[News] US Allocates USD 39 Billion Subsidy to Semiconductor Industry for Establishing Plants

US Commerce Secretary Gina Raimondo has announced on February 5th that the Commerce Department would distribute substantial subsidies to chipmakers investing in the US within the next two months. The subsidy recipients are expected to include companies like TSMC and Intel.

As per a report from Reuters, Raimondo discussed the progress of subsidies under the US CHIPS and Science Act. “We’re in the process of really complicated, challenging negotiations with these companies. In the next six to eight weeks, you will see several more announcements. That’s what we’re striving for,” she stated.

Raimondo did not specify which chipmakers she is negotiating with, but she mentioned in an interview cited by Reuters,”These are highly complex, first-of-their-kind facilities. The kind of facilities that TSMC, Samsung, Intel are proposing to do in the United States — these are new-generation investments — size, scale complexity that’s never been done before in this country.”

Last month, as per Bloomberg cited industry sources in a report, plans for the United States to announce substantial chip subsidies by the end of March are revealed, targeting companies such as TSMC and Intel. The US CHIPS and Science Act reportedly includes a USD 39 billion manufacturing subsidy, providing 15% of the total cost for each independent project. Each fab can receive up to USD 3 billion in subsidies, along with loans, loan guarantees, and tax exemptions.


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(Photo credit: TSMC)

Please note that this article cites information from ReutersBloomberg.


[News] SMIC’s Net Profit Halved Last Year, Faces Further Reductions This Year

China’s leading semiconductor foundry, SMIC International, announced its fourth-quarter financial results on February 6th. While the quarter’s revenue exceeded expectations, a significant drop in gross margin led to a sharp decrease in net profit by less than 50% to below USD 1 billion last year.

SMIC issued a warning, further revising down the gross margin for the first quarter of this year to around 10%, with single-digit figures at the lower end.

During the fourth quarter, SMIC International saw a revenue increase of over 3.5% to more than USD 1.678 billion, marking the only quarter of revenue growth last year. Net profit plummeted by 54.7% to nearly USD 175 million.

The gross margin of 16.4% was almost halved compared to the same period in 2022 and experienced a significant decline from the previous three quarters, reaching its lowest point of the year.

In the full year of 2023, SMIC International experienced a revenue decline of over 13% to USD 6.3 billion, with a net profit decrease of 50.4% to USD 900 million. The gross margin was approximately halved to 19.3%.

Regarding the decline in net profit, SMIC cited various factors including the industry downturn, weak market demand, high industry inventory, and fierce competition among peers, all contributing to reduced capacity utilization and decreased wafer shipment for the group.

Additionally, the group experienced a period of high investment during the financial reporting period, leading to increased depreciation compared to the previous year.

Looking ahead to the first quarter of this year, SMIC estimates a quarter-on-quarter revenue growth of up to 2%. For the first-quarter gross margin guidance, SMIC has provided a range of 9% to 11%, indicating a decrease of approximately 33% to 45% from the low point of 16.4% in the fourth quarter of last year.

SMIC also anticipates that, under the assumption of no significant changes, this year’s revenue growth will not be lower than the average of comparable peers, showing a mid-single-digit increase compared to last year. The capital expenditure scale is expected to remain roughly flat compared to last year.

The significant downward revision in gross margin guidance has drawn attention to SMIC’s strategic moves. According to a report by the Financial Times, SMIC is intensifying its collaboration with Huawei by establishing a new production line in Shanghai dedicated to producing chips for Huawei’s future flagship smartphones, focusing on the 5-nanometer process.

However, industry sources cited by the report have also indicated that SMIC’s prices for 5-nanometer and 7-nanometer processes are 40% to 50% higher than TSMC’s, and the yield less than one-third of TSMC’s.

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(Photo credit: SMIC)

Please note that this article cites information from Financial Times.


[News] TSMC’s JASM Kumamoto Plant 2 Greenlit, Construction Expected to Commence by Year’s End

TSMC officially gives the green light to the second fab in Kumamoto, Japan! On January 6th, TSMC, Sony Semiconductor Solutions Corporation (SSS), DENSO Corporation (DENSO), and Toyota Motor Corporation (Toyota) jointly announced further investment in TSMC’s Japanese subsidiary, Japan Advanced Semiconductor Manufacturing, Inc. (JASM).


