According to a report from UDN, TSMC held a groundbreaking ceremony yesterday for its Dresden, Germany plant, offering a significant boost to the EU’s efforts to stabilize its chip supply.

TSMC Chairman C.C. Wei led a team of top executives at the event, joined by key officials including German Chancellor Olaf Scholz. European Commission President Ursula von der Leyen also attended, bringing with her the announcement that the EU has approved a EUR 5 billion subsidy for the Dresden plant.

TSMC announced last August that it would partner with Bosch, Infineon, and NXP Semiconductors to establish the European Semiconductor Manufacturing Company (ESMC) in Germany.

The joint venture will construct a 12-inch wafer plant, with TSMC holding a 70% stake, while Bosch, Infineon, and NXP each hold 10%. Construction is planned to start in the second half of this year, with mass production expected by the end of 2027.

The planned fab is expected to have a monthly production capacity of 40,000 12-inch wafers on TSMC’s 28/22 nanometer planar CMOS and 16/12 nanometer FinFET process technology.  TSMC will be responsible for the plant’s operations.

Following the U.S.-China tech war, the EU passed the “Chips Act” to fully support the development of the semiconductor industry, attracting key investments from companies such as TSMC, Intel, Belgium’s IMEC, GlobalFoundries, and GlobalWafers, all of which sought subsidies for their new European operations.

TSMC’s joint venture proposal, exceeding EUR 10 billion, stands as the largest global direct investment in Saxony’s history.

When C.C. Wei took the stage, he began by thanking the German government. He revealed that when he first met with the German Chancellor, he had prepared a polite speech to decline the offer of building a plant in Germany.

However, when the Chancellor mentioned that a budget had already been reserved for TSMC, Wei eventually found himself agreeing to the project.

C.C. Wei further highlighted that TSMC’s total investment in the German plant exceeds EUR 10 billion and is expected to create around 2,000 jobs.

He explained that the decision to locate the plant in Dresden was due to its proximity to TSMC’s customers and access to a large pool of talented individuals. Wei also pledged to continue recruiting and nurturing talent in the region, with the goal of making ESMC the most important semiconductor manufacturing hub in Europe.

Read more

• [News] TSMC Maintains Overseas Expansion Strategy, Unfazed by Geopolitical Disruptions
• [News] TSMC’s German Plant Reported to Break Ground in Weeks, Expected to Begin Production by Late 2027

(Photo credit: TSMC)

AI industry has been driving semiconductor industry to advance forward. Benefited from the surge in AI-driven demand for advanced process chip, foundry industry is experiencing a gradual turnaround, while demands for consumer chip and automotive chip have not yet fully recovered, and competition remains fierce in the mature process chip sector, representing a stark contrast within the wafer foundry industry.

• Financial Results Indicate Strong AI Development but Weak Automotive Terminal Demands

Recently, several major foundries released their Q2 financial reports and shared outlook on future market conditions.

For the second quarter ending June 30, TSMC reported consolidated revenue of approximately USD 20.82 billion, up 32.8% YoY and 10.3% QoQ, which was attributed to strong demand for its 3nm and 5nm technologies.

As per the financial report, revenue from advanced technologies (7nm and below) accounted for 67% of TSMC’s total wafer revenue in 2Q24. In terms of application areas, HPC has replaced mobile business as the core driver of the company’s growth, contributing 52% of revenue.

Additionally, although TSMC’s automotive electronics revenue grew 5% QoQ, the company warned of a potential downturn in the automotive market this year.

UMC reported Q2 revenue of TWD 56.8 billion, up 4% QoQ. UMC expected customer inventories in the communications, consumer electronics, and computer sectors to return to seasonal levels as usual in the second half of this year, and to reach healthy levels by the end of the year.

However, demand in the automotive end market remains weak, which may extend the period of inventory adjustment, with healthy levels anticipated only by the first quarter of next year.

On August 6, GlobalFoundries released its latest financial report.

