSMC’s cutting-edge 4nm process. Qualcomm’s claim is bold; they assert that the chip will deliver superior performance compared to Intel’s x86 architecture and Apple’s M2 chip. Simultaneously, towards the end of October, Apple revealed its own Arm-based M3 chip. Notably, semiconductor giants AMD and NVIDIA are rumored to be exploring the development of new PC processors on the Arm architecture. The future outlook suggests that Arm-based processors may gradually cut in the market share traditionally held by x86 architecture processors.

TrendForce’s Insights:

1. Qualcomm’s New PC Processor Poised to Expand the Arm-Based PC Processor Market

Following Intel’s September 2023 Meteor Lake processor release, Qualcomm introduced the Snapdragon X Elite, its latest Arm-based PC processor in October. This chip leverages TSMC’s advanced 4nm technology. Qualcomm is forging partnerships with Taiwanese heavyweights such as Quanta, Compal, Wistron, Acer, Asus, Realtek, Nuvoton and others, aiming to secure a foothold in the CPU market within the PC supply chain. This collaborative effort is expected to yield new PC products hitting the market in 2024.

As of 2023, Arm commands approximately 11% of the market share. Apple, a pioneer in PC chips built on the Arm architecture, has seen success with the release of three generations of processors since the 2020 debut of M1 chip.

With Qualcomm entering the Arm architecture group, AMD also intends to step into Arm architecture with the upcoming Phoenix processor, set for launch in 2025. There are also whispers of NVIDIA partnering with MediaTek to develop a chip processor featuring SoC+GPU capabilities on the Arm architecture, with an initial focus on ChromeBook market, where MediaTek boasts years of experience.

In the PC market, significant factors include processor development timelines, product performance, power efficiency, extended battery life, and compatibility with software and hardware. High-end CPUs and GPUs have become indispensable components for high-end computers. Currently, Intel leads the CPU market, with AMD following closely in the x86 landscape. As more companies delve into the development of Arm-based processors, there is potential for them to carve a share from the x86 market in the future.

2. Arm Architecture Processors Gain Momentum, Intel Focusing on AI Software Application Processor Development

Apple’s M-series chips demonstrate their efficiency and extended battery life. Microsoft recognizes the advantages of the Arm architecture and is dedicated to fostering a strategic collaboration for Windows on Arm. This collaboration involves integrating operating systems with processors to attract leading manufacturers to engage in Arm-based processor development, aligning with the growing demands for AI PCs.

In the realm of x86 architecture, Intel enjoys a dominant position in the CPU market. To tap into the opportunities arising from AI PCs, Intel has integrated AI acceleration engine features into its processors, introducing a new generation of AI application processors that combine CPU, GPU, and NPU (Neural Processing Unit) functionalities. This caters to the growing demand for generative AI applications in enterprise mobile PCs. Furthermore, Intel has joined forces with major laptop brands to launch new AI PCs, aiming to seize a substantial share of the market.

As momentum grows in Arm-based processor development, Intel maintains confidence that their immediate effect on the demand for x86 architecture processors will be restrained. It is unlikely to hinder Intel’s continuous advancement in developing new processors. Unlike competitors concentrating on Arm architecture processor development, Intel places a stronger focus on AI software applications and the market opportunities arising from its partnership with the Microsoft platform.

Explore more:

• [News] Qualcomm Challenges Intel & AMD in AI PC Chip Race
• [News] Intel, Samsung, TSMC Race in Cutting-Edge Processes

According to UDN’s report, the Taiwanese government has introduced the “Taiwan Chip-Driven Industrial Innovation Program,” an investment of NT$300 billion with an annual average of NT$30 billion.  On October 2, Executive Yuan Commissioner Tsung Tsong Wu and Chairperson of the National Science Council revealed that this program welcomes foreign participation but will consider prerequisites such as competition with local talent.

When asked about what attracts international startups to Taiwan, Tsung Tsong Wu emphasized that while the $30 billion investment over a decade is significant, Taiwan’s strength lies in its complete industry ecosystem, covering everything from IC design and manufacturing to packaging and testing.

