Countries around the world are leaving no stone unturned in their pursuit of semiconductor development, and South Korea is no exception. South Korea has just unveiled an ambitious plan to invest a staggering 622 trillion Korean won (approximately $471 billion USD) in collaboration with industry giants Samsung Electronics and SK hynix, aiming to create the world’s largest semiconductor supercluster.

According to reports from The Korea Times, South Korea’s vision includes the construction of the world’s largest semiconductor cluster in Gyeonggi Province by 2047. As revealed by the Ministry of Trade, Industry, and Energy in South Korea, Samsung Electronics, SK hynix, and other semiconductor companies are set to pool their resources into building 16 new fabs, with the potential to generate over 3 million job opportunities.

This ambitious undertaking will involve an expansion of the existing mega cluster, which already boasts 19 production fabs and two research fabs spread across adjacent cities in the province. The new mega chip cluster, spanning a massive 2,102 square meters, is slated to commence production, churning out an impressive 7.7 million wafers each month, beginning in 2030.

Within this sprawling cluster, Samsung Electronics has outlined plans to construct six new fabs at the national industrial complex in Yongin, with an investment commitment of 360 trillion Korean won. Additionally, the company intends to establish three fabs in Pyeongtaek, involving an investment of 120 trillion Korean won, and three research fabs at an R&D center located in the Giheung District, at a cost of 20 trillion Korean won. Meanwhile, SK hynix is earmarking 122 trillion Korean won for the construction of four fabs at another industrial complex in Yongin.

The primary objective of this supercluster is to foster an environment conducive to the production of cutting-edge memory chips, including high bandwidth memory (HBM), and system semiconductors measuring 2 nanometers or more advanced nodes.

Reports suggest that with the establishment of this new cluster, the South Korean government has set ambitious targets for the country. By 2030, they aim to capture a significant 10% share of the system semiconductor market, a substantial increase from the current 3%. 

Furthermore, the government plans to boost self-sufficiency in the supply chain of critical materials, components, and equipment from the current 30% to an impressive 50% by the year 2030.

(Image: SK Hynix)

An increasing number of Chinese semiconductor design companies are seeking collaboration with testing and packaging facilities in Malaysia to carry out advanced chip packaging. According to Reuters’ report, this move aims to hedge the risk of potential expanded U.S. restrictions on the Chinese semiconductor industry.

As there is currently only one non-U.S. testing and packaging provider in Malaysia with advanced capabilities, namely ASE Technology Holding Co., a Taiwanese semiconductor packaging and testing firm, industry sources believe that ASE is likely to become the top choice for orders from Chinese enterprises.

Previously, the U.S. has imposed controls on China’s advanced semiconductor manufacturing processes and access to high-performance chips from major companies like NVIDIA. However, advanced packaging has not yet fallen within the restricted scope.

Two anonymous sources reportedly revealed that some of the Chinese businesses are showing interest in advanced chip packaging services. Despite the fact that the chip packaging sector has not yet faced export controls from the U.S., concerns are rising among businesses due to its involvement in sophisticated technology, fearing that it might be targeted for curbs on exports in the future.

Reuters’ report also indicates that due to the relatively affordable investment costs in Malaysia and the availability of experienced workforce and sophisticated equipment, an increasing number of Chinese chip design firms are seeking Malaysian Firms to carry out advanced chip packaging activities, including graphic processing units (GPUs).

Insiders have informed Reuters that the related contracts only involve packaging and do not violate any restrictions imposed by the U.S.. Additionally, they clarified that wafer manufacturing is not included in these contracts.

Two of the sources mentioned that some contracts have already been agreed. However, these insiders prefer not to disclose the names of the involved companies.

Meanwhile, according to a report from Taiwan’s Economic Daily News, when observing the global landscape of advanced packaging, in addition to TSMC, there are integrated device manufacturers (IDMs) like Intel and Samsung, as well as outsourcing semiconductor assembly and test (OSAT) companies like ASE Technology, Amkor, and others that possess advanced packaging capabilities. Among them, only ASE Technology, Amkor, and Intel have production capacity in Malaysia.

