As the demands for AI and HPC processors keep their momentum, driving the usage of advanced packaging technologies, TSMC revealed plans to further expand its chip-on-wafer-on-substrate (CoWoS) capacity at a compound annual rate (CAGR) of over 60% until at least 2026, according to a report by AnandTech.

According to its latest roadmap revealed at the company’s European Technology Symposium earlier, TSMC would now be able to more than quadruple its CoWoS capacity from 2023 levels by the end of 2026, the report indicated.

Last year, the foundry leader announced plans to more than double its CoWoS capacity by the end of 2024, but now it needs to be more ambitious, not only to meet existing demand but also address the future market.

TSMC is also preparing additional versions of CoWoS (specifically CoWoS-L) to support building system-in-packages (SiPs) with up to eight reticle sizes, just in case that increasing CoWoS capacity four-fold over three years may still be insufficient, the report said.

In addition to CoWoS, TSMC also plans to expand its system-on-integrated chips (SoIC) capacity at a CAGR of 100% through 2026, indicating that its SoIC capacity will increase eight-fold from 2023 levels by the end of 2026, according to AnandTech.

When it comes to the latest overseas expansion plans regarding major Taiwanese foundries, TSMC’s Kumamoto Fab 1, a joint investment between TSMC, Sony Semiconductor Solutions Corporation, and Denso Corporation, was inaugurated in February. Construction of the second Kumamoto fab is slated to begin by the end of 2024, with operations starting by the end of 2027.

UMC, Taiwan’s second-largest wafer foundry, announced on May 21st the arrival of the first equipment tools for phase 3 expansion at its Fab12i located in Singapore. According to a report by CNA, UMC anticipates the construction of the facility will be completed by mid-year. However, due to adjustments in customer orders, mass production has been delayed by six months to early 2026.

In October, 2023, Powerchip Semiconductor Manufacturing Corporation (PSMC), in collaboration with SBI Holdings, Inc., announced plans regarding its first semiconductor wafer plant in Japan, which is expected to be located in the Second Northern Sendai Central Industrial Park in Ohira Village, Kurokawa District, Miyagi Prefecture (Second Northern Sendai Central Industrial Park).

Previous reports indicated that PSMC plans to construct multiple plants, with the first phase potentially starting construction as early as 2024, involving an investment of around JPY 400 billion (USD 2.6 billion).

Read more

• [News] TSMC Reportedly Prepares Next-generation HBM4 Manufacturing, Utilizing 12nm and 5nm Process Nodes
• [News] TSMC’s Kumamoto Plant – Semiconductor Bubble or Once-in-a-Century Opportunity?

(Photo credit: TSMC)

Wafer foundries’ mature process continues to suffer from oversupply, facing further price reduction pressure. According to a report from Economic Daily News, industry sources from IC design companies revealed that in this quarter, prices for certain mature processes have dropped by single-digit percentages (1% to 3%). Given the current situation, prices in the third quarter may drop by another 1% to 3%, leading to a continuous correction in overall price trends starting from the third quarter of 2022, marking the ninth consecutive quarterly decline.

Industry sources cited by the same report pointed out that this wave of price reductions in mature process was triggered by Chinese foundries two to three years ago, with Taiwanese manufacturers subsequently following suit. Major Taiwanese foundries involved in mature processes, include UMC, Vanguard International Semiconductor (VIS), and PSMC, have all been closely monitoring the latest market changes.

Regarding rumors of further price cuts in the market, UMC stated that the company would not make further comments. VIS, on the other hand, mentioned during a recent earnings call that the price pressure from Chinese foundries has affected its operations, but the company will not engage in these price-cutting competitions. It is expected that as market inventory adjustments approach completion, prices should gradually stabilize without significant fluctuations. PSMC indicated that they have not particularly felt any price pressure.

Local foundries stated that even though customers from specific applications, including driver ICs and other IC design houses, turn to Chinese foundries in order to enjoy cheaper manufacturing prices, they will not engage in price-cutting. After all, price wars may never see an end. Instead, Taiwanese foundries will continue to increase orders from other applications to gradually boost capacity utilization rates.

In the third quarter of 2022, as market conditions reversed, Chinese foundries initiated price cuts, prompting some Taiwanese manufacturers to make slight concessions in pricing. The pricing gap between Chinese and Taiwanese foundries generally remained at double-digit percentages.

To cope with a period of market inventory adjustment, some foundries are more flexible in negotiations, while others hope for customers to “exchange volume for price.”

