The new Three Kingdoms situation in wafer fabs emerges
Latest update time：2021-07-15
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At present, chips are in short supply and rising in price worldwide. Against this backdrop, the construction of wafer fabs in various regions has become hot. Whether it is a wafer foundry or an IDM, most of them are expanding their production capacity locally or overseas.
This week, IC Insights released a statistical data on the wafer capacity installed in major regions of the world in December 2020, divided by geographical area (each regional figure is the total monthly installed capacity of factories located in the region, regardless of where the company owning the factory is headquartered. For example, the wafer capacity installed by Samsung of South Korea in the United States is included in the total North American capacity, but not in the total Korean capacity).
Data shows that Taiwan leads the world in installed wafer production capacity, with a market share of 21.4% (8-inch equivalent wafers). South Korea ranks second, accounting for 20.4% of global wafer production capacity. Mainland China accounts for 15.3% of global production capacity. Although it ranks fourth, it is almost the same as Japan (15.8%), which ranks third. It is expected that the installed capacity of mainland China will exceed that of Japan in 2021. North America (12.6%) ranks fifth and Europe (5.7%) ranks sixth.
IC Insights believes that North America’s capacity share is expected to decline during the forecast period (2020-2025) as the region’s large fabless supplier industry continues to rely on foundries, primarily in Taiwan, and Europe’s capacity share is also expected to continue to shrink slowly.
The opposite is true for China, which IC Insights believes will be the only region to increase its share (3.7 percentage points) between 2020 and 2025. Although expectations for large new DRAM and NAND fab launches dominated by China have weakened, IC manufacturers headquartered in other countries will bring a large amount of wafer capacity into China in the next few years, while Chinese companies are also continuously expanding their wafer capacity.
Although this data only covers wafer production capacity in various regions in December 2020, it fully reflects the distribution and changes in global wafer production capacity in recent years: Taiwan, South Korea, and Japan are the traditional top three regions, while mainland China, ranked fourth, has become a rising star with the strongest upward momentum. Although it is not a problem to overtake Japan, it will not be able to shake the leading position of Taiwan and South Korea in the short term. North America and Europe, ranked fifth and sixth, have not allowed mainland China to continue to expand its market share. In particular, in the past year, they have made frequent moves, and the plans and momentum for new wafer production capacity can rival those of mainland China.
North America clarifies the direction of advanced processes
In the past two years, the United States has been striving to establish advanced process wafer fabs in its own country, and the target companies include today's three major manufacturers: TSMC, Samsung, and Intel.
TSMC is preparing for its 5nm process wafer factory in the United States, which requires approximately US$12 billion. The speed of progress depends largely on the availability of US government subsidies. Not long ago, the US government issued a budget of US$520 to develop the local chip industry, especially the manufacturing industry. At present, all parties are paying attention to its implementation, because this will largely determine the enthusiasm of TSMC and Samsung, two non-US companies, to invest and build factories in the United States.
After TSMC announced its plan to build a factory in the United States, Samsung, as its biggest competitor, is not to be outdone and also plans to expand its 5nm process wafer factory in the United States, but the specific site and construction time have not yet been announced.
With the appointment of Intel's new CEO, the company's enthusiasm for large-scale expansion of wafer fabs has been ignited, especially in the United States. As it wants to vigorously develop its wafer foundry business, it has decided to invest $20 billion to build two new wafer fabs in Arizona, which are scheduled to be put into production in 2024. The new wafer fabs will use advanced process technology. The additional factories will be located in the company's Ocotillo campus (Chandler, Arizona), so that the number of their local factories will increase from 4 to 6.
At present, both the US government and the three major manufacturers have a clear and unified goal of building advanced process wafer fabs locally. The situation in Europe is different.
European thought is not yet unified
In the past year, the EU has invested a lot of energy in the large-scale construction of advanced process wafer fabs in the region. It has not only been lobbying local IDM manufacturers such as Infineon, ST and NXP, but also actively trying to get TSMC and Intel from outside the region to invest and build factories in Europe to change the situation where their share of wafer production capacity in various regions around the world is seriously lagging behind. However, it is difficult to reach a consensus, especially for the old Infineon, ST and NXP, they are more proficient in mature and special process technology, and are not as active as Asian manufacturers in the construction of advanced process wafer fabs such as 7nm and 5nm. TSMC does not seem to be very enthusiastic about building new wafer fabs in Europe. Relatively speaking, the ambitious American manufacturers Intel and Globalfoundries have shown a strong interest in expanding wafer production capacity in Europe.
This week, Thierry Breton, the EU's industrial strategy commissioner, said that the EU plans to increase its share of global chip production to 20% in the next 10 years. At the same time, the EU also said that it plans to conquer the 2nm process technology in the future. On the same day, Intel announced plans to invest $20 billion to build new wafer fabs in Europe and invest in multiple EU member states at the same time. The company said it hopes to receive more funding and policy support from the EU, and also hopes that the EU can provide a piece of land with complete surrounding infrastructure and covering an area of more than 4 square kilometers to build 8 wafer fabs.
Semiconductor manufacturing in Europe is mainly concentrated in Germany and France, with Germany being the top priority. Earlier this month, German Economy Minister Peter Altmaier said that 5 billion euros ($5.9 billion) of government funds had been allocated for EU-supported wafer fab expansions, and that state support could double to 10 billion euros. Altmaier said, "Investors from outside Germany are very interested in this government move."
