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Weekly News | Supply Chain Trends in Semiconductor Industry

发布日期：2023-12-19

Company Trend（Dec. 11）

TSMC takes the lead in cutting prices due to a lack of orders from China-based chip enterprises

When the US amended chip-related export rules, the whole chip market changed dramatically. No matter how advanced fabs’ technology and process are, they could not withstand the backfire of the US chip ban. TSMC, a global leader of chip foundry, has embraced high seasons for many years. In order to obtain some its capacity, some enterprises have to queue for half a year.

TSMC has joined the Chip 4 Alliance led by the US and has established 5nm, 4nm and 3nm process production lines in the US and Japan, but only expanded 28nm process and other mature process capacity in Chinese Mainland, showing a clear "geographical discrimination". After the launch of Huaweis new-gen flagship chip, Kirin 9000S, Chinese enterprises realized that China could also produce mid-to-high-end chips of 7nm process node. Since domestic 7nm process is available, it is natural that no one would beg for TSMCs foundry.

Recently, TSMC has been troubled by a lack of orders, and announced price reduction for mature processes by about 2% to 5%. Although the reduction was not significant, there is a clear signal that TSMC could not withstand the current situation. However, a few days later, news came that TSMC cut price for its advanced 7nm process by 5% to 10%.

Comments

As leader of wafer foundry, TSMC has recently been troubled by a lack of orders. TSMCs actions have always been seen as an industry signal. This means that this wave of price reductions by wafer foundry has begun to spread from second-tier fabs to first-tier fabs and from mature processes to advanced processes. It also means that chip manufacturers are facing fierce competition in the market, and the chip industry chain will become more flexible and diverse.

The current price reductions will not only affect the performance of wafer industry but further transfer the performance pressure faced by fabs to the enterprises of the upstream industries of equipment and materials, compressing their profit margin. But for consumers, price reductions mean more choices and opportunities.

Company Trend（Dec. 11）

Nvidia confirms to expand cooperation with Vietnamese companies

The CEO of the US chip manufacturer, Nvidia, said on Monday that the company will expand cooperative partnership with top tech companies in Vietnam and support training AI and digital infrastructure talents in Vietnam. According to a document on upgrading US-Vietnam diplomatic relations released by the White House in September, Nvidia has invested US$250mn in Vietnam and has so far partnered with leading tech companies and has deployed AI in cloud, automotive and healthcare industries. The CEO of Nvidia said at an event held in Hanoi: “Vietnam is already our partner because we have millions of customers here.”

Nvidia plans to discuss with Vietnamese tech companies and the government about a semiconductor co-operation agreement at a meeting held on Monday, Reuters reported last week. Vietnam is trying to enter into the fields of chip design and even chip manufacturing, as the US-China trade war has created chances for Vietnam in the industry. During the event on Monday, the Minister of Investment of Vietnam said that Vietnam had been preparing mechanisms and incentive measures to attract investment for projects in the semiconductor and AI industries.

Comments

In fact, Vietnam has created a certain foundation in the semiconductor field. Intel has established one of the worlds largest chip assembly plants in Vietnam. In addition, a batch of large assembly plants are operating well in Vietnam. However, Vietnam is not satisfied with the current situation. It is seeking to make breakthroughs and further enter into fields such as chip design and chip manufacturing. Nvidia is expanding its partnership with Viettel, FPT, Vingroup, and VNG in Vietnam, and has built a base in Vietnam to attract talents from around the world, contributing to the development of the semiconductor and AI ecosystems and the future digital industry in Vietnam.

Policy Trend（Dec. 12）

South Korea and Netherlands set up “2nm semiconductor alliance”

On December 12, local time, the President of South Korea, together with Chairman of Samsung Electronics and Chairman of SK Group, visited the clean room at the headquarters of ASML, the world’s only EUV lithography machine manufacturer during his state visit to the Netherlands. The president of South Korea visited ASLM’s 2nm engineering capability (one nanometer (nm) is equal to one-billionth of a meter), a game changer in the semiconductor market. Some analysts believe that if any enterprise has the advantage of the most cutting-edge 2nm foundry technology，it will seize the 660-trillion-KRW market. In this case, in order to catch up the advanced 2nm process technology of TSMC, the President of South Korea and the presidents of the core semiconductor companies of South Korea held a face-to-face meeting.

The high-ranking officials at the presidential office said that Samsung Electronics and TSMC have just entered into the 3nm process competition. If any enterprise holds the 2nm engineering facility, it will be in a very favorable position. The President of South Korea announced on December 11, local time, that the semiconductor cooperation between South Korea and the Netherlands will be upgraded to “semiconductor alliance” during his visit.

Comments

The visit of the President of South Korea is crucial to the development of the AI chip war. With the rapid growth of AI servers, AI phones and AI computers dominated by generative AI, securing EUV equipment is one of the most urgent agenda of South Korea’s semiconductor companies. As for AI chips, the demand of AI chips for high-end GPUs and state-of-the-art memory DRAM is expected to grow significantly.

In addition, this was the first time that a South Korean president visited a company during his overseas visit. It was also the first time for ASML, a leading technical giant known as the “Super B Party”, disclosed its core facilities to a foreign leader. According to report of South Korean media, the success of South Korea’s semiconductor cooperation depends on the cooperation between South Korea and the Netherlands.

