An earthquake that was around magnitude 6.0 on the Richter scale occurred off the east coast of Taiwan at 5:46PM local time on January 3, 2022. As most local DRAM and foundry fabs are located in the northern and central parts of the island, TrendForce’s latest investigations reveal no notable damages to the equipment from the fabs. Therefore, the production side is expected to continue normal operation, and the actual impact of the earthquake on the output of Taiwan’s DRAM and foundry industries will likely be limited. Taiwan’s memory fabs, including those operated by MTTW, Nanya, and other smaller semiconductor companies, collectively account for about 21% of the global DRAM production capacity. In the foundry industry, Taiwan’s fabs, including those operated by TSMC, UMC, Vanguard, PSMC, etc., together make up as much as 51% of the global production capacity.

Regarding the current state of the DRAM market, it is in midst of the conventional off-season. However, the recent easing of component gaps in the supply chain is generating some stock-up activities in different application segments and thus bolstering the overall demand. The headwinds of the off-season are not as strong as usual. Also, there are now concerns brewing in the wider memory market about the supply side being affected by the COVID-19 lockdown in the Chinese city of Xi’an. Consequently, memory spot prices have been registering daily hikes lately. It is worth noting that increases in DRAM spot prices have been more significant than the increases in NAND Flash spot prices. Regarding DRAM contract prices, TrendForce for now maintains its original forecast of QoQ drops in the 8-13% range for 1Q22. However, the latest earthquake that struck Taiwan could affect DRAM buyers’ behavior at any time. How contract prices will actually end up is something that requires further observation. As for DRAM spot trading, the memory spot market of Mainland China was still in midst of the year-end holiday on January 3. Hence, spot traders were passive for the most part. TrendForce will continue monitoring the spot market to see if the earthquake is going to be a positive driver going forward.

Turning to the current state of the foundry market, the chip demand related to some categories of end products has slowed down a bit recently because of seasonality. However, demand remains quite strong for chips that were previously in short supply, such as PMIC, Wi-Fi SoC, etc. Foundry fabs on the whole are still operating with a fully loaded capacity because demand continues to outstrip supply. The fabs of Taiwan-based foundries, including TSMC, UMC, PSMC, and Vanguard, are concentrated in Hsinchu, Taichung, and Tainan. In those places, an earthquake intensity scale of 3 or under was recorded. As such, no foundry fab in Taiwan has halted operation because of the earthquake, and all fabs are operating normally at the moment.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Although the demand for end products related to the stay-at-home economy slowed down as many countries saw rising vaccination rates and were partially lifting social distancing restrictions, the decline in foundry orders from this source was more than offset by the traditional peak season for smartphones, according to TrendForce’s latest investigations. At the same time, OEMs for notebook (laptop) computers, networking devices, automotive electronics, and IoT devices kept vigorously building up their inventories because the earlier capacity crunch in the foundry market was constraining them from reaching their shipment targets. Because of these developments, demand continued to outstrip supply in the foundry market during 3Q21. As for foundries, they have been gradually taking on new production capacity in the recent period and gaining from the ongoing rise in the ASP. Thanks to robust demand, new production capacity, and rising wafer prices, the quarterly total foundry revenue rose by 11.8% QoQ to reach a new record high of US$27.28 billion for 3Q21. This result indicated nine consecutive quarters of revenue growth.

Top four foundries posted double-digit revenue growth for 3Q21 due to peak season for smartphones; SMIC’s revenue growth was slightly limited by restrictions imposed on its capacity expansions

TSMC raised its quarterly revenue by 11.9% QoQ to US$14.88 billion as it benefited from the release of new iPhone models. The foundry remained firmly at the top of the ranking in 3Q21. Regarding TSMC’s revenue generation by node, the combined revenue share of the 7nm and 5nm nodes has already surpassed 50% and is still expanding thanks to continued demand for smartphone chips and HPC chips. Samsung raised its revenue by 11% QoQ to US$4.81 billion for 3Q21 and sat firmly in second place. The revenue growth was attributed to several factors. First, the releases of new smartphone models during the second half of the year has spurred the demand for SoCs and DDIs. Second, fab Line S2 in Austin has returned to its normal level of revenue contribution following the recovery from the winter storm that struck Texas in the earlier part of this year. Third, fab Line S5 in Pyeongtaek has activated its newly added production capacity. And finally, the revenue result for 2Q21 was a low base for comparison and thus led to a rather impressive performance for 3Q21.

