TSMC


2021-04-28

Impact of Power Outage on TSMC Fab14 P7 Still Remaining Under Assessment, with Production of Automotive MCU and CIS Logic Products Hit Hardest, Says TrendForce

TSMC’s Fab14 P7 in the Southern Taiwan Science Park suffered a power outage on April 14th. The cause of the power outage was an accidental severing of an underground power cable during construction work nearby. According to TrendForce’s latest investigations, the facility accounts for around 4% of TSMC’s total 12-inch wafer foundry capacity and around 2% of the global 12-inch wafer foundry capacity, and TSMC is still assessing the exact figures for the wafers that have to be scrapped and the wafers that can be reworked.

According to the latest available information, power was fully restored to the fab site at 7:30 p.m. on April 14th. The diesel uninterruptible power supply (DUPS) of the facility kicked in instantly when the power cable was cut, but there was still a short period of power interruption and voltage drop. As a result, some of the equipment systems in the facility temporarily experienced operational irregularity or malfunction. Based on past experiences with this type of incident, TrendForce believes that it will take 2-7 days to recalibrate the equipment systems so that they can return to normal operation.

For TSMC, this power outage incident has had implications on both revenue and production. With respect to revenue, TrendForce’s own analysis indicates that the disposal of the wafers that are too damaged for rework will bring about a revenue impact of US$10-25 million. This amount represents less than 0.1% of TSMC’s annual total revenue.

On the other hand, with respect to production, the Fab14 P7 facilities contain 45/40nm and 16/12nm production lines, and the outage will primarily impair end products including smartphones and automobiles, since automotive chips, which are in extreme shortage at the moment, are manufactured at the 45/40nm nodes, and 45/40nm capacities are among the most insufficient among all foundry capacities.

TrendForce further indicates that clients whose wafer inputs for automotive MCU and CIS logic products (manufactured at the 45/40nm nodes) are bearing the brunt of the outage’s impact mainly include NXP, Renesas, and Sony. In particular, Sony CIS 40nm Logic products are primarily supplied for high-end smartphones. However, as Sony manufactures these products in its in-house facilities as well, even if TSMC were to fully discard this batch of wafers, Sony’s supplies will remain relatively unaffected in the short run.

On the other hand, after the automotive market entered a gradual recovery in 2H20, automotive MCUs have been in shortage due to automakers’ insufficient inventory. Furthermore, a fire broke out at Renesas’ Naka-based 12-inch fab on March 19, and the fab’s cleanrooms were severely damaged as a result.

As of now, manufacturing operations at the Naka fab have yet to resume. Since TSMC has been allocating some of its production capacities in Fab14 to these products as a substitute for the Naka fab, TrendForce believes that the power outage incident will likely exacerbate the shortage of automotive MCUs going forward.

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

2021-04-28

Foundry Revenue Projected to Reach Historical High of US$94.6 Billion in 2021 Thanks to High 5G/HPC/End-Device Demand, Says TrendForce

As the global economy enters the post-pandemic era, technologies including 5G, WiFi6/6E, and HPC (high-performance computing) have been advancing rapidly, in turn bringing about a fundamental, structural change in the semiconductor industry as well, according to TrendForce’s latest investigations. While the demand for certain devices such as notebook computers and TVs underwent a sharp uptick due to the onset of the stay-at-home economy, this demand will return to pre-pandemic levels once the pandemic has been brought under control as a result of the global vaccination drive.

Nevertheless, the worldwide shift to next-gen telecommunication standards has brought about a replacement demand for telecom and networking devices, and this demand will continue to propel the semiconductor industry, resulting in high capacity utilization rates across the major foundries. As certain foundries continue to expand their production capacities this year, TrendForce expects total foundry revenue to reach a historical high of US$94.6 billion this year, an 11% growth YoY.

TrendForce’s latest analysis also finds that shipments and production volumes of end products will continue to grow in the post-pandemic period. Regarding host computers, the total (or global) shipments of servers and workstations are forecasted to undergo a yearly growth mainly driven by applications that are enabled by 5G and HPC. As for various types of client (or end-user) devices, the annual total production volume of 5G smartphones, in particular, is forecasted to increase by around 113% YoY. The penetration rate of 5G models in the smartphone market is also forecasted to rise to 37% in the same year. Turning to notebook (or laptop) computers, their total shipments in 2021 will register a YoY growth rate of about 15% thanks to the proliferation of the stay-at-home economy.

