TSMC has previously said its overseas facilities could account for 20% or more of its 28nm and beyond capacity in five years or later, depending on customer demand and government support.

Discussions are still ongoing, focusing on how Bosch and other partners can take risks in manpower, unions and production efficiency, a report said.

A Bosch spokesman said the company does not comment on the reports. If the deal goes through, TSMC would use a similar financial model to the one it already has with Sony in Japan (Japan provides TSMC with a 40% subsidy, Sony Ventures), and could expect a similar level of subsidy.

Currently, GlobalFoundries’ 12nm process in Dresden is the most advanced process node in Germany. While Berlin may be content with TSMC’s alleged 28nm offerings in the short term, whether TSMC will introduce more advanced nodes on Germain soil depends in part on how Berlin assesses its own security needs.

28nm: Not bright in Taiwan, but bright overseas?

A few days before the news of TSMC’s construction of a 28nm factory in Germany, there was news that TSMC’s 28nm expansion plan in Kaohsiung was cancelled.

TSMC announced in November 2021 to invest in the establishment of two 12-inch wafer fabs of 7nm and 28nm in Kaohsiung. The 7nm fab has been suspended earlier this year, and now it is reported that TSMC originally planned to open the bidding for the Kaohsiung plant in January. With a one-year delay, related clean rooms, installation operations are postponed, and the list of 28-nanometer machines planned to be purchased by TSMC’s Kaohsiung plant is also canceled. This means that the 28-nanometer plant that is expected to be completed in 2024 may not be completed as scheduled.

Kaohsiung Mayor Chen Qimai said that he will respect the progress of TSMC’s plant construction, and the Kaohsiung City Government will fully assist and cooperate with the central government.

TSMC said that the process delivery and timetable of the Kaohsiung factory depend on customer needs and market trends. It is currently in the silent period of the corporate briefing, and will clearly explain the overall market conditions at the legal briefing on April 20.

At the same time, we found that outside of Taiwan, TSMC’s 28nm is very popular.

As early as 2021, TSMC, the leading wafer foundry, joined hands with Japan’s Sony Semiconductor Solutions to establish a subsidiary in Japan and cooperate in the construction and operation of a wafer fab. According to the deliberations of the Taiwan authorities, the announcement was approved on the 20th.

TSMC announced on November 9 that the new fab in Japan is in cooperation with Japan’s SONY Semiconductor Solutions Corporation (SSS), and TSMC will set up a subsidiary in Kumamoto City (Japan Advanced Semiconductor Manufacturing, Inc., JASM). Initially adopting 22/28nm process to provide professional integrated circuit manufacturing services to meet the strong demand for special technologies in the global market, SONY Semiconductor Solutions will invest a minority stake.

Japan’s JASM fab is expected to start construction in 2022 and produce by the end of 2024. The fab will directly create about 1,500 high-tech professional jobs, with a monthly production capacity of 45,000 12-inch wafers. The initial estimated capital expenditure is about 7 billion US dollars, and the Japanese government has promised to support it. Under the final agreement between TSMC and Sony Semiconductor Solutions, Sony Semiconductor Solutions plans to invest approximately US$500 million to obtain no more than 20% of JASM’s equity. The conditions for the completion of the transaction between TSMC and Sony Semiconductor Solutions follow general transaction practices.

According to the announcement of the Investment Review Committee of the Ministry of Economic Affairs, in order to meet the needs of Japanese customers nearby, TSMC invested a maximum of 237.8 billion and 20.8 million yen to establish JASM in Japan, which is engaged in the manufacturing, sales, testing and circuit-aided design of integrated circuits and other semiconductor devices.

This case is a joint venture between TSMC and Sony Semiconductor Solutions of Japan to set up a technology node 22/28nm 12-inch wafer fab in Kumamoto Prefecture, Japan. TSMC’s tentative shareholding ratio is up to 81%. Considering that TSMC’s establishment of a factory in Japan is a cooperation between Taiwan and Japan’s index companies, and the relevant process technology is at least one generation behind Taiwan, China, there should be no doubts about the outflow of high-end process technology. Taiwan’s semiconductor technology still maintains an international competitive advantage. It was discussed at the committee meeting After that, agree to the case.

The factory is progressing so well that TSMC even plans to build a second factory in Japan.

Why is 28nm so capable?

Statistics show that in 2011, TSMC took the lead in the field of professional integrated circuit manufacturing services to launch the 28nm general purpose (General Purpose) process technology, and provided the industry’s most complete and diverse 28nm process options according to customer needs, so as to provide customers with more efficient production High-performance, more energy-saving and more environmentally friendly chip products.