The collaboration is expected to construct JASM’s second fab in Japan, dedicated to the 6/7-nanometer advanced process. The new facility is expected to commence operations by the end of 2027, with a total investment exceeding USD 20 billion, strongly supported by the Japanese government.

TSMC has stated that in this investment venture with JASM, TSMC, SSS, DENSO, and Toyota hold approximately 86.5%, 6.0%, 5.5%, and 2.0% of JASM shares, respectively. Toyota Motor Corporation is a new major shareholder following this capital increase, indicating its potential involvement in automotive electronics initiatives.

TSMC has further indicated that the construction of JASM’s second fab in Japan is set to commence at the end of 2024. The expansion in production capacity is expected to optimize overall cost structure and supply chain efficiency.

With two fabs in Kumamoto, TSMC anticipates in the press release that JASM’s total monthly production capacity will exceed 100,000 12-inch wafers, offering process technologies ranging from 40nm, 22/28nm, 12/16nm, to 6/7nm for automotive, industrial, consumer, and high-performance computing (HPC) applications. Capacity planning may be further adjusted based on customer demand.

For JASM’s first fab, it is planned to commence production by the end of the year. The initial facility, costing USD 8.6 billion, received subsidies of JPY 478 billion (approximately USD 3.23 billion) from the Japanese government.

The primary process of the first fab are 22/28nm and 12/16nm, with a monthly production capacity of around 50,000 12-inch wafers. Located in Kikuyo-cho, Kikuyo-gun, Kumamoto Prefecture, Kyushu, construction of the facility was announced in November 2021, ground was broken in April 2022, and construction was completed within two years.

JASM’s first fab is set to open on February 24, 2024, with mass production scheduled by the end of the year. The facility is a joint venture between Taiwan and Japan, with TSMC holding the majority of shares, Sony Semiconductor Manufacturing Corporation (SSMC) of Japan holding approximately 20%, and Toyota Group’s DENSO holding about 10%.

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[News] Semiconductor Equipment Sales in Japan Reach Nearly JPY 3.3 Trillion in 2023

On January 26th, the Semiconductor Equipment Association of Japan (SEAJ) released statistical data revealing that in December 2023, sales of semiconductor equipment in Japan amounted to JPY 305.799 billion (approximately USD 2.07 billion), marking a 2.4% increase from November 2023.

This represents the second consecutive month of month-on-month growth. However, compared to the same month in 2022, there was a slight decline of 0.3%, marking the seventh consecutive month of contraction. Nonetheless, this decline is significantly smaller compared to the 11% decrease observed in the previous month.

In 2023, the total annual sales of semiconductor equipment in Japan amounted to roughly JPY 3.29 trillion (approximately USD 22.26 billion), reflecting a 6.7% year-on-year decrease. Despite the decline, this figure still represents the second-highest sales record in history, second only to the JPY 3.85 trillion (approximately USD 26.05 billion) recorded in 2022.

SEAJ predicts that aside from the recovery of foundries and logic manufacturers, expenditures from memory manufacturers are expected to significantly rebound in the second half of the fiscal year 2023 (from September 2023 to March 2024). It is anticipated that the compound annual growth rate (CAGR) will continue at 10% until March 2026.

Moreover, driven by the demand for new expenditures related to artificial intelligence (AI), semiconductor equipment sales in Japan are forecasted to surge by 27% in the fiscal year 2024 (starting from April 2024), reaching JPY 4.03 trillion (approximately USD 27 billion).

TrendForce has previously reported that Japan’s resurgence in the semiconductor arena is palpable, with the Ministry of Economy, Trade, and Industry fostering multi-faceted collaborations with the private sector. With a favorable exchange rate policy aiding factory construction and investments, the future looks bright for exports.

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Please note that this article cites information from SEAJ.


[News] Over 350 China’s Semiconductor Industry Projects Thriving in 2023

In 2023, the downturn in terminal consumption has spread to various aspects of the semiconductor industry. While the industry generally adopted a cautious stance, some specific segments defied the trend and showed counter-cyclical growth. This attracted numerous companies to strategically position themselves, leading to a flurry of activity in various semiconductor industry projects.

In terms of project deployment, according to TrendForce’s statistics, there were over 350 new developments in China’s semiconductor industry in 2023. These projects span across areas such as third-generation semiconductors, memory, automotive chips, advanced packaging, sensors, RF chips, silicon wafers, semiconductor equipment, and more.