Finally, the governments of many countries introduced consumption subsidies during the pandemic so as to stimulate the domestic economy. Video streaming services have also grown dramatically with respect to content and demand because of the pandemic. As a result, the TV market is seeing a wave of replacement demand as consumers want to purchase the latest models that offer higher resolutions (e.g., 4K and 8K) and network connectivity (i.e., smart TVs). The total shipments of digital TVs in 2021 are forecasted to undergo a YoY growth rate of around 3%.

The high demand for the aforementioned end devices has therefore resulted in a corresponding surging demand for various ICs used in these devices, including CIS, DDI, and PMICs. In addition, the increasing adoption of cloud services, including IaaS, PaaS, and SaaS, has also generated a massive demand for various high-end CPUs and memory products used in the HPC platforms that power said cloud services.

On the whole, TrendForce believes that, with demand maintaining a healthy growth momentum for many kinds of end products, semiconductor components that are manufactured with the same foundry nodes will be competing for production capacity. Some categories of ICs will therefore experience a more severe capacity crunch due to the product mix strategies of respective foundries. In the short term, no effective resolution is expected for the undersupply situation in the foundry market.

Certain foundries will continue to expand their production capacities in 2021 as the semiconductor industry undergoes a structural change

With regards to the expansion plans of various foundries this year, tier-one and tier-two foundries will prioritize the development of different process nodes. More specifically, tier-one foundries, including TSMC and Samsung, will focus on the R&D, fab build-out, and capacity expansion for the 5nm and below nodes in response to the growing chip demand for HPC-related applications. On the other hand, tier-two foundries, including SMIC, UMC, and GlobalFoundries will primarily focus on expanding their production capacities of the 14nm to 40nm mature process nodes in order to meet the massive demand for next-gen telecom technologies (such as 5G and WiFi6/6E) and other diverse applications (such as OLED DDI and CIS/ISP).

Incidentally, it should be pointed out that SMIC’s capacity expansion plans have been constrained after the US Department of Commerce added SMIC to the Entity List, which prohibited the company from procuring US semiconductor equipment. However, SMIC still possesses enough funds for procuring non-US equipment and building new fabs, as the company is not only actively expanding its existing 8-inch and 12-inch wafer capacities, but also proceeding with the construction of its new fab in Beijing.

Apart from the aforementioned companies, other foundries, including PSMC, Tower Semiconductor, Vanguard, and HHGrace, will prioritize the capacity expansion of their 8-inch wafers (which are used for the 55nm and above nodes) to meet the demand for large-sized DDI, TDDI, and PMICs. These foundries, in contrast with their larger competitors, are primarily focusing on 8-inch capacity expansion due to the relatively high cost of DUV immersion systems used for the 40/45nm and below processes. For these companies, it is much more economically feasible to instead undertake capacity expansions for the 55/65nm and above nodes.

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

2021-03-11

Strong Growth Expected for Third-Generation Semiconductors in 2021, with GaN Power Devices Undergoing Highest YoY Increase in Revenue at 90.6%, Says TrendForce

The third-generation semiconductor industry was impaired by the US-China trade war and the COVID-19 pandemic successively from 2018 to 2020, according to TrendForce’s latest investigations. During this period, the semiconductor industry on the whole saw limited upward momentum, in turn leading to muted growth for the 3rd gen semiconductor segment as well. However, this segment is likely to enter a rapid upturn owing to high demand from automotive, industrial, and telecom applications. In particular, the GaN power device market will undergo the fastest growth, with a $61 million revenue, a 90.6% YoY increase, projected for 2021.

TrendForce expects three factors to drive the rapid growth of the GaN and SiC markets in 2021: First, widespread vaccinations are projected to drastically curb the spread of the pandemic, thereby galvanizing a stable increase in the demand for base station components, as well as for components used in industrial energy transition, such as power inverters and converters. Secondly, as Tesla began adopting SiC MOSFET designs for its in-house inverters used in Model 3 vehicles, the automotive industry has started to place increasing importance on 3rd gen semiconductors. Finally, China will invest enormous capital into its 14th five-year plan starting this year and expand its 3rd gen semiconductor production capacity to ultimately achieve semiconductor independence.