TSMC’s 28nm process technology has the advantages of high performance and low power consumption, and seamlessly integrates with TSMC’s 28nm design ecosystem to help customers accelerate time to market. It can support customers including central processing units, image processing Devices, high-speed network chips, smart phones, application processors (APs), tablet PCs, home entertainment, digital consumer electronics, automotive devices, and the Internet of Things.

In addition, TSMC’s world-leading 28nm process technology mainly adopts high-k metal gate (High-k Metal Gate, HKMG) gate-last technology. Compared with the gate-first technology, the gate-last technology has the advantages of lower leakage current and better chip performance.

According to a previous report, 28nm semiconductors have the following typical characteristics:

The 28nm technology node is the last generation using planar (Planer) transistors.

Do not use Self-Aligned Double Patterning (SADP, self-aligned double mode, use SADP from FinFET).

Companies such as Renesas Electronics, which originally adopted the IDM (Integrated Device Manufacturer) model, handed over to Foundry from the 28nm generation.

From 28/22 nanometers to 16/14 nanometers, although the performance has been improved, the cost has also risen, and there is this irreconcilable contradiction. As far as Apple’s iPhone and High-Performance Computing (high-performance computing) are concerned, even if the cost rises slightly, FinFET will be used (using SADP). However, most other electronic devices such as automobiles do not require such high performance. The performance of the 28nm technology node is sufficient, and even many manufacturers prefer to adopt 28nm, which has an advantage in cost. Therefore, the results shown in the figure below appear, and most of the semiconductors used in electronic equipment are concentrated on 28 nanometers.

LSI (System on Chip, SoC), TCON (Timing Controller, timing controller) for notebook computer Wi-Fi systems. SoC and NAND controller for tablet PC. The SoC, TCON of the TV, and the semiconductor (Connectivity) play a role in the connection. SoC for router Wi-Fi. SoC for smartphones (entry-level), communication semiconductor (RF, Radio Frequency, radio frequency), display driver IC (Display Drive IC, DDI), CMOS image sensor (CMOS Image Sensor, CIS) logic semiconductor, image signal processor (Image Signal Processor, ISP) for face recognition, etc., NAND controller. MCU (Micro Controller Unit, generally referred to as microcontroller unit) for automobiles. SoC, MCU, NAND controllers for game consoles. MCU for wearable devices, True Wireless Stereo (TWS, true wireless stereo) for wireless headphones, ASIC (logic semiconductor for specific directions), FPGA (Field Programmable Gate Array, field programmable logic gate array), for Connected semiconductors (Connectivity).

The uses for 28nm (including improved 22nm) semiconductors are endless. The demand for these 28nm semiconductors has rapidly expanded due to the new crown epidemic. Moreover, almost all of the above 28nm semiconductors are produced by Foundry.

All in all, 28nm semiconductors have become a “sweet node” (the 16nm proposed by McKinsey will not become a “sweet node” because it uses SADP’s FinFET). In addition, most of the above 28nm products are manufactured by TSMC, and TSMC’s 28nm production capacity is likely to have encountered a “bottleneck”.

The figure above shows the quarterly sales of each technology node of TSMC. Although UMC, GF, SMIC and other factories are operating at full capacity, TSMC’s 28nm production capacity is still the largest in the world. Therefore, orders for 28nm worldwide are pouring into TSMC. In order to further expand the production capacity of 28nm, only new factories can be built

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Taiwanese media pointed out that the industry believes that the relevant news should be misinformation, mainly because TSMC’s strategy will not increase prices arbitrarily, and it is also a critical period for semiconductor inventory adjustment. TSMC should share the difficulties with customers and let customers complete inventory reduction first. , in order to facilitate the development of industrial structure.

According to an unnamed industry source, when TSMC and IC design customers discussed and negotiated this year’s price in the middle of last year, factors such as inflation and the increase in production expansion costs at home and abroad were taken into consideration, and the quotations for each process were raised in early 2023, with an average increase of about 3. % rise.

Recently, it has been reported that TSMC plans to raise prices in the second half of the year due to cost considerations. The supply chain believes that TSMC’s new U.S. plant is a project investment, and the related expenses are earmarked for the support of TSMC’s annual stable cash flow. If the investment cost of the new plant rises, it will turn around to manage the supply chain and lower prices instead of raising prices for customers. price.

In addition, people familiar with the industry ecology said that the recent market situation is still in the stage of inventory adjustment. Although the IC design industry has successively reported short orders, the quantity is still small, and due to timeliness, production will naturally increase the price, but the overall quotation The dynamics have little effect.

The data shows that TSMC’s consolidated revenue in February was approximately NT$163.174 billion (currently approximately RMB 36.714 billion), a decrease of 18.4% month-on-month and an increase of 11.1% year-on-year; the cumulative revenue in the first two months of this year was approximately NT$363.225 billion New Taiwan dollars (approximately RMB 81.726 billion), a year-on-year increase of 13.8%.