Overall, foundry pricing has experienced eight consecutive declines up to this quarter. However, with no significant recovery in most end-demand sectors, IC design companies assess that foundry pricing in the third quarter may continue to trend downward.

Industry sources cited by the report believe that Chinese foundries receive official subsidies, allowing them to disregard profit considerations. Previously, IC design houses’ price negotiations with Chinese foundries were mostly successful, which results in single-digit percentage price reductions recently. However, after the third quarter, the room for further price reductions may diminish, indicating that the price seems to be soon hit the bottom.

However, fin order to cope with the current macroeconomic fluctuations, some IC design companies mentioned that after suffering from being “burned” by high inventory in the past, they now tend to wait for clear demand from customers before starting production. In recent years, the proportion of production sent to Chinese foundries has been increasing due to cost considerations. With the continuous expansion of mature process capacity in Chinese foundries, the pressure of oversupply may persist for a while longer.

According to TrendForce’s previous report on the fourth quarter of 2023, global semiconductor foundry revenue rankings showed that the top three semiconductor foundries globally were TSMC, Samsung, and GlobalFoundries, which are all less exposed to mature nodes.

Read more

• [News] Amid Foundry Overcapacity, Competition for HBM Intensifies Rapidly
• [News] Intensified Competition in the Semiconductor Industry for 2nm Technology Dominance, Potentially Reshaping the Global Foundry Market

(Photo credit: TSMC)

Recently, according to sources from an official platform of Shanghai Construction No.4 (Group), Huahong Group has topped out the main building of FAB9 of the Huahong Manufacturing (Wuxi) project. This is reportedly the second phase project with a total construction area of about 530,000㎡, which is projected to construct a 12-inch characteristic process production line with a monthly capacity of 83,000 wafers.

It can be seen that the 12-inch wafer field is greeted by high enthusiasm. Previously, companies such as Renesas Electronics, PSMC, TSMC, and UMC have all announced plans to build new 12-inch fabs. As for China, as per earlier industry reports, 12-inch fabs scheduled to start production in 2024 include CR Micro, ZenSemi, and CanSemi, all located in Guangdong Province.

• Investment Enthusiasm in 12-Inch Fabs Unabated

On April 11, Renesas officially restarted its previously closed factory in Kofu. It was announced in 2022 that Renesas would invest JPY 90 billion to convert the plant into a 12-inch fab in a bid to meet the increasing demand in the power semiconductor sector.

The fab has a cleanroom with an area of 18,000㎡, and it will start mass production of IGBTs, power MOSFETs, and other power devices in 2025, which is expected to double Renesas’ overall power semiconductor capacity.

On March 13, PSMC and India-based Tata Group held a groundbreaking ceremony for their joint 12-inch fab. The fab comes with a total investment of INR 910 billion (Around USD 11 billion), which is estimated to produce a monthly capacity of 50,000 wafers, covering various mature nodes such as 28nm, 40nm, 55nm, 90nm, and 110nm.

On February 24, TSMC’s Japan Kumamoto fab (JASM) was officially opened, marking TSMC’s first plant (Fab23) in Japan. TrendForce stated that the plant will possess a total capacity of up to 40~50Kwpm in the future, with the process mainly focusing on 22/28nm and a small amount of 12/16nm. This will pave the way for developing the main process of the Kumamoto Fab2 later.

Previously, TSMC had announced that in response to customer demand growth, construction of JASM’s second fab in Japan is planned to commence at the end of 2024 and start operation in late 2027. Media reports stated that TSMC would invest JPY 2 trillion in the second fab in Kumamoto, which will adopt advanced processes of 6nm and 7nm. The monthly total capacity of 12-inch wafers in JASM Kumamoto fab is expected to exceed 100,000 pieces in the future.

In January, it was reported that UMC’s new fab in Singapore is scheduled to complete construction by mid-2024 and start mass production in early 2025. UMC said that to meet the demand for capacity construction, its board of directors approved a capital budget execution proposal of USD 39.8 million. The first phase of the new fab, with a total investment of USD 5 billion, is expected to deliver a monthly capacity of 30,000 wafers, providing 22/28nm processes.

UMC has been operating the 12-inch fab in Singapore for over 20 years. In February 2022, UMC’s board of directors approved the plan to expand a new advanced fab in the Fab12i area in Singapore. At that time, UMC expected the new fab to start mass production in late 2024, but the latest news indicates that the date of mass production will be in early 2025.

• Several Guangdong-Based 12-Inch Fabs Set to Start Production in 2024

According to a local official report from Zengcheng, Guangdong, ZenSemi held a lithography machine introduction ceremony for the project of 12-inch advanced intelligent sensors and characteristic process wafers mass production lines, marking that the project has smoothly entered the debugging and production preparation phase.

