Vanguard International Semiconductor Corporation (VIS) today announced that its Fab 3 in Taoyuan experienced a power supply issue at 12:10 PM, leading to a power outage.

VIS stated that as a precaution, the cleanroom was promptly evacuated, and all personnel were confirmed to be safe. Power was restored at 12:34 PM, and the company has taken steps to fully resume operations, with all facility systems now back to normal.

The company is currently conducting standard checks on the equipment and evaluating any potential impact on products. VIS has immediately informed the affected customers of the situation, and the impact on operations is still under assessment.

(Photo credit: VIS)

Taiwanese semiconductor foundries are facing price pressure in mature process as demand remains sluggish, according to a report from the Economic Daily News. Sources indicate that local foundries are offering discounts on mature process orders in Q4, marking a shift from the relatively stable pricing seen in Q3. Prices could continue to decline into the first quarter of next year, marking two consecutive quarters of downward pressure.

United Microelectronics Corp. (UMC), Vanguard International Semiconductor Corp. (VIS), and Powerchip Semiconductor Manufacturing Corp. (PSMC) are the key players in Taiwan’s mature process foundry space. UMC told the Economic Daily News that its Q3 pricing remained stable, with Q4 details to be revealed in its next earnings call. Vanguard also said it would disclose its Q4 outlook during its earnings release.

The report notes that VIS previously indicated the competitive pricing environment would ease this quarter, with utilization rates improving to around 70% or higher. The company expects utilization rates to rise to 70-80% next year, though whether they reach the higher end will depend on demand.

However, the pricing pressure in Taiwan’s mature foundry processes stems largely from weak demand for power management ICs and driver ICs, with some prices expected to decline by single-digit percentages over two quarters. Notably, Chinese foundries, which had previously been aggressive in cutting prices, have held firm this time, contrasting with the more flexible pricing strategies of their Taiwanese counterparts.

An unnamed source in the driver IC industry cited by the Economic Daily News said that some Taiwanese foundries are willing to offer single-digit percentage price cuts in Q4 to maintain utilization rates, while Chinese foundries are less inclined to lower prices.

Another industry source attributed Chinese foundries’ reluctance to cut prices to improved utilization rates and the fact that previous rounds of price cuts had already created a significant gap between their pricing and that of Taiwanese competitors.

According to the report, negotiations over mature process pricing are ongoing, with volume playing a key role in securing discounts. Some microcontroller unit (MCU) makers revealed that certain foundries are offering project-based discounts of single-digit percentages for large orders in Q4, while keeping base prices steady.

The industry is currently negotiating pricing for the first quarter of next year, with expectations that some foundries may continue to lower prices, though likely not by a significant margin.

(Photo credit: UMC)

Amid the rising of emerging applications in the AI market, the booming demands for high-performance computing (HPC), high-bandwidth memory (HBM), CoWoS advanced packaging, and high-performance storage, have energized the wafer foundry industry.

Given the broader applicability of 12-inch wafer in advanced process chips, the global expansion of 12-inch wafer production has accelerated in recent years. Leading companies like TSMC, Intel, UMC, Vanguard International Semiconductor (VIS), SMIC, and Huahong have successively released production capacity.

• VIS’ Singapore 12-Inch Fab Got Approved

On September 4, VIS and NXP jointly announced the approval of their Singapore-based 12-inch wafer fab joint venture by regulatory authorities in Taiwan, Singapore, and other regions.

The joint venture, named VisionPower Semiconductor Manufacturing Company (VSMC), will begin construction of its first 12-inch (300mm) wafer fab in the second half of this year.

VIS estimates that trial production will begin in 2027, with profitability expected by 2029. TSMC will provide technological support, and the market holds a favorable long-term outlook for the company’s operations.

Upon its mass production, both companies may consider building a second fab. Currently, VIS operates five 8-inch fabs located in Taiwan and Singapore. Three of the 8-inch fabs are in Hsinchu, and one in Taoyuan. The average monthly capacity of its 8-inch fabs in 2023 was about 279,000 wafers.

• TSMC Expands Production Worldwide

On August 20, TSMC held a groundbreaking ceremony for its new German fab, ESMC, which is set to begin construction by the end of the year and aims to start production by the end of 2027.

The project involves an investment of over EUR 10 billion and is expected to have a monthly capacity of 40,000 12-inch wafers, utilizing TSMC’s 28/22nm planar CMOS and 16/12nm FinFET process technologies.

In early September, Taiwan’s Ministry of Economic Affairs announced that TSMC plans to build a third fab in Japan to produce advanced semiconductors, with construction expected after 2030.

TSMC’s first fab in Kumamoto, Japan, officially opened on February 24, 2023, and will begin mass production in Q4 this year using 28/22nm and 16/12nm process technologies, with a monthly capacity of 55,000 wafers.

The second fab in Kumamoto is planned, with construction expected to start by the end of this year and operations to begin by the end of 2027, targeting 6/7nm nodes.

