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2022/01/05
A fire occurred at ASML’s factory in Berlin, Germany on January 3, according to TrendForce’s investigations ASML is the largest supplier of key equipment (including EUV and DUV) required for foundry and memory production According to TrendForce’s preliminary inquiry, approximately 200m2 out of a factory floor covering 32,000m2 was affected by the fire This factory primarily manufactures optical components used in lithography systems such as wafer tables, reticle chucks, and mirror blocks Reticle chucks used for affixing photomasks are in short supply Currently, the majority of components produced at this factory go towards supplying EUV machines while the lion’s share of demand for these products come from foundries If the fire delays component delivery, it cannot be ruled out that ASML will prioritize the allocation of output towards fulfilling foundry orders
Lead time for this exclusive supply of key EUV machines has been long and may affect the timeframe of advanced manufacturing process transition
In terms of foundries, EUV is primarily used in advanced manufacturing processes smaller than the 7nm node Currently, the only companies in the world using this equipment for manufacturing are TSMC and Samsung including TSMC’s 7nm, 5nm, 3nm nodes, Samsung's EUV Line (7nm, 5nm and 4nm) built in Hwaseong, South Korea, and 3nm GAA node However, due to factors such as the shortage of global foundry production capacity and the active expansion of manufacturing, semiconductor equipment lead times are also stretching further into the future
In terms of DRAM, Samsung and SK Hynix are already using EUV in their 1Znm and 1alpha nm processes, while US manufacturer Micron is expected to introduce EUV to their 1gamma nm process in 2024 According to TrendForce's current information, the lead time on ASML EUV equipment is approximately 12 to 18 months Due to this long equipment lead time, ASML is at liberty to wait for the completion of replace components for those lost in the fire during the time necessary for equipment assembly
Overall, the ASML Berlin factory fire will have a greater impact on the manufacturing of EUV lithography equipment when it comes to foundries and memory According to TrendForce’s information, it cannot be ruled out that ASML will obtain necessary components from other factory campuses In addition, the current lead time for EUV equipment is quite long Therefore, the actual impact on EUV supply remains to be seen
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@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/01/04
An earthquake that was around magnitude 60 on the Richter scale occurred off the east coast of Taiwan at 5:46PM local time on January 3, 2022 As most local DRAM and foundry fabs are located in the northern and central parts of the island, TrendForce’s latest investigations reveal no notable damages to the equipment from the fabs Therefore, the production side is expected to continue normal operation, and the actual impact of the earthquake on the output of Taiwan’s DRAM and foundry industries will likely be limited Taiwan’s memory fabs, including those operated by MTTW, Nanya, and other smaller semiconductor companies, collectively account for about 21% of the global DRAM production capacity In the foundry industry, Taiwan’s fabs, including those operated by TSMC, UMC, Vanguard, PSMC, etc, together make up as much as 51% of the global production capacity
Regarding the current state of the DRAM market, it is in midst of the conventional off-season However, the recent easing of component gaps in the supply chain is generating some stock-up activities in different application segments and thus bolstering the overall demand The headwinds of the off-season are not as strong as usual Also, there are now concerns brewing in the wider memory market about the supply side being affected by the COVID-19 lockdown in the Chinese city of Xi’an Consequently, memory spot prices have been registering daily hikes lately It is worth noting that increases in DRAM spot prices have been more significant than the increases in NAND Flash spot prices Regarding DRAM contract prices, TrendForce for now maintains its original forecast of QoQ drops in the 8-13% range for 1Q22 However, the latest earthquake that struck Taiwan could affect DRAM buyers’ behavior at any time How contract prices will actually end up is something that requires further observation As for DRAM spot trading, the memory spot market of Mainland China was still in midst of the year-end holiday on January 3 Hence, spot traders were passive for the most part TrendForce will continue monitoring the spot market to see if the earthquake is going to be a positive driver going forward
Turning to the current state of the foundry market, the chip demand related to some categories of end products has slowed down a bit recently because of seasonality However, demand remains quite strong for chips that were previously in short supply, such as PMIC, Wi-Fi SoC, etc Foundry fabs on the whole are still operating with a fully loaded capacity because demand continues to outstrip supply The fabs of Taiwan-based foundries, including TSMC, UMC, PSMC, and Vanguard, are concentrated in Hsinchu, Taichung, and Tainan In those places, an earthquake intensity scale of 3 or under was recorded As such, no foundry fab in Taiwan has halted operation because of the earthquake, and all fabs are operating normally at the moment
