Taiwan semiconductor


2021-11-23

Global OSAT Revenue for 3Q21 Reaches US$8.89 Billion Thanks to Peak Season Demand, Says TrendForce

As the global vaccination rate rose, and border restrictions in Europe and North America eased, social activities also began to enter a period of recovery, with the consumer electronics market seemingly ready for the arrival of the traditional peak season in 2H21, according to TrendForce’s latest investigations. At the same time, however, the global supply chain was affected by delays in maritime transport, skyrocketing shipping costs, and component shortages, in addition to already-prohibitive price hikes for certain components in 1H21. Given the parallel rise in both material and manufacturing costs, the market for end products has not undergone the expected cyclical upturn in 2H21. Even so, the overall demand for and shipment of smartphones, notebook computers, and monitors experienced QoQ increases in 3Q21, thereby driving up businesses for major OSAT (outsourced semiconductor assembly and test) companies. For 3Q21, the revenues of the top 10 OSAT companies reached US$8.89 billion, a 31.6% YoY increase.

Certain major OSAT companies experienced a slight dip in their capacity utilization rates due to the ongoing shortage of key components including chips and substrates, as well as the electricity rationing that limited both energy intensity and energy consumption in Jiangsu, Zhejiang, and Guangdong at the end of September. Nevertheless, this dip has had virtually no impact on the OSAT industry because certain OSAT companies shifted their operations to substrate-less packaging technologies and reallocated the previously affected capacities. Hence, TrendForce is bullish on the performance of the OSAT industry in 4Q21.

Market leaders ASE and Amkor registered revenues of US$2.15 billion and US$1.68 billion, which represent YoY increases of 41.3% and 24.2%, respectively, for 3Q21. While both companies had some of their capacities hindered due to the shortage of chips, lead frames, and substrates, ASE had its lead times further extended given that its Suzhou-based fab was affected by China’s power rationing. Notably, as the demand for packaging and testing smartphone APs, network chips, and automotive chips remains strong in 4Q21, ASE and Amkor will continue to expand in the 5G, IoT, and AI end-product markets in 2022.

SPIL is currently aiming to strengthen the R&D operations for advanced packaging technologies at its new fab in Erlin, Changhua, since it will be unlikely to compensate for the loss of smartphone AP packaging business from Huawei in the short run. SPIL’s revenue for 3Q21 reached US$1.04 billion, a 15.6% YoY increase. While KYEC previously suffered lowered capacity utilization due to the COVID-19 pandemic, it has since made a gradual recovery and registered a revenue of US$323 million, a 28.5% YoY increase, for 3Q21, thanks to testing orders for 5G chips from Qualcomm and MediaTek. PTI, on the other hand, primarily benefitted from its DRAM packaging and testing business. The company posted a revenue of US$802 million, a 24.0% YoY increase, for 3Q21. Nonetheless, PTI’s memory packaging capacity will likely undergo a sharp decline going forward, as Intel gradually finalizes the sale of its Dalian fab to SK Hynix by 2025, and the agreement between Micron and PTI regarding the assembly and testing services PTI provides at Micron’s Xi’an fab expires in 2Q22. In response, PTI reallocated some capacities at its new fab in Hsinchu to other strategic priorities such as CIS packaging and FOPLP technologies in 3Q21.

Major Chinese OSAT companies JCET and Hua Tian continued to benefit from China’s pursuit of domestic semiconductor substitutes. The two companies expanded their supply of OSAT services for 5G smartphones, base stations, automotive chips, and consumer electronics. As a result, JCET and Hua Tian registered revenues of US$1.25 billion and US$502 million, representing YoY growths of 27.5% and 57.6%, respectively, for 3Q21. Owing to strong sales by its client AMD this year, TFME recorded a revenue of US$636 million, an impressive 59.8% YoY increase, which represents the highest revenue growth among the top 10 OSAT companies in 3Q21.

Although ChipMOS and Chipbond, which specialize in packaging and testing display panel driver ICs, were affected by the slight drop in small-sized TV panel shipment in 3Q21, they were able to compensate for this loss owing to the gradual increase in packaging and testing demand for such driver ICs as TDDI and DDI. This increase can primarily be attributed to the growing demand for mid- and large-sized TV panels, as well as the ramp-up of OLED smartphone panels, which certain smartphone models began to adopt. For 3Q21, ChipMOS and Chipbond grew their respectively revenue by 32.5% YoY and 29.5% YoY to about US$257 million and US$255 million. At the same time, as IC design companies from the upstream supply chain redirected certain orders to ChipMOS and Chipbond in response to China’s power rationing at the end of September, these two companies will likely reach new revenue records in 4Q21.