Additionally, TSMC’s 2nm fabs in Hsinchu (Fab 20) and Kaohsiung (Fab 22) in Taiwan are scheduled to start mass production next year.

In the U.S., TSMC’s first fab in Arizona is scheduled to begin producing chips using 4nm technology in the first half of 2025. The second fab will produce both 3nm and 2nm chips using next-generation nanosheet transistors, with production starting in 2025.

Plans for a third fab are also underway, with production of chips using 2nm or more advanced processes expected to begin in 2028.

• UMC’s Fab 12i in Singapore has Set Equipment in Place

On May 21, UMC held a ceremony for the settlement of equipment at its expanded Fab 12i in Singapore with the arrival of the first equipment.

UMC has operated 12-inch fabs in Singapore for over 20 years, and in February 2022, it announced the plan to invest USD 5 billion to expand Fab 12i, adding a new 12-inch fab with a monthly capacity of 30,000 wafers, focusing on 22/28nm processes. Mass production is expected by early 2026.

• Toshiba’s 12-Inch Wafer Fab Completed

On May 23, Toshiba Electronic Devices & Memory Corporation announced the completion of its new 300mm power semiconductor manufacturing fab, with a total investment of JPY 100 billion and plans to begin production in March 2025.

The fab will be built in two phases, with the first phase starting production within the 2024 fiscal year. Once fully operational, Toshiba’s power semiconductor capacity will be 2.5 times that of 2021. Equipment installation is underway, with mass production expected in the second half of FY2024.

• Powerchip Begins Construction of Two New 12-Inch Fabs

On March 13, Powerchip held a groundbreaking ceremony for a 12-inch wafer fab in partnership with India’s Tata Group, located in Dholera, Gujarat, with a total investment of INR 910 billion rupees (about USD 11 billion).

The fab will have a monthly capacity of 50,000 wafers and will produce chips using 28nm, 40nm, 55nm, 90nm, and 110nm nodes.

In early May, Powerchip also announced plans for a new 12-inch fab to expand advanced packaging capacity to support growing demand for AI devices. Powerchip’s chairman stated that the company will provide interposers, one of the three components in CoWoS packaging technology.

• Texas Instruments Built Three New 12-Inch Fabs

Texas Instruments is currently expanding its 300mm capacity to meet future demand for analog and embedded processing chips. TI plans to invest USD 30 billion in building up to four interconnected fabs (SM1, SM2, SM3, SM4) in the coming decades.

According to its 2022 roadmap, TI will build six 300mm fabs by 2030, with RFAB2 in Richardson, Texas, and LFAB (acquired from Micron) already starting production in 2022 and 2023, respectively. Two of the Sherman fabs were completed in 2023, with two more planned for 2026-2030.

In addition to the plan mentioned above, TI also announced the plan for a second 300mm fab in Lehi, Utah in February 2023, adjacent to its existing 12-inch fab, with production estimated to begin in 2026, focusing on producing analog and embedded processing chips. These fabs will be combined into one once the construction is completed.

On August 16, Texas Instruments announced that it received USD 1.6 billion in funding from the U.S. CHIPS Act. This funding will be used to build a cleanroom for the SM1 fab and complete the pilot production line, construct a cleanroom for LFAB2 to begin initial production, and build the shell for the SM2 fab.

• Intel Focuses on U.S. Projects in Arizona and Ohio

Intel has disclosed chip expansion plans in multiple regions, including Arizona, New Mexico, Ohio, Oregon, Ireland, Israel, Magdeburg, Malaysia, and Poland. However, due to market challenges and poor financial results, some of Intel’s expansion plans have been delayed.

Currently, Intel is advancing the construction of large semiconductor manufacturing plants in Arizona and Ohio for the production of cutting-edge semiconductors, as well as working on equipment development and advanced packaging projects at smaller facilities in Oregon and New Mexico.

• GlobalFoundries Revved up Investment in the U.S. and Portugal

On February 19, the U.S. government announced a USD 1.5 billion subsidy for GlobalFoundries. According to a preliminary agreement with the U.S. Department of Commerce, GlobalFoundries will establish a new semiconductor manufacturing facility in Malta, New York, and expand its existing Fab 8 plant in the same location.

The facility will leverage manufacturing technology already implemented in GlobalFoundries’ plants in Germany and Singapore to produce automotive chips, effectively introducing mature-node technology into Fab 8.

In February of this year, GlobalFoundries also announced a partnership with Amkor Technology to build a large packaging facility in Portugal.

It plans to transfer the 12-inch wafer-level packaging production line from its Dresden plant to Amkor’s facility in Porto, Portugal, aiming to establish Europe’s first large-scale backend facility. GlobalFoundries will retain ownership of the tools, processes, and IP transferred to Porto.