Resurging demand from EV, industrial, and telecom sectors will bring about a corresponding increase in 3rd gen semiconductor device revenue

Although certain foundries, such as TSMC and VIS, have been attempting to manufacture GaN devices with 8-inch wafers, 6-inch wafers are still the mainstream. As the pandemic shows signs of a slowdown, the demand for RF front end in 5G base stations, for smartphone chargers, and for automotive on-board chargers has now gradually risen. As such, total yearly revenue from GaN RF devices is projected to reach US$680 million, a 30.8% increase YoY, in 2021, whereas GaN power device revenue is projected to reach $61 million, which is a 90.6% increase YoY.

In particular, the remarkable increase in GaN power device revenue can primarily be attributed to the release of fast chargers from smartphone brands, such as Xiaomi, OPPO, and Vivo, starting in 2018. These chargers enjoyed excellent market reception thanks to their effective heat dissipation and small footprint. Some notebook computer manufacturers are currently looking to adopt fast charging technology for their notebook chargers as well. Going forward, TrendForce expects more smartphone and notebook chargers to feature GaN power devices, leading to a peak YoY increase in GaN power device revenue in 2022, after which there will be a noticeable slowdown in its upward trajectory as GaN power devices become widely adopted by charger manufacturers.

On the other hand, 6-inch wafer capacities for SiC devices have been in relative shortage, since SiC substrates are widely used in RF front end and power devices. TrendForce expects yearly SiC power device revenue to reach $680 million, a 32% increase YoY, in 2021. Major substrate suppliers, including Cree, II-VI, and STMicroelectronics, are planning to manufacture 8-inch SiC substrates, but the short supply of SiC substrates will unlikely be resolved until 2022.

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

2021-03-05

Progress in Importation of US Equipment Dispels Doubts on SMIC’s Capacity Expansion for Mature Nodes for Now, Says TrendForce

The major suppliers of WFE (wafer fab equipment) in the US are progressing smoothly in the application for license from the US government for the exportation of equipment systems, equipment parts, and customer services for 14nm and above processes to Chinese foundry SMIC. The US-based equipment suppliers that are applying for the license include Applied Materials, Lam Research, KLA-Tencor, and Axcelis. TrendForce believes that as some support from US-based equipment suppliers is forthcoming, SMIC should be able to continue its efforts in the optimization of the mature process modules and overcoming production bottlenecks to avoid a scission in raw materials and spare parts, and predicts the company to sit at a global market share of 4.2% in 2021. Keeping SMIC in operation will provide a bit of relief to the capacity crunch in the global foundry market, however, the tightening of the available production capacity will remain a challenge that is difficult to resolve for the foundry industry as a whole. Also, the US government continues to prohibit SMIC from obtaining the equipment of the advanced nodes that are 10nm and below, and the particular restriction poses a potential risk for the long-term development of the Chinese foundry.

SMIC Continues to Expand Domestic Demand and Localization under China’s Explicit Direction in Long-Term Development of Semiconductor

As the fifth largest IC foundry in the world, SMIC obtains over 70% of revenue from China and Asia-Pacific. In terms of process node perspectives, 0.18um, 55nm, and 40nm contribute to the majority of revenue that totaled to over 80% from being applied on service platforms such as logic, BCD, eFlash, sensor, RF, and HV, and the coordination with the IC projects listed in the 13th and 14th Five-Year Plan of China will continue to enhance on the assimilation of localized WFE (wafer fab equipment) and raw materials.

The sanctions imposed by the US Department of Commerce that have affected the long-term planning in production capacity and development strategies of SMIC are expected to result in a YoY declination of 25% in the capital expenditure of 2021 for the Chinese foundry. SMIC intends to allocate the majority of its capital expenditure to capacity expansion for the mature nodes and the construction of a new joint-venture fab in Beijing, and is conservative towards investing in advanced process technology such as FinFET. TrendForce believes that geopolitical factors and uncertainties in the WFE section of the supply chain have compelled SMIC to scale back its capital expenditure and shift its development focus to the 55/40nm and 0.18um nodes.

A breakdown of SMIC’s revenue by region shows that more than 50% comes from China, though whether major global clients are willing to continue placing their orders with SMIC under the consideration of foundry selection and long-term cooperation amidst the unabated status in the semiconductor competition between China and the US will be a focus of observation going forward. Pertaining to the return on investment for technology scaling and mature node, the development planning in advanced processes for SMIC no longer succumb to immediacy in demand under restricted client conditions and constraints from subcontractors. On the other hand, the resources for chiplet and specialty IC that exert better functions for the operation of the company are focused on the existing 14nm and above matured processes to enhance on PDK (process design kits) for clients that may create a business model with prolonged profitability, as well as preserve R&D staffs and future growth dynamics.