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

2021-11-10

Shortage of Semiconductor Parts, Such As IC Substrates, Becomes Primary Driving Force Behind Development of FOPLP Technology

As the COVID-19 pandemic wreaked havoc on the global electronics supply chain, the packaging and testing operations of mid-range and high-end chips were subsequently confronted with prolonged lead times. This can primarily be attributed to the fact that IC substrate suppliers were unable to raise output or expand their production capacities in the short run in order to meet the skyrocketing volume of client orders. Hence, products that are packaged using BGA (Ball Grid Array), Flip Chip, or SiP technologies, all of which require the use of IC substrates, had their lead times lengthened. Certain IC design companies are therefore considering the feasibility of packaging technologies that do not require substrates.

Regarding the trend of advanced packaging development, technologies such as 2.5D/3D IC, SiP, and FOPLP (Fan-out Panel Level Packaging) remain the current mainstream R&D targets. Given the ongoing shortage of semiconductor components, including IC substrates, FOPLP, in particular, has garnered the most attention among the aforementioned three packaging technologies as it can be operated without substrates. At present, most OSAT companies and other chipmakers have successively invested in FOPLP-related technological and manufacturing development in order to capitalize on potential new commercial opportunities.

Despite FOPLP’s advantage of packaging chips across large areas, technological development remains problematic

Regarding the history of FOPLP development as well as the technology’s evolution going forward, its earliest roots can be traced to existing packaging applications including Flip Chip and BGA. As end-products continued to experience performance upgrades, leading to the number of I/O pins being insufficient for meeting the increase in performance demand, new types of wafer-level packaging technologies such as Fan-in and Fan-out subsequently emerged to fulfill the packaging demands of mid-range chips, high-end chips, and other emergent applications.

Although Fan-in and Fan-out packaging technologies are able to effectively raise the number of I/O pins, they also result in a substantial increase in manufacturing costs compared to previous-generation technologies such as Flip Chip and BGA. For both 8-inch wafers and 12-inch wafers, packaging costs have only been on a very slight downtrend. That is why the packaging industry has placed a top priority on simultaneously lowering production costs while raising the number of chips packaged at once. Hence, FOPLP technology has emerged in response to this demand for large-area packaging technology.

Regarding the actual implementation of FOPLP, a potential solution may be found in wafer-level packaging RDL (Redistribution Layer) designs, such as chip first or chip last. It should be noted that chip first FOWLP or chip last FOWLP processes do in fact serve as feasible concepts for FOPLP development. However, the FOPLP process involves stacking massive amounts of packaging materials and chips together, and their combined weight may lead to such issues as panel warpage. In addition, it remains difficult to maintain a consistent uniformity and yield rate during the FOPLP process, meaning further collaborations and optimizations on the parts of OSAT companies and semiconductor equipment suppliers are necessary for FOPLP to succeed going forward.

(Image credit: Unsplash)

2021-10-28

Annual Foundry Revenue Expected to Reach Historical High Once Again in 2022 with 13% YoY Increase with Chip Shortage Showing Sign of Easing, Says TrendForce

While the global electronics supply chain experienced a chip shortage, the corresponding shortage of foundry capacities also led various foundries to raise their quotes, resulting in an over 20% YoY increase in the total annual revenues of the top 10 foundries for both 2020 and 2021, according to TrendForce’s latest investigations. The top 10 foundries’ annual revenue for 2021 is now expected to surpass US$100 billion. As TSMC leads yet another round of price hikes across the industry, annual foundry revenue for 2022 will likely reach US$117.69 billion, a 13.3% YoY increase.

Foundries will gradually kick off production with newly added capacities in 2H22 in response to the ongoing chip shortage

TrendForce indicates that the combined CAPEX of the top 10 foundries surpassed US$50 billion in 2021, a 43% YoY increase. As new fab constructions and equipment move-ins gradually conclude next year, their combined CAPEX for 2022 is expected to undergo a 15% YoY increase and fall within the US$50-60 billion range. In addition, now that TSMC has officially announced the establishment of a new fab in Japan, total foundry CAPEX will likely increase further next year. TrendForce expects the foundry industry’s total 8-inch and 12-inch wafer capacities to increase by 6% YoY and 14% YoY next year, respectively.

Although the manufacturing costs of 8-inch and 12-inch wafer fabrication equipment are roughly equal, the ASP of 8-inch wafers falls short compared with 12-inch wafers, meaning it is generally less cost-effective for foundries to expand their 8-inch wafer capacities. That is why the increase in 8-inch capacity is also expected to fall short of the increase in 12-inch capacity next year. Regarding 12-inch wafer foundry services, the 1Xnm and more mature nodes, which currently represent the most severe shortage among all manufacturing process technologies, will account for more than 50% of the newly added wafer capacities next year. On the other hand, while Chinese foundries, such as Hua Hong Wuxi and Nexchip, account for most of the newly added 12-inch wafer capacities this year, TSMC and UMC will comprise the majority of 12-inch wafer capacity expansions in 2022. These two foundries will primarily focus on expanding the production capacities allocated to the 40nm and 28nm nodes, both of which are currently in extreme shortage. As a result, the ongoing chip shortage will likely be alleviated somewhat in 2022.