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In April 2022, UMC announced a partnership with DENSO to build the first 12-inch wafer line at the USJC facility in Japan.

Taiwan media pointed out that the majority of IGBTs are currently produced on 8-inch wafers, although in the second half of 2022 to 8-inch wafer capacity oversupply, but in the medium and long term because of the difficulty of capacity expansion, market conditions improve and demand recovery is still facing the problem of lack of capacity.

The legal person said that the past 8-inch or 6-inch wafer production of power semiconductors, in recent years began to shift to 12-inch wafer production but more difficult, UMC and DENSO cooperation, if successful, will provide effective capacity to meet the long-term demand for automotive chips.

UMC’s January 2023 revenue slipped to NT$19.59 billion (currently about RMB 4.427 billion), down 6.47% sequentially and 4.31% year-over-year, hitting a 15-month low.

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Aerial view of DW Phase V Project

DW Phase V project will promote TCL Zhonghuan G12 production capacity, through the depth of automation development of intelligent factory equipment, realize the automation of the whole process from incoming materials to finished goods delivery and upgrade again, increase the per capita labor productivity by 150% compared with the traditional factory, effectively reduce production costs, improve production efficiency and yield, and improve flexible manufacturing capabilities.

The 50GW (G12) solar-grade monocrystalline silicon material smart factory project (Crystal VI project) invested by Azeus is currently the world’s largest single monocrystalline silicon production base with the highest degree of intelligence.

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The industry attributed the decline in utilization to the decline in IT demand during the global economic downturn. With the prolongation of the economic downturn, demand from downstream industries such as smartphones, personal computers and home appliances has been shrinking, while the server market, which should have been robust recently, has also weakened.

In addition, the capacity utilization rate of TSMC, the world’s number one foundry, has also declined. The industry estimates that TSMC’s average foundry utilization rate is 70-75%.

Foreign media believe that the impact of the decline in foundry utilization rate on DB HiTek, Key Foundry, SK Hynix IC, Magner Chip and other 8-inch foundry companies has a greater impact. DB HiTek maintains 60-70% of the start-up rate, but in the case of some 8-inch foundries, the start-up rate has fallen to 50% of the level.

As utilization rates decline, the profit picture is expected to be burdened. Coupled with the increased burden of fixed costs, some foundries have begun to reduce prices, for example, UMC announced that it will start to reduce prices by 10% from the second quarter of this year.

Foreign media said that some Korean foundries have also recently begun to reduce prices. An 8-inch wafer foundry industry leader said, “We are currently making price concessions to strategic customers to small and medium-sized wafer foundries.”

However, industry insiders predict that the decline in foundry utilization will be temporary. This is because demand for semiconductors is steadily increasing with the commercialization of autonomous driving, the Internet of Things and artificial intelligence technologies, and the demand for semiconductor replacement, which has been delayed due to the recession, is high.

Jeong Ki-bong, vice president of Samsung Electronics foundry division, said in a conference call held after last year’s fourth-quarter earnings announcement, “We expect demand and market conditions to recover in the second half of the year, mainly in HPC, data centers and automotive.”

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The company achieved sales revenue of $7.273 billion in FY2022, up 33.6% year-over-year; attributable profit attributable to the Company was $1.818 billion, up 6.8% year-over-year; and gross margin was 38.0%, up 7.2% year-over-year.

In 2022, cell phones will account for 27% of the company’s total wafer revenue, while consumption will account for 23% of total wafer revenue, adding up to half of the total wafer revenue.

But in reality, SMIC’s previous cell phone chip revenue was about 35% to 45% of wafer revenue, which means that the cell phone industry has declined very severely, and consumption has also declined a lot. A very large portion of the foundry business comes from cell phones and consumption. SMIC revealed that the mobile phone industry now has a relatively high inventory, and the consumer industry’s inventory may be digested within six months.

Compared with the coldness of the cell phone industry, the industrial sector has little inventory, and the automotive industry, especially new energy vehicles, is in short supply. In the cell phone and consumer industries, the highest inventory is related to display driver circuits, large-screen TVs, medium-screen monitors, small-screen cell phones, and panel-type driver chip inventory is estimated to be more than 3 quarters, individual inventory may be the whole year.

According to the regional view of SMIC’s annual revenue, China, the U.S. and Eurasia accounted for 74%, 21% and 5% respectively, and the amount of revenue from China and the U.S. increased by 42% and 24% year-over-year.

By size, eight-inch and 12-inch wafer revenue accounted for 33% and 67% of revenue, respectively, with year-over-year revenue growth of 24% and 42%.