The government and private sector collaborate to achieve the best results, making international startups and chip designers eager to come to Taiwan. The aim is to turn Taiwan into the global destination for related industries’ dreams.

The National Science Council presented the “Taiwan Chip-Driven Industrial Innovation Program” to the Executive Yuan on October 2. Tsung Tsong Wu explained that out of next year’s $12 billion technology budget, approximately $4 billion will be allocated to generating AI-driven innovations across all industries, attracting international investments, and supporting startups. Additionally, around $8 billion will be dedicated to strengthening talent development and advancing towards cutting-edge processes.

While the initial investment for the first year of the “Taiwan Chip-Driven Industrial Innovation Program” is $1.2 billion, critics have raised concerns about its insufficiency. The National Science Council clarified that although the initial investment is relatively low, the budget allocated will increase from 2025 onwards, adapting to the evolving economic landscape.

Tsung Tsong Wu emphasized that the program encompasses both advanced and mature processes. While Taiwan is perceived to have an advantage in advanced processes, many mature processes, such as 3DIC, are vital for future industry innovations.

(Photo Credit: TSMC)

According to TechNews’ report, Gitae Jeong, Vice President of Samsung Electronics, recently revealed in an interview that the company is set to introduce the SF1.4 (1.4nm) process, expected to enter mass production in 2027.

This announcement intensifies the competition in advanced semiconductor manufacturing, particularly in the development of 2.5D/3D integrated heterogeneous structure packaging among the three major semiconductor foundry giants.

• TSMC: N3P Process Superior to Intel 18A, N2 to Lead Industry’s Advanced Processes

Previously, the semiconductor industry reported challenges with both TSMC and Samsung achieving yields above 60% for their 3nm processes due to undisclosed issues. TSMC’s yield was reported to be only 55%, below the normal yield rate.

However, TSMC’s President, C.C. Wei, expressed optimism, stating that current N3 demand is better than three months ago, contributing to a healthy growth outlook for TSMC in 2024.

Wei also anticipates that TSMC’s 3nm process will contribute a mid-single-digit percentage (4%-6%) to the company’s annual wafer revenue in 2023.

Regarding competition with rival Intel’s 18A process, Wei believes that TSMC’s N3P process offers better performance, power, and area (PPA), alongside improved cost efficiency and technical maturity. Furthermore, TSMC’s upcoming N2 process is expected to be the industry’s most advanced when introduced.

• Intel: Striving for the Fourth Customer for 18A Process Outsourcing Orders

Intel’s CEO, Pat Gelsinger, has revealed that the 18A process has secured orders from three customers and aims to acquire a fourth customer by the end of the year. The advanced 18A process is scheduled to begin production at the end of 2024, with one customer already having made an advance payment. External expectations suggest that the customer could possibly be NVIDIA or Qualcomm.

Intel has stated that Intel 4 and Intel 3 processes are similar, as are Intel 20A and Intel 18A processes. Consequently, Intel’s primary focus will be on offering Intel 3 and Intel 18A to semiconductor foundry customers. Meanwhile, Intel 4 and Intel 20A processes are more likely to be used internally. However, Intel is open to accommodating customer requests if they express interest in adopting these later processes.

• Samsung: Commencing Mass Production of SF2 in 2025, Prioritizing Internal Use

Due to challenges with the three-nanometer (3nm) manufacturing process, there have been reports that Samsung plans to shift directly to the more advanced two-nanometer (2nm) process.

According to Samsung’s Foundry Forum (SFF) plan, they 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.

Similar to Intel, Samsung intends to prioritize the production of its own products using the 2nm process. The 2nm process products will initially be utilized for Samsung’s in-house products rather than external customer products.

• Summary

While TSMC’s N3 series currently enjoys broad support, including N3E, N3X, and N3P process series, the move to 2nm introduces new variables as it adopts a completely new GAAFET architecture. Regardless, whether it’s TSMC’s N2, Intel’s 18A, or Samsung’s SF2, each of them possesses its competitive strengths. The industry is also eagerly anticipating the future developments in advanced semiconductor processes.

Read more

• [News] Progress and Adoption of Advanced Processes by Samsung, Intel, and TSMC