Chip shortages will show signs of easing, but component gaps will continue to impact the production of some end products

Application segments such as consumer electronics (such as notebook computers), automotive electronics, and most connected digital appliances are now being impacted by the shortages of peripheral components made with the 28nm and more mature nodes. The undersupply of the said components will probably begin to moderate somewhat in 2H22 if foundries proceed to activate their newly added production capacity. However, just as there will be signs indicating an easing of capacity crunch for the 40nm and 28nm nodes, the tightening of production capacity for 8-inch wafers and 1Xnm nodes is going to be an important development that warrants close attention in 2022.

Regarding 8-inch wafer foundry services, the overall production capacity growth has been limited while the demand related to PMICs has increased multiple folds. The growth of this particular application has to do with the increasing market penetration of 5G smartphones and electric vehicles. Under this circumstance, PMICs continue to take up the available production capacity of 8-inch wafers, and wafer production lines that deploy ≦0.18µm nodes are now expected to operate at fully-loaded capacity to the end of 2022. Hence, the capacity crunch for 8-inch wafers will not ease in the short term.

As for 1Xnm nodes, the number of foundries that are offering these more advanced process technologies is gradually shrinking. The reason is that following the migration to FinFET in the general development of semiconductor manufacturing, the costs associated with R&D and capacity expansions have risen higher and higher. TSMC, Samsung, and GlobalFoundries are now the only three foundries in the world that possess 1Xnm technologies. Also, GlobalFoundries is the only one among these three to undertake a marginal capacity expansion for its 1Xnm node next year. The other two currently have no plan to raise 1Xnm production capacity in 2022.

In the aspect of demand, the kinds of chips that are made with 1Xnm nodes include the following: 4G SoCs, 5G RF transceivers, and Wi-Fi SoCs equipped in smartphones, as well as TV SoCs, chips for Wi-Fi routers, and FPGAs/ASICs. Due to the increasing market penetration of 5G smartphones, 5G RF transceivers will take up a massive portion of the overall 1Xnm production capacity. This will, in turn, significantly limit the available wafer capacity allocated to other products. Furthermore, demand has been rising over the years for smartphones that are equipped with 1Xnm Wi-Fi SoCs and Wi-Fi routers that contain 1Xnm chips. The supply of these components is already very limited at this moment and will get tighter in 2022 because the overall 1Xnm production capacity will not be raised by a significant amount.

In sum, there are several takeaways from this focus on the potential developments in the foundry market next year. First, the major foundries have now announced capacity expansions with the emphasis on addressing the capacity crunch for the 40nm and 28nm nodes. Their newly added production capacity is expected to enter operation next year, following two consecutive years of chip shortages. This will bring some relief to the undersupply situation, which is already very severe at this moment. However, the actual chip output contribution from the newly added production capacity will mainly take place no earlier than 2H22, or during the middle of the traditional peak season. With stock-up activities across the supply chain expected to reach a higher level of intensity at that time because of preparations for holiday sales, the easing of the capacity crunch in the foundry market will not be especially noticeable.

Second, it is worth pointing out that even though supply will loosen slightly for some 40/28nm chips, the lack of production capacity for 0.1Xµm chips on 8-inch wafers and 1Xnm chips on 12-inch wafers will likely remain a serious bottleneck in the supply chain. Currently, production capacity is already quite insufficient for 0.1Xµm 8-inch wafers and 1Xnm 12-inch wafers. Next year, the related capacity growth is also expected to be fairly limited. In sum, TrendForce believes that the foundry market will continue to experience some tightness in production capacity during 2022. Although the undersupply situation will moderate for some components, the persistent issue of component gaps will also continue to adversely affect the production of certain end 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

2021-10-18

Why did TSMC choose to build a chip plant in Japan?

Having experienced in worldwide lockdown caused by COVID-19 and rising geopolitical worries in recent years, governments of various countries hope to have wafer manufacturing plants in their own territories to reduce the possible impact of supply chain disconnection; however, building and operating a semiconductor wafer manufacturing factory is not an easy task. In addition to the extremely high cost, high labor demand, and environmental conditions are also a threshold. Therefore, TSMC, the leader in foundries, has naturally become the target of active invitations by governments to set up factories. In addition to Japan,  after evaluating customer needs, cost, and environmental resources (including water, electricity, land) and other conditions, TSMC doesn’t rule out the possibility of setting up factories in other countries if it is cost-effective.