Flourishing Semiconductor Industry with Over 350 Projects Accelerated

Looking at the overall picture, among the disclosed investment amounts for over 350 projects, the highest investment goes to the second phase of Hua Hong Semiconductor (Wuxi) with a sum of USD 6.7 billion (approximately RMB 48.007 billion).

Following closely is Nexchip Semiconductor Corporation’s 12-inch wafer manufacturing project with an investment of RMB 21 billion (approximately USD 2.9 billion). Anhui Yangtze Advanced Semiconductor’s Third-generation Semiconductor Power Device Production Project exceeds RMB 20 billion (approximately USD 2.8 billion).

Among the 350+ projects, there are over 100 signed projects, over 90 projects have commenced, over 50 operational projects, and more than 50 projects nearing completion.

High Proportion of Upstream Projects, Concentrated Capacity in East China

From the perspective of the industry chain, last year’s semiconductor industry projects saw the highest proportion occupied by upstream semiconductor materials.

It involved companies such as Zhejiang Jingsheng Mechanical & Electrical Co., TankeBlue Semiconductor, SICC, Konfoong Materials International, Boncom Semi, Vital Micro-Electronics Technology (Jiangsu) Co., GRINM Semiconductor Materials, IV-Semitec, Zhonghuan Advanced Material & Technology, and SiFusion, among others. 

Following that is IC manufacturing, involving companies like Hua Hong Semiconductor, Nexchip Semiconductor Corporation, AscenPower, GTA Semiconductor, Jiejie Microelectronics, SMIC, CanSemi Tech, GalaxyCore, and Unicmicro (Guangzhou) Co., among others.

Companies involved in IC design include Huawei, Empyrean Technology, Loongson Technology, Corigine, 3Peak, HeYangTek, UNIM, Semitronix, Awinic, X-Chip, and Silergy Corp., among others. 

In the IC packaging and testing segment, companies like Huatian Technology, Nexperia, Forehope Electronic, Innosilicon, JCET Group, XinHenYuan Technology, ACCESS Semiconductor, and Leadyo IC Testing Co. are notable players.

From a regional perspective, the majority of semiconductor industry projects are located in the eastern regions of China, including Jiangsu, Zhejiang, Shanghai, Anhui, and Shandong. Jiangsu and Zhejiang have a relatively high proportion.

It is worth noting that a significant portion of semiconductor materials projects are concentrated in the eastern region. 

“Remarkable Advances in Specialized Sectors” – Third-Generation Semiconductors in the Spotlight

Amidst last year’s uncertain overall market conditions, notable growth in specific sectors has captured market attention. Chinese manufacturers strategically focused on various sectors last year, including semiconductor materials/equipment like photoresist, silicon-based products, quartz products, high-purity electronic specialty gasses, and ultra-pure chemicals. Additionally, areas such as silicon carbide, gallium nitride, sensors, automotive chips, and IGBT power devices were key areas of emphasis.

With the increasing trend toward electrification in the automotive sector and growing demand for efficient power systems in applications like new energy vehicles and industrial processes, the market’s appetite for advanced semiconductor materials is on the rise. 

In response, industries are transitioning to third-generation semiconductor materials represented by silicon carbide (SiC) and gallium nitride (GaN). Consequently, power devices like SiC and GaN are gaining substantial market popularity.

From an application perspective, GaN is not only expanding in consumer applications but is also making inroads into rapidly growing markets such as electric vehicles, computing (data centers, artificial intelligence, infrastructure), renewable energy, industrial power supplies, and fast-charging stations/adapters.

According to TrendForce, the global GaN power device market is expected to grow from USD 180 million in 2022 to USD 1.33 billion in 2026, with a compound annual growth rate (CAGR) of up to 65%. 

As for SiC, TrendForce anticipates the SiC power device market to reach USD 5.33 billion by 2026, with its mainstream applications still heavily reliant on electric vehicles and renewable energy.

According to previous TrendForce statistics, China has 44 foundries, and this number is expected to increase to 32 in the future, focusing on mature processes. The industry anticipates that there will be more fab capacity releases in the future, driving demand for upstream semiconductor materials and equipment.

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Please note that this article cites information from DRAMeXange.

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