It is reported that the first phase of the project covers an area of 370 acres, with a planned investment of CNY 37 billion. It is expected to start production in June 2024, with the first batch of high-yield products scheduled to be completed in late December and delivered to customers.

According to official information from CanSemi, the third phase of CanSemi’s project will establish a 12-inch integrated circuit analog characteristic process production line with a capacity of 40,000 wafers per month. Currently, the first and second phases have been put into production successively, and the company are accelerating the construction of the third phase project, striving to achieve a fixed asset investment of over CNY 4 billion in 2024 and ensure the third phase to complete construction and start production in 2024.

According to the Wechat Account “Binhai Baoan”, Huahong’ 12-inch characteristic process integrated circuit production line project is also expected to start production this year.

It is reported that the first phase of Huahong’ 12-inch power chip production line project has a total investment of CNY  22 billion, with a total construction area of 238,000㎡, and an annual production capacity of 480,000 wafers after completion. The products will mainly be used in automotive electronics, new energy, industrial control, consumer electronics, and other fields.

As per stats from Wechat Account “Global Semiconductor Observation”, there are currently 31 operating 12-inch fabs in China (Inclusive of under-construction 12-inch fixed-capacity fabs), with a total monthly capacity of approximately 1.189 million wafers.

Compared with the planned monthly capacity of 2.17 million wafers, the capacity utilization rate of these fabs is close to 54.48%, indicating significant expansion potential. Considering construction and future planning, it is estimated that China will add 24 new 12-inch fabs in the next five years, with a planned monthly capacity of 2.223 million wafers.

Assuming all planned 12-inch foundries achieve full production, the total monthly capacity of 12-inch wafers in China will exceed 4.14 million wafers in late 2026, representing a 248.19% increase in capacity utilization compared to the present.

Read more

• [News] SK Hynix Rumored to Propose Collaboration with Kioxia for HBM Production in Japan
• NAND Flash Industry Revenue Grows 24.5% in Q4 2023, Expected to Increase Another 20% in Q1, Says TrendForce

(Photo credit: TSMC)

Taiwan experienced a magnitude 7.2 earthquake on the 3rd, prompting round-the-clock repair efforts during the holiday by semiconductor fabs, aiming to restore equipment operations. According to reports from TechNews, the latest progress of various fabs and science parks across different locations is as follows.

TSMC

TSMC stated that the maximum intensity of the earthquake on the 3rd in science parks such as Hsinchu, Longtan, and Zhunan was magnitude 5, while in Central Taiwan and Southern Taiwan science parks, it was magnitude 4. The recovery rate of semiconductor fab equipment has exceeded 80%, with newly built fabs (such as Fab 18 responsible for producing 3 and 5 nanometers wafers) expected to fully recover by the evening of the 4th..

While some equipment in certain areas suffered damage, affecting production lines, major equipment including all EUV machines remained undamaged. In areas with higher seismic intensity, longer time is expected for adjusting and calibrating to restore automated production.

It is believed that this may refer to the advanced packaging stronghold in Longtan, where production process equipment needs reconfiguration due to earthquake evacuation, unstable or disrupted network signals requiring parameter reset, as well as seismic impacts on cleanroom spaces, damaged pipelines, and machinery relocation, all requiring extensive scheduling for repair.

UMC

A spokesperson for UMC indicated that the impact of the strong quake on 12-inch Fab in Southern Taiwan was relatively light, while 8-inch Fab in Hsinchu was more severely affected. The company’s machinery and pipelines remained undamaged, with only instances of machinery displacement, some quartz tube damage, sprinkler head damage, and partial office ceiling damage.

According to market sources cited in the same report, UMC is actively reallocating manpower to reposition machinery in 8-inch Fab, cleaning damaged wafers, and replacing quartz tubes, expecting a recovery time of two to three days, or even a week.

VIS

VIS stated that as of noon on the 4th, about 80% of affected machinery had returned to normal, and production operations would gradually resume. The company promptly informed affected customers upon the earthquake’s occurrence, maintaining close communication and providing detailed information individually.

Hsinchu Science Park Administration

Most major factories including semiconductor and panel manufacturing plants completed equipment recovery from the quake on the 3rd. Although there was some impact on production lines, effective measures were taken by factories such as seismic design for buildings and machinery, personnel evacuation, and preventive machinery shutdowns, resulting in minimal impact on factory operations.