Japan, once the world’s largest semiconductor cluster, still occupies a very important position in some semiconductor equipment, raw materials and packaging materials, and technologies. TSMC has previously announced the establishment of a 3DIC material R&D center in Japan, and this time it announced the establishment of a wafer manufacturing plant. In addition to deepening the streamlined process of customer products from manufacturing to packaging, it can also cooperate closely with upstream equipment vendors, chemical raw materials factories, such as TEL, SCREEN, SUMCO, Shinetsu, etc.

(Image credit: TSMC

2021-09-06

Revenue of Top 10 OSAT Companies for 2Q21 Reaches US$7.88 Billion Due to Strong Demand and Increased Package/Test Prices, Says TrendForce

Despite the intensifying COVID-19 pandemic that swept Taiwan in 2Q21, the domestic OSAT (outsourced semiconductor assembly and test) industry remained largely intact, according to TrendForce’s latest investigations. Global sales of large-sized TVs were brisk thanks to major sporting events such as the Tokyo Olympics and UEFA Euro 2020. Likewise, the proliferation of WFH and distance learning applications propelled the demand for IT products, while the automotive semiconductor and data center markets also showed upward trajectories. Taking into account the above factors, OSAT companies raised their quotes in response, resulting in a 26.4% YoY increase in the top 10 OSAT companies’ revenue to US$7.88 billion for 2Q21.

TrendForce indicates that, in light of the ongoing global chip shortage and the growing production capacities of foundries/IDMs in the upstream semiconductor supply chain, OSAT companies gradually increased their CAPEX and expanded their fabs and equipment in order to meet the persistently growing client demand. However, the OSAT industry still faces an uncertain future in 2H21 due to the Delta variant’s global surge and the health crisis taking place in Southeast Asia, home to a significant number of OSAT facilities.

Regarding the performances of individual OSAT companies in 2Q21, market leader ASE and Amkor each recorded revenues of US$1.86 billion and US$1.41 billion, which represented YoY growths of 35.1% and 19.9%, respectively, for the quarter. Both companies benefitted from strong demand for 5G smartphones, notebook computers, automotive chips, and networking chips. In particular, ASE allocated some of its capacities to KYEC (which suffered a drop in its IC testing capacity due to the pandemic) and therefore experienced a surge in its revenue. Also posting a revenue growth in 2Q21 was Amkor, which took second place on the top 10 list owing to the high demand for automotive chips, HPC chips, and 5G handsets released by Apple and other smartphone brands.

SPIL’s revenue for 2Q21 reached US$931 million, a modest 2.3% YoY increase. The company’s relatively muted growth can be attributed to the fact that smartphone IC packaging demand from Huawei, one of SPIL’s major clients, had plunged, while other smartphone brands did not place orders sufficient for making up for this plunge. As previously mentioned, some of KYEC’s testing capacities were adversely affected by the COVID-19 pandemic, resulting in a 6.8% YoY increase in KYEC’s revenue to a mere US$274 million for 2Q21. PTI gradually recovered from difficulties resulting from the closure of its Japanese and Singaporean subsidiaries. For 2Q21, PTI’s revenue reached US$742 million, a 14.3% YoY increase.

Regarding Chinese OSAT companies, JCET and Hua Tian both expanded their capacities in order to meet the massive demand from the domestic 5G telecom, base station, consumer electronics, and automotive markets. While JCET and Hua Tian continue to operate in accordance with China’s goal of achieving domestic semiconductor substitutes, the two companies’ revenues for 2Q21 reached US$1.1 billion and US$467 million, which represented YoY growths of 25% and 64.7%, respectively. It should be pointed out that TFME also benefitted from the aforementioned market demand. TFME’s revenue reached US$591 million, a 68.3% YoY increase, which was the highest increase among the top 10 OSAT companies in 2Q21. TFME’s impressive growth took place primarily because the company is the main OSAT provider for AMD. As AMD captured some of Intel’s market share, both AMD and, by extension, TFME, experienced a resultant revenue growth.

Finally, ChipMOS and Chipbond, which specialize in panel driver IC packaging and testing, benefitted from major sporting events such as the Tokyo Olympics and UEFA Euro 2020. Given the skyrocketing demand for display panels, IC testing demand for driver ICs, including TDDI and DDI, also underwent a corresponding rise. Notably, due to a shortage of packaging materials, ChipMOS raised the price of its packaging services for memory products and subsequently registered a spike in both revenue and gross profits. While both companies’ revenues reached US$251 million, ChipMOS and Chipbond each registered revenue growths of 38.4% YoY and 49.6% YoY, respectively.

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

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