• China’s 12-Inch Wafer Production Lines Entered New Stages

In China, companies like SMIC, Huahong, CR Micro (Shenzhen), and Zensemi (Guangzhou) are making new progresses in 12-inch wafer production.

SMIC expects its monthly 12-inch wafer capacity to increase by 60,000 by the end of the year.

Huahong is speeding up the construction of its new 12-inch fab in Wuxi, with the first lithography machine installed on August 22, aiming for production in 1Q24.

CR Micro’s 12-inch fab in Shenzhen has entered the stage of equipment installation and debugging, with production expected to start in late 2024.

Zensemi’s 12-inch wafer manufacturing production line has went into production.

Read more

• [News] Wafer Foundry Market Shows Signs of Recovery
• [News] Two Contrasting Trends Emerge in Wafer Foundry Industry

(Photo credit: TSMC)

According to a report from Commercial Times, with expectations that tensions between the U.S. and China remain unresolved for the time being, and China’s continued production in mature process semiconductor foundries and communication equipment, the trend of decoupling from China is likely to expand.

The U.S.-China trade war has continued for several years, with the U.S. announcing in May an additional tariff on Chinese imports, including a substantial 50% tariff on semiconductor products manufactured in China by 2025. This move has further intensified the trade conflict between the two superpowers.

Thus, as per the same report, as concerns over overcapacity in various industrial products in China heighten this year, coupling with the unresolved U.S.-China relations, Taiwanese foundries including UMC, VIS, Powerchip, and networking companies such as WNC, SERCOM and Arcadyan may be benefited from the potential increased outsourcing orders.

Consequently, despite aggressive pricing competition from Chinese mature process foundries, the average selling price (ASP) and overall operational performance of Taiwan’s major mature process foundries have exceeded expectations in the first half of this year.

TrendForce previously indicated that, the supply chain’s order-shifting has become more proactive with the imposition of US tariffs. Qualcomm, which began cooperation discussions with Vanguard in 2021, has made its production plans more aggressive this year. This has prompted Vanguard to expand the first-phase capacity of its new Fab5 plant by 3Q24 and to complete cross-plant validation for Qualcomm’s PMIC to meet demand. Since 2022, MPS has also started shifting orders, including plans with both Vanguard and PSMC.

In recent years, the limitations on Chinese companies’ expansion in the U.S. have also allowed Taiwanese networking companies to capture significant American infrastructure opportunities. WNC covers optical fiber, 5G FWA, and enterprise networking businesses, with over 60% of its revenue from the Americas. SERCOMM Corporation has penetrated the North American optical fiber broadband upgrade market, securing key North American telecom operators. Meanwhile, Arcadyan Technologys’ optical fiber products have entered top-tier North American telecom operators.

Read more

• [News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls
• [News] China Lists Semiconductor Self-Reliance Challenges, Excluding Lithography Equipment

(Photo credit: iStock)

The intense price competition among Chinese mature process foundries is nearing its end. According to a report from the Economic Daily News, it has indicated that Hua Hong Semiconductor, the second-largest foundry in China, plans to raise prices by 10% in the second half of the year.

This marks the end of a two-year decline in mature process foundry prices, signaling that the industry is emerging from its correction phase and moving towards a healthier path. Consequently, Taiwanese foundries specializing in mature processes, such as UMC, VIS, and PSMC, are also expected to see a rise in their prices, boosting their operations.

Industry sources cited in the same report also note that due to geopolitical factors, Chinese foundries primarily focus on the domestic market, which is gradually diverging from the customer base of Taiwanese foundries. However, if Hua Hong’s price increase materializes, it would be a significant indicator.

Since the end of the COVID-19 pandemic, mature process foundry prices have been continuously adjusting downward. A price increase would indicate a rebound in demand for consumer electronics.

Reportedly, the industry sources believe that if the market for mature process foundries rebounds, UMC will be the primary beneficiary. As demand for consumer electronics and mobile phones picks up, related products such as OLED panel driver ICs, image signal processors (ISP), and WiFi chip will see improvements in inventory levels across the computer, consumer, and communication sectors, reaching healthier levels.

VIS and PSMC are also expected to benefit from the industry’s recovery trend. Although VIS does not comment on pricing issues, the company previously mentioned that inventory levels for consumer electronics are expected to return to normal by 2024. Despite ongoing adjustments in industrial and automotive inventories, the company remains optimistic about moderate growth in the second half of the year.

PSMC is anticipated to experience a gradual return of orders as well. The company emphasizes its commitment to adapting to market competition and continuously adjusting its production and sales strategies. With the positive effects of these adjustments becoming evident and customer inventory levels returning to healthy standards, along with new business opportunities at the Tongluo plant, PSMC expects its revenue to gradually recover.

Read more

• [News] UMC Optimistic About Second Half Business Outlook, While AI Could Capture 10-20% Market Share
• [News] Foundries Face Price Pressure in Mature Process Amid Oversupply, Indicating Q3 Price Decline
  

(Photo credit: UMC)