Currently, factories are operating normally, with a few undergoing machine calibration for full recovery in the short term. Manufacturers’ machinery is gradually returning to operation, personnel have resumed their positions, and major wafer manufacturing plants have sufficient materials and are smoothly recovering operations.

Central Taiwan Science Park Administration

In parts of the Central Taiwan Science Park, which mainly focuses on optoelectronics, semiconductors, and precision machinery industries, manufacturers have gradually resumed operations after machinery shutdowns. Among them, over 90% of high-precision machinery in semiconductor fabs have resumed operation, with only some machines undergoing calibration, all expected to complete and operate normally by the end of the 4th.

Southern Taiwan Science Park Administration

As of noon on the 4th, major factories including TSMC, UMC, Innolux and Corning Taiwan in the area have all resumed normal operations. Continuous monitoring of aftershocks and manufacturer dynamics will be maintained, with necessary assistance provided as needed.

(Photo credit: TSMC)

Contract chip manufacturer United Microelectronics Corp has partnered with Intel to develop a 12-nanometer technology platform and will commence production at three Intel facilities in Arizona, USA. According to a report by Nikkei, mass production for chips destined for communication and other applications is slated to begin in 2027

During an interview at the Intel IFS Direct Connect event in February, Jason Wang, Co-President of UMC, stated that both UMC and Intel are pioneering innovative collaboration models. They aim to provide customers with foundry services with competitive pricing through vertical specialization. The two companies will leverage complementary advantages to accelerate the development timeline and expand their global presence.

The foundry market is generally divided into advanced chips and mature chips. Advanced chips, which constitute the brains of smartphones and other devices, are predominantly led by TSMC and Samsung Electronics.

In the realm of mature chips, around 10 companies from Taiwan, China, South Korea, and the United States are competing for the demands of telecommunications equipment, Vehicular communication systems, and other technology manufacturers.

Intel is changing its vertically integrated business model to compete with TSMC and Samsung in contract manufacturing demands.

In March of this year, the US government announced that Intel would receive up to USD 8.5 billion in subsidies for the development of advanced chips. By collaborating with UMC on mature chips, Intel may focus more resources on cutting-edge technologies like 1.4nm.

For UMC, partnering with Intel enables it to mass-produce chips that are more advanced than its mainstream 22nm to 28nm products. Obtaining production facilities in the United States will also help the company win North American clients, as revenue from this region currently accounts for less than 30% of its total.

TSMC is also constructing a semiconductor plant in Arizona, utilizing US assistance to produce advanced 4nm chips. In contrast, the collaboration between UMC and Intel will focus on relatively mature chips.

UMC has long been one of the pillars of the semiconductor industry in Taiwan. Established in 1980, seven years before TSMC, the company has been vying for the position of industry leader until the 2000s.

During the 2010s, UMC lagged behind TSMC in advanced chip development, as the latter made significant investments in the semiconductor market following the global financial crisis. Since then, UMC has reportedly put more emphasis on mature chips.

The company is currently at a turning point. Benefiting from the global chip shortage, its performance continued to grow from 2020 to 2022. However, as of December 2023, annual revenue declined by 20% to 222.5 billion New Taiwan dollars ($6.9 billion), marking the first decrease in four years. This is approximately one-tenth of TSMC’s revenue.

UMC’s downturn in 2023 also signifies an intensification in mature process technologies, especially as Chinese semiconductor enterprises’ mature process technologies and equipment remain unaffected by US export restrictions. In an effort to overcome US restrictions, China is heavily investing in mature process.

Per data from TrendForce, China’s share of mature chip production at 28nm and above is expected to increase from the current 31% to 39% by 2027, as production volumes grow.

Joanne Chiao stated that semiconductors for applications such as general sensors and display controllers are expected to face fierce price competition.

On the other hand, UMC continues to face competition from Taiwanese foundries. TSMC plans to produce mature chips at a new plant in Japan by the end of 2024 and at a plant in Germany by the end of 2027. With subsidies from the Japanese and German governments, TSMC will form joint ventures with buyer customers to ensure stable production capacity.

Powerchip Semiconductor Manufacturing Corporation (PSMC) announced at the end of February its plans to assist Tata Group in building a chip plant in India. PSMC stated that it would provide intellectual property for the project without investment, aiming to generate licensing revenue.

Read more

• [News] Rumors Regarding Price Reductions in Mature Process for Foundries Emerge, Signaling a Further Decrease in Prices in Q2
• [News] China’s ICs Imports Decrease in 2023, Chinese Manufacturers Focus on Mature Processes

(Photo credit: UMC)