Reportedly, industry analysts predict that Chinese companies seeking advanced packaging support in Malaysia, due to geopolitical considerations, are likely to avoid American companies such as Intel and Amkor. Given that ASE is not an American company and can provide high-end packaging services, it is expected to be the preferred choice for Chinese companies.

ASE has previously stated that it will continue to invest in advanced packaging for AI, expecting the performance of advanced packaging to double next year compared to this year.

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(Photo credit: ASE Holdings)

In a bid to revitalize its semiconductor industry, Japan has enticed the sector with subsidies worth trillions of yen, aiming to attract both domestic and international semiconductor companies.

Leading semiconductor foundry Taiwan Semiconductor Manufacturing Co. (TSMC) has invested USD 8.6 billion to construct a factory in Kumamoto Plant, and it is considering building a second plant nearby. According to reports, TSMC is also contemplating a third plant within Kumamoto Prefecture to produce cutting-edge 3nm chips.

Apart from TSMC, major players like Samsung and Powerchip Semiconductor Manufacturing Corporation (PSMC) are actively investing in Japan. The initiatives of these giants have not only influenced semiconductor manufacturing equipment suppliers in Japan but also spurred them to accelerate technological research and expand production capacity.

As a result of these efforts, the investment of Japan’s six major semiconductor equipment suppliers has surged by 70% over the past five years.

TSMC Kumamoto New Plant Aims for Monthly Production of 55,000 12-Inch Wafers

Reportedly, the new chip plant in Kumamoto, Japan, operated by Japan Advanced Semiconductor Manufacturing (JASM), a joint venture between TSMC, Sony, and Denso, is poised for commencing production in the fourth quarter of 2024, while the plant’s production capacity will target a full capacity of 55,000 12-inch wafers per month.

Simultaneously, JASM aims to enhance the local contribution of semiconductor supply chain and ecosystem in Japan from the current 25% to 60% by 2030.

Meanwhile, according to sources cited by Bloomberg, TSMC has informed its supply chain partners that it is considering building a third factory in Kumamoto Plant in southern Japan, codenamed TSMC Fab-23 Phase 3.

TrendForce’s analysis mentioned that Japan’s expertise in semiconductor materials and machinery makes it an attractive location for TSMC’s expansion.

Additionally, Japan’s critical role in semiconductors and raw materials, coupled with collaboration with Sony, provides TSMC with significant advantages. TSMC’s investment in Japan is expected to facilitate access to advanced materials and expertise in CIS technology.

Furthermore, industry speculation suggests that in the future, Japan will not only continue subsidizing semiconductor manufacturing but also enhance collaboration between the semiconductor industry and academia to attract more talent to join the semiconductor industry.

PSMC Japanese Plant Aims for Monthly Production of 40,000 12-Inch Wafers

In late October, PSMC, in collaboration with SBI Holdings, Inc., the Miyagi Prefecture of Japan, and JSMC Corporation, signed a memorandum of understanding. The memorandum confirmed that JSMC’s first semiconductor wafer plant is expected to be located in the Second Northern Sendai Central Industrial Park in Ohira Village, Kurokawa District, Miyagi Prefecture (Second Northern Sendai Central Industrial Park).

The plant will produce 28nm, 40nm, and 55nm chips for automotive and industrial applications, with a planned monthly production of 40,000 12-inch wafers. Previous reports indicated that PSMC plans to construct multiple plants, with the first phase potentially starting construction as early as 2024, involving an investment of around JPY 400 billion (USD 2.6 billion).

The Japanese Ministry of Economy, Trade, and Industry (METI) is expected to provide up to JPY 140 billion in subsidies for the project, targeting operational commencement by 2026. The timeline and plans for the second phase are yet to be determined, with a total investment of approximately JPY 800 billion.