UMC made significant gains in 3Q21 because the activation of new production capacity for its 28/22nm nodes led to an increase in wafer input for OLED driver ICs and other components. This also caused a rise in its blended ASP. UMC’s revenue went up by 12.2% QoQ to US$2.04 billion for 3Q21. With a growth rate that surpassed the top two ranking leaders, UMC retained third place by overtaking GlobalFoundries in the ranking for the first time in 1Q20, and its lead has been gradually widening since then. GlobalFoundries posted a QoQ increase of 12% in revenue to US$1.71 billion for 3Q21 and kept fourth place in the ranking. To address the worldwide chip shortage, GlobalFoundries has announced a series of capacity expansions and greenfield projects this year. Existing plants including Fab1 in Dresden and Fab8 in Malta (which is a town in the state of New York) will take on new production capacity. New plants will also be built in Singapore and Malta. It is worth noting that the capacity expansions and greenfield projects that GlobalFoundries has revealed so far for this year will be financed via a public-private partnership model. GlobalFoundries will be leveraging funding from governments and advance payments from its clients to reduce the pressure of rising capital expenditure and ensure that the new production capacity will operate at a high utilization rate in the future.

SMIC increased its revenue by 5.3% QoQ to US$1.42 billion for 3Q21 and was ranked fifth. Two reasons were behind the revenue growth. First, there is a stable level of demand for its PMICs, Wi-Fi chips, MCUs, and RFICs. Second, SMIC has been steadily raising wafer prices. It is also worth pointing out that SMIC has been adjusting its product mix and client base due to geopolitical factors. Growing consistently over the quarters, the share of Chinese clients in SMIC’s client base came to almost 70% in 3Q21. Under the impetus of the semiconductor policies of the Chinese government, SMIC will continue to give priority to the demand from domestic clients. Hence, the portion of foreign clients in its incoming orders will gradually shrink relative to that of domestic clients.

Second- and third-tier foundries posted higher revenue growth rates compared with first-tier counterparts because of strong demand for mature nodes

HuaHong Group posted a QoQ increase of 21.4% in revenue to US$799 million for 3Q21, thereby taking sixth place in the ranking. HuaHong continues to raise its ASP as it production capacity is expected to be fully loaded through the whole 2021. This development, together with the successful capacity expansion undertaken at its Fab7 in Wuxi, contributed to the above-expected revenue result for the foundry. PSMC’s revenue growth continued to pick up pace in 3Q21 thanks to the general rise in wafer prices and the robust demand for the main categories of chip products (e.g., DDIs, PMICs, CIS, and power discretes such as MOSFETs and IGBTs). PSMC raised its quarterly revenue by 14.4% QoQ to US$525 million and was ranked seventh.

After surpassing Tower Semiconductor in the ranking for the first time in 2Q21, VIS maintained its strong growth momentum by posting a QoQ increase of 17.5% in revenue to US$426 million in 3Q21 on account of several factors. First, VIS increased its products shipments through capacity expansion. Furthermore, VIS was able to optimize its product mix and raise its ASP. It secured eighth place in the ranking. Occupying ninth place in the ranking, Tower Semiconductor’s performance exceeded expectations for 3Q21 with its revenue climbing 6.9% QoQ to US$387 million. Tower’s revenue generation mainly benefited from the stable demand related to RF-SOI chips, industrial sensor chips, and PMICs.

Taking the tenth place in the ranking, DB HiTek registered a 15.6% QoQ increase in revenue to a record high of US$283 million for 3Q21 because of the rising ASP. In the past year, DB HiTek kept its capacity utilization rate at almost 100%. To raise its overall output, the foundry has decided to focus its expansion efforts on its existing wafer production lines. As a result, its production capacity has been increasing slightly since 2Q21. The additional production capacity will effectively contribute to its revenue generation in 4Q21.