By application, SMIC’s revenue from smartphones, consumer electronics, smart homes and other applications accounted for 27%, 23%, 14% and 36%, respectively, with year-over-year revenue growth of 14%, 32%, 48% and 54%.

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At the end of November last year, TCL Azeus lowered wafer prices due to supply and demand, with 150μm thickness P-type 210 and 182 wafers quoted at $9.30 and $7.05 per wafer, respectively.

TCL Azeus is the world’s leading manufacturer and shipper of monocrystalline silicon wafers, high-efficiency N-type photovoltaic monocrystalline silicon wafers, TCL Azeus industry layout in Tianjin, Inner Mongolia, Jiangsu, Ningxia and other places, has formed semiconductor materials, new energy photovoltaic materials and modules and other industrial sectors of the synergistic development of the industrial ecology.

TCL Zhonghuan’s 2022 full-year net profit attributable to 6.6 billion yuan – 7.1 billion yuan, an increase of 63.8% – 76.2% over the same period last year; the fourth quarter of 2022 net profit attributable to 1.6 billion yuan – RMB 2.1 billion, an increase of about 50.7% – 97.8% over the same period last year.

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However, Samsung confessed that this quarter, it is difficult to escape the pressure of industrial inventory adjustment, will make the foundry business capacity utilization began to decline. Industry worries, Samsung fear of launching a price cut to grab a single tactic, to the detriment of TSMC, UMC and other manufacturers.

Industry analysis, the recent general decline in capacity utilization of foundries, UMC capacity utilization rate from the previous full load to about 70%, and rumors that some manufacturers have only 50% capacity utilization of some production lines, but TSMC, UMC are holding prices, TSMC this year, but also a 6% price increase, UMC is expected to be flat this quarter, the average price of products (ASP).

Taiwan media pointed out that in this context, if Samsung cut prices to grab a single, the IC design houses and integrated component (IDM) factories facing huge inventory pressure and unwilling to pay more manufacturing costs are very attractive, Samsung can not only use this to fill the capacity gap, but also help increase market share.

Samsung did not provide its foundry capacity utilization data and offer dynamics, only revealed that the industry inventory adjustment, resulting in the foundry business capacity utilization began to decline, but still expects the second half of the automotive and high-speed computing demand will bring recovery, will be the second generation of 3 nm process product competitiveness, to win new customers, and has set up advanced packaging team to support the foundry business needs.

In addition, Samsung updated the most advanced chip process information, 3 nm process yield stability, the second generation of 3 nm process is progressing rapidly, also in the development of 4 nm process for automotive applications, this year will focus on the development of 2 nm process.

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The report shows that the foundry output is expected to decrease by 4% year-on-year in 2023.
The report shows that the capacity utilization rate of foundries from the first quarter to the second quarter is not satisfactory, and some processes in the second quarter are even lower than in the first quarter, and orders have not yet shown obvious signs of return. Looking ahead to the second half of the year, even if some of the products that began earlier in the inventory correction cycle will likely be stocked for the end-of-the-year festivities and orders to fill the phenomenon, the global political and economic trends are still the biggest variables, capacity utilization rate back up is not as fast as expected.

TrendForce Tiburon Consulting said that the third quarter from eight inches and twelve inches capacity utilization rate will be more obvious. However, taking into account that the overall economic situation is still uncertain, the overall rate of increase is limited, and it is difficult to return to full capacity in a short period of time.

In terms of capacity layout, in recent years, there will be more than 20 new fabs planned worldwide, including 6 in China, 5 in Taiwan, 5 in the United States, 4 in Europe, 4 in Japan, Korea and Singapore.

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According to the data, TSMC’s revenue for the fourth quarter of 2022 fell to 14.363 billion NTD (about 3.189 billion RMB), down 25% YoY; total revenue for 2022 was 76.087 billion NTD (about 16.891 billion RMB), up 16% YoY.

The average selling price of DRAM is close to the cost, so it will not be used to fill the capacity, and the capacity utilization is expected to drop to more than 60% in the first quarter of this year.

Looking ahead to the first quarter, LMC expects revenue in the first quarter of this year will be reduced by 15%, the second quarter has a chance of flat performance, and the second half of the year is expected to improve, and the situation should be clearer in February and March.

In terms of capital expenditures, TSMC’s 2022 capital expenditures of $650 million (approximately RMB 4.368 billion) are lower than the expected $840 million (approximately RMB 5.645 billion). This year’s capital expenditures are estimated at approximately $1.84 billion (approximately RMB 12.365 billion), with 78% invested mainly in the Causeway plant and the rest in the non-Copper plant and part of the 8-inch plant.

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