Regarding subsidies, PSMC stated that once Japan announces the subsidy amount for this semiconductor wafer plant investment, all relevant parties will reconfirm the effectiveness of this memorandum of understanding and proceed with the planned construction.

Is Foundry Revenue Expected to Continue its Upward Trend?

In the semiconductor industry chain, the significance of the foundry industry is self-evident. In recent years, the foundry sector has been affected by headwinds in end markets such as consumer electronics. However, as entering the latter half of the year, there are gradually emerging positive signals in the semiconductor industry.

According to TrendForce’s report on December 6th, looking ahead to 4Q23, TrendForce’s anticipation of year-end festive demand is expected to sustain the inflow of urgent orders for smartphones and laptops, particularly for smartphone components.

Although the end-user market is yet to fully recover, pre-sales season stockpiling for Chinese Android smartphones appears to be slightly better than expected, with demand for mid-to-low range 5G and 4G phone APs and continued interest in new iPhone models. This scenario suggests a continued upward trend for the top ten global foundries in Q4, potentially exceeding the growth rate seen in Q3.

According to the Semiconductor Equipment and Materials International (SEMI) report presented at SEMICON Japan 2023 on December 12, the global semiconductor equipment market is anticipated to experience a 6.1% year-on-year decline to USD 100.9 billion in sales for new equipment in 2023, marking the first contraction in four years.

However, the forecast for 2024 shows a reversal, with the semiconductor equipment market expected to grow by 4%, reaching USD 105.3 billion in sales. In 2025, a substantial increase of 18% is projected, surpassing the historical high of USD 107.4 billion in 2022.

SEMI CEO Ajit Manocha has noted that the semiconductor market exhibits cyclical patterns, with a short-term downturn expected in 2023. However, he anticipates a turning point towards recovery in 2024.

The year 2025 is poised for robust recovery, driven by increased production capacity, the construction of new wafer fabs, and growing demand for advanced technologies and solutions.

Major Companies Indirectly Boost Chip Equipment Investment in Japan, Surging 70% in 5 Years

According to a report by Nikkei, the proactive investments by semiconductor giants such as TSMC and Micron in Japan have accelerated technological innovations and production capacity expansion among Japanese chip equipment manufacturers.

The combined investment (including R&D and equipment investment) of Japan’s six major chip equipment firms, namely TEL, DISCO, Advantest, Lasertec, Tokyo Seimitsu, and Screen Holdings, for the fiscal year 2023 (April 2023 – March 2024) is approximately JPY 547 billion, marking a significant 70% increase compared to the 2018 fiscal year.

On December 13, Tokyo Electron Limited (TEL) President Tony Kawai stated at SEMICON Japan 2023 that the semiconductor market is projected to exceed USD 1 trillion by 2030, highlighting the immense potential within the industry.

On December 14, Hisashi Kanazashi, the Duputy Director at METI of Japan, noted that top overseas semiconductor firms plan to collaborate with Japan’s strength in “equipment” and expand their research and development presence in Japan.

Read more

• Top 10 Foundries Experience 7.9% QoQ Growth in 3Q23, with a Continued Upward Trend Predicted for Q4, Says TrendForce
• [News] TSMC’s Kumamoto Plant Production Capacity Set for Significant Leap, Gradually Increasing to 55,000 Wafers per Month

(Photo credit: TSMC)

The new chip plant in Kumamoto, Japan, operated by Japan Advanced Semiconductor Manufacturing (JASM), a joint venture between Taiwan Semiconductor Manufacturing Co. (TSMC), Sony, and Denso, is poised for substantial capacity growth.

JASM President Yuichi Horita revealed that after commencing production in the fourth quarter of 2024, the plant’s production capacity will gradually ramp up, targeting a full capacity of 55,000 12-inch wafers per month.

Simultaneously, TSMC aims to enhance Japan’s semiconductor supply chain and ecosystem, looking to a 60% local contribution by 2030, a significant increase from the current 25%.