Moving into 4Q21, although foundries have undertaken various capacity expansions and greenfield projects, their new production capacity that has been activated this year is already completely booked. The new fabs that foundries have announced will need some time to get built and fully set up, so the chip shortage on the whole will unlikely ease off anytime soon. On the demand side, sales have weakened a bit for TVs and other end products associated with the stay-at-home economy. However, the hardware and infrastructure demand related to 5G, Wi-Fi 6, and IoT continues to gain momentum. Moreover, OEMs for consumer electronics are still stocking up on components in preparation for the year-end holiday sales. Based on the latest examination of incoming foundry orders, TrendForce finds that foundries will continue to operate at fully-loaded capacity. Due to the undersupply situation, the overall ASP of the foundry market has also been climbing. Meanwhile, foundries have been optimizing their product mixes to boost their financial performances. Taking account of this and other aforementioned developments, TrendForce believes that revenue growth will continue for the top 10 foundries in 4Q21. However, 4Q21 will also see more moderate growth compared with the previous quarter because there is a shortage of peripheral ICs made using mature process nodes. Additionally, demand has slacked a bit for some SoC products.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

This year sees the continuation of the persistent chip shortage, which entails a shortage of production capacity for not only 12-inch wafers fabricated with mature process technologies but also 8-inch wafers in particular. The shortage of 8-inch wafer production capacity initially began gestating in 2H19, owing to emerging demand from structural changes in the semiconductor industry, with 5G smartphones and PMICs used in new energy vehicles as two examples of such demand. At the same time, the consumption of semiconductor production capacity has also increased multiplicatively in recent years as a result of the aforementioned structural changes. TrendForce expects demand for semiconductor capacity from emerging applications to continue rising in the coming years.

In response to this emerging demand, foundries such as TSMC, UMC, and SMIC are currently expanding their investment in mature process technologies. TrendForce expects the industry’s total 8-inch wafer capacity to grow at a 3-5% CAGR from 2019 to 2023, while 12-inch wafer capacity is expected to grow at an 11-13% CAGR across the same period. It should be pointed out that production capacities allocated to the 0.18-0.11µm process nodes（for 8-inch wafer fabrication） and 55nm-12nm nodes（for 12-inch wafer fabrication）represent the most severe shortage among all process nodes. Hence, certain foundries are expected to gradually install additional production capacities for mature process technologies in 2H22-1H23. These installations will likely help address the ongoing chip shortage.

In addition, several foundries are focusing on expanding their 28nm manufacturing capacity, primarily because transistor architecture below the 20nm node requires a transition to FinFET architecture, which is relatively costly. The 28nm node represents the sweet spot in terms of cost/benefit and is widely used for manufacturing such mainstream products as notebook Wi-Fi chips, smartphone OLED driver ICs, automotive MCUs, and image signal processors. Furthermore, chips used for IoT applications, including smart home appliances and set-top boxes, as well as other products currently manufactured at the 40nm node will likely be migrated to 28nm manufacturing, meaning the demand for 28nm capacity will continue to grow going forward.

（Image credit: Pixabay）

Leading driver IC OSAT company Chipbond and major foundry UMC announced on September 3 that the two companies established a strategic partnership via a stock swap, through which UMC (and its subsidiary UMC Capital) will hold 9.09% of Chipbond’s equity, while Chipbond will hold 0.62% of UMC’s equity. TrendForce believes that this strategic partnership will not only strengthen the two companies’ presence throughout all parts of the driver IC supply chain, but also kick-start a business model that involves the simultaneous development of RF front-end ICs and power devices in the third-generation semiconductor industry.

TrendForce further indicates that, although Chipbond has traditionally dominated the panel driver IC OSAT package and test industry along with ChipMOS, recent aggressive attempts at seizing market share by major OSAT companies from China have persuaded Chipbond to expand its business to other markets, such as PA (power amplifier) or electronic filter packaging, in order to diversity its previously specialized operations. The strategic partnership between Chipbond and UMC is also noteworthy because demand has been constantly growing in the third-generation semiconductor market.

Most of the predominant companies in the third-generation semiconductor industry are major IDMs based in Europe, the US, and Japan. As for foundries, they generally play the role of fulfilling excess client orders outsourced by IDMs whose capacities are fully loaded.

Regarding the technological competencies of foundries in the power devices industry, Taiwanese foundries (including TSMC, VIS, and EPISIL) possess the competitive advantage in terms of manufacturing processes, while WIN and AWSC are also among the most representative foundries in the RF front-end segment.

Although UMC slightly lags behind some of its other competitors in the aforementioned markets, its subsidiary Wavetek has been actively strengthening its competencies. For the RF front-end segment, Wavetek is making strides towards 5G PA manufacturing by leveraging its existing 4G PA successes. On the other hand, Wavetek is also in the midst of developing its own GaN on Si power devices.