In the second quarter of this year, the company achieved revenue of USD 1.63 billion, a year-on-year decrease of 12% and a quarter-on-quarter increase of 5%. Net profit was USD 155 million, a year-on-year decrease of 35% and a quarter-on-quarter increase of 16%.

Industry sources cited by the report from WeChat account DRAMeXchange believe that during the pandemic, customers in sectors such as IoT, mobile device, and data center accumulated high inventory, which impacted GlobalFoundries’ revenue.

Moreover, the company is experiencing a cyclical downturn due to soft demands in the automotive, industrial, and other sectors.

• Advanced Processes Continue to Thrive while Mature Processes Face Intense Competition

The adoption of AI generative models keeps on the rise, driving high demand for AI chip. In this context, advanced processes have been well-received, leading to price increase and production expansion.

TrendForce’s survey in June showed that TSMC is seeing full capacity utilization in its 5/4nm and 3nm nodes due to strong demand from AI applications, new PC platforms, HPC applications, and high-end smartphones.

Its capacity utilization is expected to exceed 100% in the second half of the year, with visibility extending into 2025. Given cost pressures from overseas expansion and rising electricity prices, TSMC plans to raise prices for its advanced processes, which are experiencing strong demand.

TSMC is seeing full capacity utilization in its 5/4nm and 3nm nodes due to strong demand from AI applications, new PC platforms, HPC applications, and high-end smartphones. Its capacity utilization is expected to exceed 100% in the second half of the year, with visibility extending into 2025.

Given cost pressures from overseas expansion and rising electricity prices, TSMC plans to raise prices for its advanced processes, which are experiencing strong demand.

As per other sources cited by the same report, TSMC informed customers of a price increase for 5/3nm process products in 2024 at the beginning of this year.

In late July, TSMC notified several customers that due to rising costs, prices for 5/3nm process products will increase again starting January 2025, and the increase will range from 3-8%, depending on the tape-out plan, product, and partnership.

Meanwhile, the surge in demand for advanced packaging driven by AI will also lead to higher CoWoS prices.

To seize the significant opportunities brought by AI, many companies are actively investing in advanced processes. Currently, the 3nm process is the most advanced in the industry.

Meanwhile, TSMC, Samsung, Intel, and Rapidus are vigorously promoting the construction of 2nm fabs. Previously, TSMC and Samsung intended to produce 2nm chip at scale in 2025, while Rapidus planed to start trial production in 2025.

Following 2nm, 1nm chip will be the next goal for these fabs. According to their plans, the industry is likely to see the mass production of 1nm chip from 2027 to 2030.

Unlike the rising prices and volume in advanced process chip, mature process chip faces some uncertainty due to weaker-than-expected recovery in end-user demand, and sees more intense competition among manufacturers.

TrendForce’s survey reveals that the capacity utilization rates of PSMC and Vanguard is expected to improve more than anticipated in the second half of the year. However, overall demand for mature processes remains weak, with average capacity utilization still around 70–80%—indicating no significant shortages.

TrendForce further pointed out that in 2024, concerns over global inflation and weak recovery in end-demand may result in inconsistent momentum in replenishing inventory. Many foundries might offer price incentives to attract customers and boost capacity utilization, leading to a decline in overall ASP.

Furthermore, a significant amount of new capacity is expected to come online in 2025, including TSMC JASM, PSMC P5, SMIC’s new Beijing/Shanghai plants, HHGrace Fab9, HLMC Fab10, and Nexchip N1A3.

This increase in mature process capacity could intensify competition and impact future pricing negotiations.

Read more

• [News] Intel and NVIDIA’s New Platform Orders Rolling Out, TSMC Unaffected by Market Turbulence
• Foundry Market Shows Mixed Conditions with Price Adjustments for Specific Chinese Processes and Anticipated Price Increases for Taiwanese Advanced Processes, Says TrendForce

(Photo credit: TSMC)

On July 1, GlobalFoundries (GF), a major foundry player, announced that it has acquired Tagore Technology’s production-verified proprietary GaN (Gallium nitride) power IP portfolio, which refers to a high-power density solution designed to enable higher efficiency and better performance of automobile, IoT, and AI data center applications where power supply is widely used.