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

2021-02-24

Revenue of Top 10 Foundries Expected to Increase by 20% YoY in 1Q21 in Light of Fully Loaded Capacities, Says TrendForce

Demand in the global foundry market remains strong in 1Q21, according to TrendForce’s latest investigations. As various end-products continue to generate high demand for chips, clients of foundries in turn stepped up their procurement activities, which subsequently led to a persistent shortage of production capacities across the foundry industry.

TrendForce therefore expects foundries to continue posting strong financial performances in 1Q21, with a 20% YoY growth in the combined revenues of the top 10 foundries, while TSMC, Samsung, and UMC rank as the top three in terms of market share. However, the future reallocation of foundry capacities still remains to be seen, since the industry-wide effort to accelerate the production of automotive chips may indirectly impair the production and lead times of chips for consumer electronics and industrial applications.

TSMC has been maintaining a steady volume of wafer inputs at its 5nm node, and these wafer inputs are projected to account for 20% of the company’s revenue. On the other hand, owing to chip orders from AMD, Nvidia, Qualcomm, and MediaTek, demand for TSMC’s 7nm node is likewise strong and likely to account for 30% of TSMC’s revenue, a slight increase from the previous quarter. On the whole, TSMC’s revenue is expected to undergo a 25% increase YoY in 1Q21 and set a new high on the back of surging demand for 5G, HPC, and automotive applications.

In response to increased client demand for 5G chips, CIS, driver ICs, and HPC chips, Samsung will continue to raise its semiconductor CAPEX this year, which is divided between its memory and foundry businesses and represents Samsung’s desire to catch up to TSMC. With regards to process technologies, the Korean company’s capacity utilization rates for the 5nm and 7nm nodes have been relatively high in 1Q21, during which Samsung is expected to increase its revenue by 11% YoY.

In addition to chip demand from the automotive sector, UMC has been keeping up with manufacturing driver ICs, PMICs, RF front-end, and IoT products. The company’s capacity thus remains fully loaded in 1Q21, and UMC is expected to undergo a 14% YoY increase in revenue. GlobalFoundries is similarly experiencing high capacity utilization rates due to the increase in automotive chip demand, as well as the military chips that it has been manufacturing for the U.S. Department of Defense. GlobalFoundries’ revenue is expected to increase by 8% YoY in 1Q21.

SMIC’s revenue for the 14nm and below nodes is expected to decline in 1Q21 as the company was added to the Entity List by the U.S. and subsequently faced constraints in the development of advanced processes. However, with the persistent demand in the foundry market for mature processes above (including) the 40nm node, SMIC’s revenue is projected to stay on a positive trajectory and reach a 17% YoY increase in 1Q21. TowerJazz will spend about US$150 million on a small-scale capacity expansion, but equipment move-in and calibrations will not be finalized until approximately 2H21, after which the expanded capacity will start measurably contributing to the company’s revenue. In 1Q21, TowerJazz’s revenue is expected to be on par with the previous quarter while reaching a 15% increase YoY.

PSMC is primarily focused on manufacturing memory products, DDICs, CIS, and PMICs. At the moment, high demand for 8-inch and 12-inch wafer capacities and for automotive chips has resulted in fully loaded capacity for PSMC. The company’s revenue is expected to increase by 20% YoY in 1Q21. Likewise, VIS’ capacity is fully loaded across all of its process technologies. Driven by increased spec requirements for PMICs and small-sized DDICs, VIS’ revenue is expected to increase by 26% YoY in 1Q21. Finally, Hua Hong is currently placing considerable emphasis on expanding the 12-inch capacity of HH Fab7 in Wuxi. Process technologies for 12-inch production lines, including NOR, BCD, Super Junction, and IGBT, have all passed qualifications, thereby injecting fresh momentum into Hua Hong’s development. Furthermore, given Hua Hong’s fully loaded 8-inch capacities and the fact that its performance in 1Q20 represents a relatively low base period for YoY comparison, Hua Hong’s revenue may likely reach a 42% YoY increase in 1Q21.

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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