Yuichi Horita unveiled the latest plan for TSMC’s Kumamoto plant during his speech at the SEMICON Japan. He emphasized that TSMC’s Kumamoto plant is actively working to establish a local supply chain and ecosystem in Japan.

The current proportion of equipment and materials sourced from Japan for the Kumamoto plant is approximately 25%. The goal is to increase this to 50% by 2026 and achieve 60% by 2030. The progress in constructing production capacity, trial production, and mass production is in line with the original plan.

Yuichi Horita stated that the current workforce at the Kumamoto facility stands at 1,700 employees. Among them, around 600 are dispatched by TSMC and Sony, with the remaining being newly recruited staff.

The production capacity of the new Kumamoto plant primarily focuses on 28/22 nanometers and 16/12 nanometers. In the initial phase, the majority of the capacity is allocated to the manufacturing of Image Signal Processor (ISP) used in CMOS image sensors, as part of Sony’s outsourcing.

The remaining capacity is dedicated to automotive parts supplier Denso, where they outsource the production of automotive microcontroller unit (MCU), with Denso reportedly able to obtain approximately 10,000 wafers per month.

Reportedly, in industry analysis, although Japan’s recent performance in foundry has not matched that of Taiwan, South Korea, and China, Japan’s semiconductor equipment supply chain is already quite mature and comprehensive.

Major players in the field, such as Nikon in lithography equipment, and Hitachi High-Tech, renowned for etching equipment and critical dimension scanning electron microscopy (CD-SEM), have established dominance.

Additionally, Japanese companies specializing in chemical solutions, gases, and materials have also secured significant positions. All of these factors make them crucial partners for supporting the development of TSMC’s Kumamoto plant in the future.

Industry source suggests that in the future, the Japanese government will not only continue to subsidize semiconductor manufacturing but also strengthen collaboration between the semiconductor industry and academia to attract more talent into the semiconductor industry.

Read more

• [News] TSMC’s Kumamoto Plant Prepares for 2024 Mass Production with 1000+ Employees, Followed by Taiwanese Material Suppliers’ Collaboration
• [News] Rumored to Build Third Plant in Kumamoto, TSMC: Currently Focusing on Assessing the Construction of a Second Plant

(Photo credit: TSMC)

According to a news report from UDN, despite U.S. restrictions on the exportation of technologies related to advanced semiconductor processes, China is fortifying its independent chip development capabilities.

ChangXin Memory Technologies (CXMT), a Chinese DRAM chip manufacturer, presented a paper at the 69th IEEE International Electron Devices Meeting (IEDM) in San Francisco, showcasing a Gate-All-Around (GAA) technology applicable to cutting-edge 3nm chips.

According to an article from South China Morning Post, while CXMT has not yet released sample products, the evidence of the company’s next-generation memory production has caught the attention of industry analysts. This is noteworthy because the design of such chips typically involves technology subject to U.S. export restrictions.

Frederick Chen, a memory expert at Winbond Electronics, a Taiwan-based company, said the evidence of progress by CXMT is “impressive”, as it shows that the Chinese company is not far away from state-of-the-art research and products. “It’s significant because Samsung Electronics is trying to do the same.” Chen said.

Regarding this matter, CXMT has maintained a relatively low profile. Reportedly, in a statement to the South China Morning Post on Wednesday, CXMT stated that the paper “describes fundamental research related to DRAM structure and the feasibility of 4F2 design” and “it has nothing to do with CXMT’s current production processes.” This may have implied that the conceptual design is still distant from becoming a market-ready product.

“Any accusation that CXMT is violating US sanctions or export controls is completely inaccurate,” the company’s export control experts said. “We firmly believe that the free flow of ideas that IEDM seeks to foster is essential for the industry’s innovation and development.”

At the end of this November, CXMT released China’s first LPDDR5 chip, marking the entry of Chinese manufacturers into the DDR5 competition and narrowing the technological gap with leading memory suppliers such as South Korea’s Samsung and SK Hynix.

(Photo credit: CXMT)