It should be pointed out that the production of back-end components such as power devices and RF front-end remains relatively low in scale. Hence, in consideration of order volumes, profitability, and equipment costs, major OSAT companies such as ASE and Amkor generally are unwilling to fulfill package and test orders for these components, most of which subsequently fall to either foundries or IDMs.

For Chipbond, which is attempting to enter the power devices and RF front end markets, the aforementioned situation spells good news, as Chipbond has to compete with only mainstream foundries and IDMs. In spite of the relatively low volume of client orders, the room for profitability is still there. Second of all, by partnering with major upstream foundry UMC, Chipbond’s third-generation semiconductor packaging and testing capacities can be secured and stabilized.

On the whole, TrendForce believes that the strategic partnership between Chipbond and UMC can be said to result in a win-win situation with regards to both revenue and industrial integration, since Chipbond now receives an infusion of cash that can facilitate its R&D into third-generation semiconductor, while UMC on the other hand also benefits from the partnership as upstream IDMs may now be incentivized to input wafers at UMC’s fabs.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

（Image credit: UMC）

The panic buying of chips persisted in 2Q21 owing to factors such as post-pandemic demand, industry-wide shift to 5G telecom technology, geopolitical tensions, and chronic chip shortages, according to TrendForce’s latest investigations. Chip demand from ODMs/OEMs remained high, as they were unable to meet shipment targets for various end-products due to the shortage of foundry capacities. In addition, wafers inputted in 1Q21 underwent a price hike and were subsequently outputted in 2Q21. Foundry revenue for the quarter reached US$24.407 billion, representing a 6.2% QoQ increase and yet another record high for the eighth consecutive quarter since 3Q19.

Revenue growths of TSMC and Samsung were slightly hindered by power outages at their respective fabs

For 2Q21, TSMC once again comfortably dwarfed other foundries with a revenue of US$13.3 billion, a 3.1% QoQ increase. TSMC’s relatively muted growth can be attributed to several factors, the most prominent of which was a power outage that occurred in TSMC’s Fab14 P7, located in the Southern Taiwan Science Park, in April. The power outage subsequently caused some wafers at the 40nm and 16nm nodes to be discarded. TSMC’s fab in the Southern Taiwan Science Park suffered yet another disruption when Taipower’s Kaohsiung-based Hsinta Power Plant temporarily went offline in May. Although the fab immediately resumed operations via its emergency power generators so that no wafers in the production lines were discarded, certain wafers still needed to be reworked. Finally, TSMC maintained its longstanding strategy of giving consistent price quotes for its foundry services. Hence, although the foundry’s revenue for 2Q21 exceeded the upper end of its prior financial guidance, its revenue for the quarter underwent a slightly lower QoQ growth compared to other foundries, and it also lost some market share to competitors.

Samsung’s revenue for 2Q21 reached US$4.33 billion, a 5.5% QoQ increase. After recovering from the winter storm that swept Texas in February, Samsung’s Austin-based Line S2 fab fully resumed its manufacturing operations in April. The fab is now operating at fully loaded capacities by manufacturing for additional client orders in order to compensate for the 1.5-month loss in wafer input from idling as a result of the winter storm. Although the sharp drop in wafer input in 1Q21 somewhat constrained Samsung’s output and revenue growth for 2Q21, the foundry still managed to post a 5.5% QoQ revenue growth thanks to strong client demand for CIS, 5G RF transceivers, and OLED driver ICs. Owing to persistently high demand for PMIC, TDDI, Wi-Fi, and OLED driver IC products, UMC, ranked third on the top 10 list, operated at a capacity utilization rate surpassing 100%, and its output severely lagged behind client demand. In response, UMC continued to raise its quotes. In addition, newly installed production capacities at the 28/22nm nodes, which have a relatively high ASP, gradually became available for wafer input in 2Q21, resulting in a 5% QoQ increase in UMC’s blended ASP for 2Q21. The foundry saw its market share remaining relatively unchanged from the previous quarter at 7.2% and posted a revenue of US$1.82 billion, an 8.5% QoQ increase.