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@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2021/10/28
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$11769 billion, a 133% 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 ≦018µm 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 01Xµm 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 01Xµm 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@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2021/08/31
The panic buying of chips persisted in 2Q21 owing to factors such as post-pandemic demand, industry-wide shift to 5G telecom technology, geopolitical tensions, and chronic chip shortages, according to TrendForce’s latest investigations Chip demand from ODMs/OEMs remained high, as they were unable to meet shipment targets for various end-products due to the shortage of foundry capacities In addition, wafers inputted in 1Q21 underwent a price hike and were subsequently outputted in 2Q21 Foundry revenue for the quarter reached US$24407 billion, representing a 62% QoQ increase and yet another record high for the eighth consecutive quarter since 3Q19
Revenue growths of TSMC and Samsung were slightly hindered by power outages at their respective fabs
For 2Q21, TSMC once again comfortably dwarfed other foundries with a revenue of US$133 billion, a 31% QoQ increase TSMC’s relatively muted growth can be attributed to several factors, the most prominent of which was a power outage that occurred in TSMC’s Fab14 P7, located in the Southern Taiwan Science Park, in April The power outage subsequently caused some wafers at the 40nm and 16nm nodes to be discarded TSMC’s fab in the Southern Taiwan Science Park suffered yet another disruption when Taipower’s Kaohsiung-based Hsinta Power Plant temporarily went offline in May Although the fab immediately resumed operations via its emergency power generators so that no wafers in the production lines were discarded, certain wafers still needed to be reworked Finally, TSMC maintained its longstanding strategy of giving consistent price quotes for its foundry services Hence, although the foundry’s revenue for 2Q21 exceeded the upper end of its prior financial guidance, its revenue for the quarter underwent a slightly lower QoQ growth compared to other foundries, and it also lost some market share to competitors
Samsung’s revenue for 2Q21 reached US$433 billion, a 55% QoQ increase After recovering from the winter storm that swept Texas in February, Samsung’s Austin-based Line S2 fab fully resumed its manufacturing operations in April The fab is now operating at fully loaded capacities by manufacturing for additional client orders in order to compensate for the 15-month loss in wafer input from idling as a result of the winter storm Although the sharp drop in wafer input in 1Q21 somewhat constrained Samsung’s output and revenue growth for 2Q21, the foundry still managed to post a 55% QoQ revenue growth thanks to strong client demand for CIS, 5G RF transceivers, and OLED driver ICs Owing to persistently high demand for PMIC, TDDI, Wi-Fi, and OLED driver IC products, UMC, ranked third on the top 10 list, operated at a capacity utilization rate surpassing 100%, and its output severely lagged behind client demand In response, UMC continued to raise its quotes In addition, newly installed production capacities at the 28/22nm nodes, which have a relatively high ASP, gradually became available for wafer input in 2Q21, resulting in a 5% QoQ increase in UMC’s blended ASP for 2Q21 The foundry saw its market share remaining relatively unchanged from the previous quarter at 72% and posted a revenue of US$182 billion, an 85% QoQ increase
Fourth-ranked GlobalFoundries posted a revenue of US$152 billion for 2Q21, a 170% QoQ increase After selling its US-based Fab10 and Singapore-based Fab3E to ON Semi and VIS, respectively, in 2019, GlobalFoundries has been gradually consolidating its existing product lines and focusing on the development of 14/12nm FinFET, 22/12nm FD-SOI, and 55/40nm HV and BCD technology platforms At the same time, GlobalFoundries has also announced that it will expand its current production capacities by building new US-based and Singapore-based fabs, which are expected to contribute to GlobalFoundries’ earnings starting in the 2H22-2023 period On the other hand, although GlobalFoundries has already sold its Fab10 to ON Semi, the former continues to manufacture products for the latter at Fab10 across the 2020-2021 period ON Semi will not independently operate the fab until the transfer of ownership is finalized in 2022 SMIC likewise grew its revenue for 2Q21 by a remarkable 218% to US$134 billion and raised its market share to 53% SMIC’s growth took place due to strong client demand for various technologies including 015/018µm PMIC, 55/40nm MCU, RF, HV, and CIS, as well as a continued increase in its ASP Owing to better-than-expected adoption of its 14nm technology by new clients, SMIC is operating at a fully loaded capacity of 15K wspm at the moment
While VIS leapfrogged Tower on the top 10 list, HuaHong Group, inclusive of subsidiaries HHGrace and HLMC, took sixth place