Founded in January 2011, Tagore Technology focuses on developing GaN-on-Si (Gallium nitride on silicon) semiconductor technology for RF and power management applications.

As part of the acquisition, a team of veteran engineers from Tagore, dedicated to developing GaN technology, will join GF. “With this acquisition, GF takes another step toward accelerating the availability of GaN and empowering our customers to build the next generation of power management solutions that will reshape the future of mobility, connectivity and intelligence,” said Niels Anderskouv, chief business officer at GF.

It is worth mentioning that in February 2024, GF received a direct subsidy of USD 1.5 billion under the US CHIPS and Science Act, with part of the funds allocated to the mass production of critical technologies, including GaN.

By combining this manufacturing capability with the technical expertise of the Tagore team, GF is well positioned to transform the efficiency of AI systems and enable lower power consumption particularly pivotal for edge or IoT devices.

Read more

• [News] SK keyfoundry Advances in GaN Power Semiconductors, Reportedly Producing for Tesla Soon
• [News] Infineon in GaN and SiC Expansion Drive Advancements in the New Energy Market

(Photo credit: GF)

Due to the impact of international situations and uncontrollable factors, the global semiconductor supply chain is undergoing a shift. According to a report from WeChat account DRAMeXchange, the Southeast Asian region, with its advantages in labor and development conditions, has become the preferred location for major global companies. Countries such as Malaysia, India, and Singapore have been targeted by many manufacturers, who are rapidly setting up operations to secure a foothold.

On June 5, Taiwan-based contract chipmaker Vanguard International Semiconductor Corp. (VIS) announced to team up with Netherlands-based semiconductor supplier NXP Semiconductors N.V. to set up a joint venture, VisionPower Semiconductor Manufacturing Company (VSMC), and build a 12-inch fab in Singapore.

The fab will have an investment of approximately USD 7.8 billion. VIS will invest USD 2.4 billion and take a 60% stake, with NXP to invest USD 1.6 billion and a 40% share. The fab will be operated by VIS.

Besides, both parties have promised to allocate a total of USD 1.9 billion of long-term capacity security deposit and usage fees, with the remaining funds (Loans included) to be provided by third parties.

VSMC will run as an independent wafer manufacturing service provider, offering a certain proportion of its capacity to both partners. By 2029, the fab’s monthly 12-inch wafer capacity is expected to reach 55,000 pieces, which is projected to create around 1,500 jobs in Singapore. Following the successful mass production of the first fab, both sides will consider building a second one.

This fab will use 130nm to 40nm technologies to produce mixed-signal, power management, and analog products for markets including automotive, industrial, consumer electronics, and mobile terminals. Relevant technology licensing and transfers are expected to come from TSMC. VSMC will commence construction of the first fab in 2H24 , pending approval from relevant regulatory authorities, and it is expected to start mass production in 2027.

Currently, VIS has five 8-inch fabs, respectively located in Taiwan and Singapore. Three of them are based in Hsinchu (Taiwan) and one in Taoyuan (Taiwan). In 2023, the average monthly capacity was about 279,000 8-inch wafers.

On this collaboration with NXP, VIS Chairman Fang Leuh stated that both parties wish to own a 12-inch fab as they currently only have 8-inch fabs. More than half of the new fab’s capacity has already reserved upon long-term commitments from customers, including NXP. He also noted that setting up a fab in Singapore offers several advantages.

Since VIS is held by TSMC, industry experts believe that the establishment of the new VIS fab is driven in part by the need to meet the demands of TSMC’s mature process customers. Mature processes above 90nm account for a small single-digit percentage of TSMC’s revenue but retaining all customers is also necessary to match orders from various manufacturing capacities.

As such, VIS will take over TSMC’s customer orders. Influenced by multiple factors, the order transfer effect is expanding, and VIS has recently received new orders from several customers, like Qualcomm and MPS. That means order transfer effect in 2H24 has become evident.

It is worth noting that Singapore is being seen as a critical hub of the Asian semiconductor industry. It currently boasts a complete semiconductor industry chain, covering design, manufacturing, packaging, test, equipment, materials, and distribution, with more than 300 semiconductor-related companies already established.