Market Trend（Dec. 14）

Global wafer fabs expand capacity crazily

According to the latest estimate of TreadForce as of 2023, Taiwan holds approximately 46% of global semiconductor foundry capacity, followed by China (26%), South Korea (12%), the US (6%), and Japan (2%). However, due to the incentives and subsidies of each country, Chinese mainland and the US are actively promoting their local production, and the semiconductor production capacities of Taiwan and South Korea are projected to decrease to 41% and 10%, respectively, by 2027.

As for advanced manufacturing processes (including 16/14nm and more advanced technologies), Taiwan takes a lead with a 68% global capacity share in 2023, followed by the US (12%), South Korea (11%), and Chinese mainland (8%). Meanwhile, Taiwan holds nearly 80% of the capacity based on EUV generation processes (such as 7nm and beyond).

In terms of mature processes (28 nm and more mature processes)，Chinese mainland is forced to expand capacity aggressively. Due to the export controls by the US, Japan, and the Netherlands on advanced equipment, Chinese mainland moves to mature process, and China’s share in mature process capacity is expected to reach 39% by 2027, with room for further growth if equipment procurement goes smoothly.

Comments

Due to the impact of the previous chip shortage and geopolitical influence, IC design customers have begun to choose multiple wafer fabs to spread risks. However, this move is likely to cause concerns of higher costs for subsequent ICs and repeated orders. At the same time, despite of long-standing cooperation with fixed wafer fabs, customers will still validate production lines of plants around the world to make flexible wafer tapeout schedules at any time. Therefore, apart from addressing larger capacity and price competitions, existing wafer fabs also need to maintain flexibility in capacity adjustments, bear new capacity depreciation pressures, and technological leadership on premise of keeping profitability.

Trends of somedomestic industries

1. JSM Wuhan SiC manufacturing base put into operation（Dec. 11）

According to the news of the official WeChat account of Wuhan Economic Development Zone, the Wuhan SiC manufacturing base of JSMicro Semiconductor Co., Ltd. (“JSM”) has officially started operation in the Comprehensive Bonded Area of Wuhan Economic & Technological Development Zone. It is learned that the total investment in the project is approximately RMB1.5bn. The project is expected to reach design capacity in 2027, with sales revenue of RMB1bn, thus filling the gap in the production of SiC semiconductor materials in Wuhan.

According to data, Semiconduct Global Solutions (“SGS”) is committed to promoting the localization of semiconductor equipment and key parts, and has delivered multiple types of equipment and parts to domestic leading customers. In March this year, JSM (Wuhan) Advanced Material Technology Co., Ltd. was incorporated in Wuhan Economic Development Zone, and it focuses on R&D, production and manufacturing of SiC materials, SiC focus rings, shower plate, wafer-boat and other parts and consumables for key equipment in the SiC semiconductor industry chain. At present, JSM has completed development of parts and consumables for etching, diffusion, extension, rapid heat treatment and other processes, and some of its products have filled the domestic gap, initially forming stable production and supply capacity.

2. WRG Semiconductor’s project with annual capacity of 240,000 8-inch power devices started operation（Dec. 12）

According to the news of the Wechat account of Lishui Economic and Technological Development Zone, Zhejiang Wangrong Semiconductor Co., Ltd. has completed its 8-inch power device project and put it into operation. The project will make up for the supply gap of 8-inch power semiconductor chips in China, and further alleviate the supply problem.

It is reported that the first phase of the project, with investment of RMB 2.4bn, will produce 240,000 8-inch wafers per year and focus on R&D and manufacturing of 0.18μm to 0.35μm power discrete devices. Upon completion and putting into operation, the project will mainly engage in technological innovation of the semiconductor field and other key areas, invest funds in R&D of manufacturing process and production technology innovation of semiconductors, and gather experience, train talents and develop IP rights in core underlying technologies for the semiconductor industry.

According to data, Zhejiang Wangrong Semiconductor Co., Ltd. is an iconic leading enterprise engaged in the manufacturing process of "Smart IDM", the semiconductor industry chain with Lishui characteristics. It is a company based on the manufacturing model of vertically integrating "chip design, wafer manufacturing, device packaging and testing, and product application", mainly focusing on power chips and power modules such as high and medium voltage IGBTs, MOSFETs, and FRDs monopolized by overseas giants.

3. PSMC invested US$5.5bn to build fab in Japan to drive automotive chip business growth(Dec. 13)

According to news on December 13, Powerchip Semiconductor Manufacturing Corp.(“PSMC”) will aggressively develop its automotive semiconductor business with the aid of its new fab in Japan. In order to gain a better position in the Japanese market, PSMC plans to work with SBI Holdings to jointly invest 800bn yen (approximately US$5.5bn) to establish a joint venture in Ohira Village, Kurokawa District, Miyagi Prefecture.

In the first phase, PSMC will invest 420bn yen to mass produce 10,000 12-inch wafers per month from 2027. The goal of the fab is to produce 40,000 wafers per month when it fully operates in 2029. The Japanese government is considering providing subsidies up to 140bn yen.

It is reported that PSMC will equip the fab at Miyagi Prefecture with the production lines for automotive micro controller, AI chip, and drivers and power management chips for automotive display produced in Taiwan, to make full preparations for entering into the automotive semiconductor industry. At present, PSMC is developing and manufacturing older generation 28nm and larger semiconductor products in Taiwan, mainly used for consumer electronics such as smart phones and PCs. Now the company is striving to enter into the automotive field.

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