Fourth-ranked GlobalFoundries posted a revenue of US$1.52 billion for 2Q21, a 17.0% QoQ increase. After selling its US-based Fab10 and Singapore-based Fab3E to ON Semi and VIS, respectively, in 2019, GlobalFoundries has been gradually consolidating its existing product lines and focusing on the development of 14/12nm FinFET, 22/12nm FD-SOI, and 55/40nm HV and BCD technology platforms. At the same time, GlobalFoundries has also announced that it will expand its current production capacities by building new US-based and Singapore-based fabs, which are expected to contribute to GlobalFoundries’ earnings starting in the 2H22-2023 period. On the other hand, although GlobalFoundries has already sold its Fab10 to ON Semi, the former continues to manufacture products for the latter at Fab10 across the 2020-2021 period. ON Semi will not independently operate the fab until the transfer of ownership is finalized in 2022. SMIC likewise grew its revenue for 2Q21 by a remarkable 21.8% to US$1.34 billion and raised its market share to 5.3%. SMIC’s growth took place due to strong client demand for various technologies including 0.15/0.18µm PMIC, 55/40nm MCU, RF, HV, and CIS, as well as a continued increase in its ASP. Owing to better-than-expected adoption of its 14nm technology by new clients, SMIC is operating at a fully loaded capacity of 15K wspm at the moment.

While VIS leapfrogged Tower on the top 10 list, HuaHong Group, inclusive of subsidiaries HHGrace and HLMC, took sixth place

HuaHong Group subsidiaries HHGrace and HLMC have been operating Fab1/2/3/7 and Fab5/6, respectively and sharing certain manufacturing resources. Hence, TrendForce will from now on combine the two subsidiaries’ revenues into a single item, listed as HuaHong Group. In particular, capacity expansion at HH Fab7, operated by Hua Hong Wuxi, proceeded ahead of expectations, with client demand for NOR Flash, CIS, RF, and IGBT products remaining strong. Not only is HH Fab7’s production capacity of 48K wspm currently fully loaded, but HuaHong Group’s 8-inch fabs have all been operating at a capacity utilization rate of more than 100%. Thanks to a 3-5% QoQ increase in HuaHong Group’s blended ASP for 8-inch wafers, HuaHong Group’s revenue for 2Q21 reached US$658 million, a 9.7% QoQ increase, placing the foundry squarely in the number six spot.

After leapfrogging Tower in the revenue rankings in 1Q21 for the first time ever, PSMC maintained its strong growth in 2Q21 partially owing to continued wafer starts for specialty DRAM, DDI, CIS, and PMIC in its P1/2/3 fabs. At the same time, there was a massive hike in demand for automotive chips, such as IGBT, manufactured at PSMC’s Fab 8A and Fab 8B. In view of quarterly increases in PSMC’s overall ASP, the foundry posted US$459 million in revenue for 2Q21, an 18.3% QoQ increase, and took the seventh spot in the rankings. VIS benefitted from a host of factors in 2Q21, including persistent demand for DDI, PMIC, and power discretes; newly installed capacities in the Singapore-based Fab3E ready for production; adjustments in the foundry’s product mix; and an overall ASP hike. VIS’ revenue for 2Q21 reached US$363 million, which represented not only an 11.1% QoQ increase, but also the first time VIS overtook Tower in terms of revenue.

Although ninth-ranked Tower benefitted from stable demand for RF-SOI products, industrial PMIC, and automotive PMIC, the foundry’s newly installed capacities were not entirely ready for mass production, and its revenue therefore underwent a modest 4.3% QoQ increase for 2Q21 to US$362 million. On the other hand, DBHiTek had been operating at fully loaded capacities for more than 18 months. While client demand for PMIC, MEMS, and CIS products manufactured with 8-inch wafers made consistent contributions to the foundry’s earnings, most of DBHiTek’s revenue growth for 2Q21 took place due to the rise in its ASP. DBHiTek’s revenue for 2Q21 reached US245 million, a 12.0% QoQ increase.

As of 3Q21, the shortage of foundry capacities that began in 2H19 has persisted and intensified for nearly two years. Although newly installed capacities from certain foundries have become gradually available for production, the increase in production capacity has been relatively limited, and these additional capacities have been fully booked by clients, as indicated by TrendForce’s investigation into orders placed by foundry clients. All major foundries currently operate at fully loaded capacities, though their production still lags behind market demand. Furthermore, wafer inputs for automotive chips have been skyrocketing since 2Q21 due to major pushes by governments worldwide, in turn constraining the available production capacities for other chips. As a result, foundries are continuing to raise their blended ASPs and adjusting their product mixes in order to further optimize profits. TrendForce therefore believes that the combined revenues of the top 10 foundries will reach a record high in 3Q21 by undergoing a wider QoQ growth compared to 2Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com