According to another report from WeChat account DRAMeXchange, multitudes of semiconductor companies, including Texas Instruments, STMicroelectronics, Infineon, Micron, GlobalFoundries, TSMC, UMC, VIS, and ASE, have set up branches or expanded production in Singapore.

Read more

• [News] TSMC Affiliate VIS and NXP to Invest USD 7.8 Billion for 12-Inch Fab in Singapore, Expected Mass Production by 2027
• Taiwanese Chipmakers Expand Overseas to Capitalize on Geopolitical Shifts and De-Sinicization Benefits, Says TrendForce

(Photo credit: VIS)

The U.S. government announced on February 19th that semiconductor giant GlobalFoundries (GF) will be the third company to receive approval for subsidies under the Chips and Science Act, also known as the CHIPS Act, receiving USD 1.5 billion.

According to MoneyDJ’s reports citing from Reuters, The Wall Street Journal, and other global news outlets, under a preliminary agreement with the Department of Commerce, GlobalFoundries, the world’s third-largest semiconductor foundry, will construct a new fab in Malta, New York, while expanding the production capacity of its existing production lines in Malta and Burlington, Vermont.

The Department of Commerce stated that in addition to providing a USD 1.5 billion subsidy, GlobalFoundries will also be eligible for a USD 1.6 billion loan. It is anticipated that these arrangements may generate up to USD 12.5 billion in potential investment activities across the two states.

U.S. government officials further revealed that the proposed construction project is expected to create over 10,000 job opportunities in the next decade. The chips manufactured by GlobalFoundries in the new facility will find applications not only in automotive blind spot detection, collision warning systems, Wi-Fi, and mobile communications but also in satellite technology, aerospace communications, and the defense industry.

The U.S. Department of Commerce has previously granted subsidies of USD 35 million and USD 162 million to BAE Systems, a British defense and aerospace company, and Microchip Technology Inc., a microcontroller and analog IC supplier, respectively.

The U.S. Department of Commerce chose defense contractors as the first beneficiaries of the CHIPS Act subsidies, rather than traditional chip manufacturers, highlighting the focus of the legislation on national security.

The increasing reliance on advanced chips in weapon systems has become evident. Concerns were raised during the signing of the CHIPS Act in August 2022 regarding Taiwan potentially facing military attacks, which could lead to a global shortage of advanced chips and result in the United States falling behind.

As per the company’s press release, Thomas Caulfield, President and CEO of GlobalFoundries, pointed out that the industry needs to shift its focus to the increasing demand for American-made chips and strive to cultivate more semiconductor talents in the United States.

Secretary of Commerce Gina Raimondo stated at a press conference on February 19th that this is the third subsidy issued by the US government under the Chips and Science Act, with several more subsidies expected to be approved in the coming weeks to months.

Raimondo mentioned that GlobalFoundries’ expansion project at its Malta chip plant will ensure stable chip supplies for auto suppliers and manufacturers. Additionally, the high-value chips produced at the new Malta plant are unique to the United States.

In addition, GlobalFoundries and General Motors (GM) recently announced a long-term supply agreement on February 8th, aiming to avoid a recurrence of the chip shortage crisis during the COVID-19 pandemic.

Reports have surfaced indicating that the U.S. government is considering granting Intel Corp. subsidies exceeding USD 10 billion. This would mark the largest incentive program since the inception of the CHIPS Act.

Due to market challenges and the slow pace of subsidy disbursement by the U.S. government, Intel has delayed the construction schedule of its USD 20 billion chip plant in Ohio. TSMC recently announced that the production launch of its $40 billion chip plant in Arizona will also be delayed due to ongoing subsidy negotiations with the U.S. government.

Read more

• [News] Overview of China’s Semiconductor Equipment Industry
• [News] Price War Among Chinese, Taiwanese, and Korean Foundries? Chinese Foundries Reportedly Cutting Tape Out Prices

(Photo credit: GlobalFoundries)