According to a report by Taiwan Economic Daily, industry sources have revealed that due to sluggish terminal demand and market competition, TSMC and Vanguard have recently been progressively lowering their prices for 8-inch wafer foundry services, with reductions as high as 30%.

While 8-inch wafer foundry services do not constitute a major portion of TSMC’s revenue, the company has historically maintained a relatively steadfast pricing strategy, refraining from frequent price hikes or reductions. The current reduction of up to 30% has raised significant attention.

The report states that the semiconductor industry is experiencing a downturn in prosperity, resulting in decreased capacity utilization at wafer foundries. Within this context, demand for 8-inch wafers is weaker compared to 12-inch wafers, leading some manufacturers to see their 8-inch wafer utilization rates drop to around 60%.

Regarding the price reduction, analysts at Nomura Securities suggest that this move is primarily aimed at countering Texas Instruments (TI), a global leader in analog ICs, which has significantly lowered prices for products such as power management ICs, triggering a worldwide semiconductor price war that has impacted related industries. In response, IC design companies are hoping for price reductions from foundries such as TSMC and to lower costs and compete against TI.

IC design firms have indicated that they have not received any official notification of price reductions for 8-inch wafer foundry services. They emphasized that TSMC has never implemented such a substantial reduction of up to 30% since its establishment, raising doubts about the authenticity of the news. TSMC has declined to comment on pricing matters.

(Photo credit: TSMC)

TSMC previously announced in November 2021 that it plans to establish two wafer fabrication plants for the 7nm and 28nm processes in Kaohsiung, a southern city of Taiwan. Construction was set to begin in 2022, with official production expected to commence in 2024. However, following the announcement, there have been changes in the progress of the Kaohsiung plant development.

Firstly, there were reports of adjustments to the 7nm plant by the end of 2022, in response to weakened demand in the smartphone and PC markets. Subsequently, there were also reports of changes to the 28nm plant’s plans.

It wasn’t until TSMC’s Q1 2023 earnings conference that they officially announced the adjustment of the Kaohsiung 28nm plant’s construction plans, focusing on capacity enhancement for more advanced process technologies.

At the time, TSMC didn’t specify the exact advanced process that would be introduced, only emphasizing that the construction of the wafer fab would proceed as planned. This triggered market speculation that TSMC was likely to adopt the advanced 2nm process technology at the Kaohsiung plant, in response to the rapidly growing demand in the artificial intelligence market.

This week, TSMC confirmed that the Kaohsiung plant will adopt the 2nm process technology. TSMC stated that the construction of the wafer fab in Kaohsiung will proceed as usual, but the previous expansion plans will be adjusted to accommodate the production of the 2nm advanced process technology, in response to strong market demand for advanced processes.

As for the specific details and contents of the plant development, they have not been further disclosed at this stage. According to TSMC’s plans, mass production of the 2nm process is expected to begin in 2025, with production bases including the previously announced Hsinchu and Taichung facilities, as well as the newly announced Kaohsiung facility.

(Photo credit: TSMC)

Leading semiconductor companies TSMC, Robert Bosch GmbH, Infineon, and NXP Semiconductors have jointly to invest in the European Semiconductor Manufacturing Company (ESMC) GmbH, situated in Dresden, Germany. This strategic move aims to bolster the region’s semiconductor manufacturing capabilities, particularly catering to the burgeoning automotive and industrial sectors. The establishment of ESMC marks a significant stride towards the realization of a 300mm fabrication facility, pending the final decision on public funding, as part of the European Chips Act framework.

The planned fab is expected to have a monthly production capacity of 40,000 300mm (12-inch) wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology, further strengthening Europe’s semiconductor manufacturing ecosystem with advanced FinFET transistor technology and creating about 2,000 direct high-tech professional jobs. ESMC aims to begin construction of the fab in the second half of 2024 with production targeted to begin by the end of 2027.

The prospective joint venture will see TSMC holding a substantial 70% ownership stake, while Bosch, Infineon, and NXP will each possess a 10% equity share, contingent upon regulatory approvals and meeting specific conditions. Total investments exceeding 10 billion euros are anticipated. Operational oversight of the fabrication facility will reside under TSMC’s purview.

However, industry analysts at TrendForce have highlighted potential challenges that lie ahead for TSMC’s groundbreaking endeavor. One such challenge pertains to the looming labor shortage issue in TSMC’s US fabrication facility, which is projected to reverberate globally. Moreover, navigating the intricacies of implementing subsidy policies in accordance with the European chip legislation and anticipated administrative procedures is expected to introduce a layer of complexity to the venture.

(Photo credit: TSMC)

Charlie Boyle, Vice President of NVIDIA’s DGX Systems, recently addressed the issue of limited GPU production at the company.

Boyle clarified that the current GPU shortage is not a result of NVIDIA misjudging demand or constraints in Taiwan Semiconductor Manufacturing Company’s (TSMC) wafer production. The primary bottleneck for GPUs lies in the packaging process.

It’s worth noting that the NVIDIA A100 and H100 GPUs are currently manufactured by TSMC using their advanced CoWoS (Chip-on-Wafer-on-Substrate) packaging technology. TSMC has indicated that it may take up to a year and a half, including the completion of additional wafer fabs and expansion of existing facilities, to normalize the backlog of packaging orders.

Furthermore, due to the significant strain on TSMC’s CoWoS capacity, there have been reports of overflow of NVIDIA GPU packaging orders to other manufacturers.

Sources familiar with the matter have revealed that NVIDIA is in discussions with potential alternative suppliers, including Samsung, as secondary suppliers for the 2.5D packaging of NVIDIA’s A100 and H100 GPUs. Other potential suppliers include Amkor and the Siliconware Precision Industries Co., Ltd. (SPIL), a subsidiary of ASE Technology Holding.

In December 2022, Samsung established its Advanced Packaging (AVP) division to seize opportunities in high-end packaging and testing. Sources suggest that if NVIDIA approves of Samsung’s 2.5D packaging process yield, a portion of AI GPU packaging orders may be placed with Samsung.

TrendForce’s research in June this year indicated that driven by strong demand for high-end AI chips and High-Bandwidth Memory (HBM), TSMC’s CoWoS monthly capacity could reach 12,000 units by the end of 2023. Particularly, demand from NVIDIA for A100 and H100 GPUs in AI servers has led to nearly a 50% increase in CoWoS capacity compared to the beginning of the year. Coupled with the growth in demand for high-end AI chips from companies like AMD and Google, the second half of the year is expected to witness tighter CoWoS capacity. This robust demand is projected to continue into 2024, with advanced packaging capacity potentially growing by 30-40% if the necessary equipment is in place.

(Photo credit: NVIDIA)

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)