HuaHong Group subsidiaries HHGrace and HLMC have been operating Fab1/2/3/7 and Fab5/6, respectively and sharing certain manufacturing resources Hence, TrendForce will from now on combine the two subsidiaries’ revenues into a single item, listed as HuaHong Group In particular, capacity expansion at HH Fab7, operated by Hua Hong Wuxi, proceeded ahead of expectations, with client demand for NOR Flash, CIS, RF, and IGBT products remaining strong Not only is HH Fab7’s production capacity of 48K wspm currently fully loaded, but HuaHong Group’s 8-inch fabs have all been operating at a capacity utilization rate of more than 100% Thanks to a 3-5% QoQ increase in HuaHong Group’s blended ASP for 8-inch wafers, HuaHong Group’s revenue for 2Q21 reached US$658 million, a 97% QoQ increase, placing the foundry squarely in the number six spot
After leapfrogging Tower in the revenue rankings in 1Q21 for the first time ever, PSMC maintained its strong growth in 2Q21 partially owing to continued wafer starts for specialty DRAM, DDI, CIS, and PMIC in its P1/2/3 fabs At the same time, there was a massive hike in demand for automotive chips, such as IGBT, manufactured at PSMC’s Fab 8A and Fab 8B In view of quarterly increases in PSMC’s overall ASP, the foundry posted US$459 million in revenue for 2Q21, an 183% QoQ increase, and took the seventh spot in the rankings VIS benefitted from a host of factors in 2Q21, including persistent demand for DDI, PMIC, and power discretes; newly installed capacities in the Singapore-based Fab3E ready for production; adjustments in the foundry’s product mix; and an overall ASP hike VIS’ revenue for 2Q21 reached US$363 million, which represented not only an 111% QoQ increase, but also the first time VIS overtook Tower in terms of revenue
Although ninth-ranked Tower benefitted from stable demand for RF-SOI products, industrial PMIC, and automotive PMIC, the foundry’s newly installed capacities were not entirely ready for mass production, and its revenue therefore underwent a modest 43% QoQ increase for 2Q21 to US$362 million On the other hand, DBHiTek had been operating at fully loaded capacities for more than 18 months While client demand for PMIC, MEMS, and CIS products manufactured with 8-inch wafers made consistent contributions to the foundry’s earnings, most of DBHiTek’s revenue growth for 2Q21 took place due to the rise in its ASP DBHiTek’s revenue for 2Q21 reached US245 million, a 120% QoQ increase
As of 3Q21, the shortage of foundry capacities that began in 2H19 has persisted and intensified for nearly two years Although newly installed capacities from certain foundries have become gradually available for production, the increase in production capacity has been relatively limited, and these additional capacities have been fully booked by clients, as indicated by TrendForce’s investigation into orders placed by foundry clients All major foundries currently operate at fully loaded capacities, though their production still lags behind market demand Furthermore, wafer inputs for automotive chips have been skyrocketing since 2Q21 due to major pushes by governments worldwide, in turn constraining the available production capacities for other chips As a result, foundries are continuing to raise their blended ASPs and adjusting their product mixes in order to further optimize profits TrendForce therefore believes that the combined revenues of the top 10 foundries will reach a record high in 3Q21 by undergoing a wider QoQ growth compared to 2Q21
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@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2021/05/31
Owing to soaring demands for various end devices, manufacturers have been ramping up their component procurement activities, and foundry capacities, as a result, have been in shortage since 2020, with various foundries raising their wafer prices and adjusting their product mixes to ensure profitability, according to TrendForce’s latest investigations Despite the result for 4Q20 being a high base for revenue comparison and power outage incidents at some fab sites, the quarterly total revenue of the top 10 foundries rose by 1% QoQ to a record high of US$2275 billion in 1Q21
Samsung and GlobalFoundries posted a revenue drop for 1Q21 due to power outage and fab sales, respectively
The ranking of foundries by revenue for 1Q21 shows that TSMC maintained its first place position with a quarterly revenue of US$129 billion, a 2% increase QoQ TSMC’s main revenue drivers have been its 7nm and 16/12nm nodes The revenue from the 7nm foundry service has kept climbing at a stable pace thanks to orders from AMD, MediaTek, and Qualcomm, registering a QoQ increase of 23% for 1Q21 The revenue from the 16/12nm foundry service has also grown on account of the demand related to MediaTek’s 5G RF transceivers and Bitmain’s cryptocurrency mining machines, registering a QoQ increase of nearly 10% for 1Q21 The revenue produced by the 5nm node, which is currently under the market spotlight, underwent a quarterly decrease mainly because Apple as the largest client for the 5nm foundry service entered the off-season for device production
Samsung posted a small QoQ drop of 2% in its foundry revenue for 1Q21 to US$411 billion This February, a freak winter storm in Texas caused power outages in Austin and forced Samsung to temporarily shut down its fab Line S2 that was located in the vicinity Line S2 finally returned to normal operation at the start of April The suspension of wafer input at the fab for almost a whole month caused Samsung to become one of the very few foundries that posted a revenue drop for 1Q21 UMC maintained a fully loaded capacity in 1Q21 thanks to the robust demand for PMICs, TDDI, OLED DDIs, CIS, and Wi-Fi SoCs Its shipments were also fairly brisk Owing to the undersupply situation, UMC raised prices, thereby causing its revenue to jump 5% QoQ to US$168 billion for 1Q21
GlobalFoundries posted a QoQ drop of 16% in its revenue to US$13 billion for 1Q21 As GlobalFoundries had formally handed over its Fab3E (an 8-inch wafer fab) in Singapore to VIS, Fab3E stopped generating revenue for GlobalFoundries with respect to fulfilling the orders related to last time buy or backlog in 1Q21 Hence, GlobalFoundries became another one of the very few foundries that posted a drop in revenue for 1Q21 SMIC raised its revenue by 12% to US$11 billion for 1Q21 The growth was mainly attributed to the substantial increase in wafer input at the foundry from Qualcomm and MPS Specifically, there was strong demand for PMICs made with the foundry’s 015/018µm nodes and for RF chips, MCUs, and Wi-Fi chips made with the foundry’s 40nm node The wafer input also rose noticeably for DDIs made with SMIC’s 40/28nm HV process technology At the moment, SMIC has been operating normally as before in all respects because it had built a very high level of inventory for production-related materials and equipment parts before it was placed on the Entity List last year
PSMC overtook Tower in quarterly revenue for the first time while total revenue of the top 10 foundries are expected to reach a new historical high in 2Q21
Owing to rising ASP and high demand for PSMC’s 12-inch wafer foundry service from clients that input wafers for specialty DRAM, DDIs, CIS, and PMICs, PSMC’s revenue for 1Q21 rose by 14% QoQ to US$388 million, surpassing Tower for the first time As for Tower, its performance in 1Q21 was relatively on par with the result for 4Q20, registering a QoQ increase of about 1% to US$347 million The main and stable demand drivers for Tower have been products made with the RF-SOI process, semiconductor components for industrial applications, and PMICs for automotive applications Tower plans to invest an extra US$150 million this year to expand its production capacity by a marginal amount, and the newly added capacity is expected to be activated in 2H21 VIS posted revenue growth for 1Q21 owing to the recovering demand for large-size DDIs, PMICs, and automotive chips It also benefited from the rising ASP Its revenue grew by 7% QoQ to US$327 million
HHGrace raised its revenue by 9% QoQ to US$305 million for 1Q21 The gain was mainly attributed to the rising demand from clients that supply NOR Flash, CIS, MCUs, and IGBTs The 8-inch wafer production capacity of the foundry is fully loaded on account of stable demand While capacity expansion of HHGrace’s 12-inch wafer fab has been taking place ahead of schedule, the capacity utilization rate of HHGrace’s 12-inch wafer fab in Wuxi is also rising rapidly as the fab is successfully proceeding with the mass production of specialty ICs and other products HLMC’s revenue fell by 2% QoQ to nearly US$300 million for 1Q21 On the technology front, HLMC is now developing its 14nm node, but the process is still in the quality acceptance phase The foundry still mainly generates revenue with its 65/55nm nodes
It should be noted that HHGrace and HLMC, which came to 9th and 10th respectively in the ranking for 1Q21, belong to Hua Hong Group If the revenues of the two companies are combined together, then Hua Hong Group would have produced around US$600 million in foundry revenue for 1Q21, giving it 6th place in the ranking If Hua Hong Group is listed in the ranking, then DBHitek would fill in the 10th place DBHitek’s 8-inch wafer foundry business has benefited from the stable demand for PMICs, MEMS, and CIS Its wafer ASP has also risen slightly For 1Q21, DBHitek posted a QoQ growth of 7% in its revenue to US$219 million The foundry currently has no plan to further expand its already fully-loaded production capacity, so its future revenue growth will be limited as it will be mainly driven by the rise in the ASP
With foundry capacity shortage expected for 2Q21, TrendForce believes the rise in wafer prices will in turn further contribute to revenue growth This is attributed to the fact that, while foundries have not been undertaking significant capacity expansions during 1H21, there has been strong demand for most types of components in 2Q21, meaning foundries will maintain fully loaded capacities going forward On the other hand, governments of some countries have directly requested foundries to prioritize automotive chips in scheduling production This will further tighten the foundry capacity allocated to chips belonging to other, non-automotive applications On the whole, TrendForce expects the quarterly total revenue of the top 10 foundries to once again reach a historical high by undergoing a 1-3% increase QoQ in 2Q21
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@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