In February this year, Altmaier said he was talking to opponents in France and the European Commission that state aid could be provided under the Important Projects of Common European Interest (IPCEI). The EU believes that Europe needs a secure supply chain and a strong, broad-based microelectronics industry, and hopes that all parties will increase resource investment, including TSMC.
Both Infineon and Dresden's GlobalFoundries welcomed the initiative. However, these two companies are not good at the research and development and production of advanced process chips, but instead focus on special process products for power semiconductors.
Previously, GF had applied for funding for the microelectronics project under the second edition of IPCEI, hoping to expand its local production capacity from 2024. GF CEO Tom Caulfiled said the company will invest $1 billion in Dresden over the next two years to reach the maximum production capacity of the current wafer fab. In terms of process technology, it covers FDSOI from 55nm to 22nm.
Altmaier believes that not only GlobalFoundries, Bosch and Infineon have benefited from the first IPCEI, which in turn has benefited Germany.
GF has applied for funding under IPCEI-2, and preliminary approval from IPCEI-2 could come later this year, with final approval in 2022.
On Intel's side, the company is reportedly in talks with the German state of Bavaria about a possible wafer fab near Munich. Bavaria has proposed an abandoned air force base in Pensing-Landsberg, west of Munich, as a possible location for the plant.
In terms of advanced processes, although the EU has discussed the formation of a semiconductor alliance including Infineon, NXP and ST to reduce dependence on foreign chip manufacturers, these participants do not seem to be interested in manufacturing the most advanced process chips such as 7nm and 5nm.
Recently, Infineon CEO Reinhard Ploss questioned the goal set by Brussels to build a state-of-the-art 2nm factory. He said: "If it is decided to build a 2nm factory in Europe, I would question who the customers should be. Mobile phone companies? There are not so many in Europe anymore. Computer manufacturers? We can use computers here, but we will not produce the most advanced process chips."
Pros believes that industrial policy should focus on leveraging Europe's traditional strengths in semiconductor manufacturing.
Faced with such differences, the EU seems to have no choice but to turn to Intel, Samsung and TSMC outside the region to build the most advanced process fabs. But the specific progress remains to be seen, especially TSMC's attitude, which is more important than Intel in some ways. Previously, TSMC was not very positive about building fabs in Europe and Japan.
However, in recent days, TSMC's attitude seems to have changed. Some Taiwanese media reported that TSMC may change its policy and agree to build new wafer fabs in Germany and Japan. It is reported that the new factories will be located in Dresden, Germany and Kumamoto District, Japan. According to reports, in these two regions, TSMC has reached an agreement with local authorities and is negotiating with local customers. It is reported that in Germany, the new factory will produce 16nm/12nm chips, focusing on meeting the needs of European automotive chips, and foundry customers include NXP, Infineon, etc.
TSMC declined to comment on the report.
The European chip manufacturing industry, which has always been calm and even somewhat dull, has attracted much attention in a relatively short period of time and has begun to be interested in advanced processes. At the same time, there are differences, and there may be a lot to watch in the future.
Wafer fab construction in mainland China is in full swing
From an incremental perspective, among all regions in the world, the wafer fabs in mainland China are growing the fastest, as shown in the statistics from IC Insights mentioned above.
Since the beginning of 2021, many local and Taiwanese manufacturers have built new 12-inch wafer fabs in mainland China. In addition, TSMC plans to expand the 28nm process chip production capacity of its mainland wafer fabs, and UMC is also increasing its investment in several wafer fabs in mainland China to meet the growing demand for mature process chips.
Even in 2020, when the pandemic was raging, the pace of wafer fab construction in mainland China did not stop. In the first half of 2020, while accelerating the resumption of work and production, various parts of mainland China successively announced the start of a number of major semiconductor projects. 14 provinces announced a total of more than 40 semiconductor projects, involving Xinsen Technology, SMIC, Sunlord Electronics, Precision Electronics, Changdian Technology, Dafu Technology, etc.
As a major semiconductor center, Shanghai has announced a list of major construction projects for 2020. In terms of integrated circuits, projects under construction include the construction of Huali Microelectronics' 12-inch advanced production line, SMIC's 12-inch chip SN1 project, and Jita Semiconductor's special process project. Projects under construction in the field of semiconductor materials and equipment include the Advanced Silicon Semiconductor 12-inch integrated circuit silicon wafer fully automatic intelligent production line project and Precision Semiconductor's global R&D headquarters and equipment manufacturing base.
The signing ceremony of key projects held in Zhangjiang Science City also included the headquarters of Juchen Co., Ltd. and Shanghai Hualing High-end Integrated Circuit Test Platform. Jiaxing has 6 projects involving the semiconductor industry, including the GaN RF and power device production base project, the new annual production of 2 million IGBT power devices project, the H3C Electronic Information Industrial Park project, and the core RF components expansion project for 5G communications.
In addition, one of the major projects announced by Hefei City is GCL Integrated Recycled Wafer Manufacturing, Suzhou announced four projects including Huaxing Yuanchuang's flat panel testing equipment capacity expansion and semiconductor testing equipment production project, and Zhejiang's major projects include Jinhua Zhejiang Loongson Intelligent Industrial Park project.
In addition to local companies, more and more international giants are setting up new wafer factory projects in China. The most representative company is Samsung. As the world's second largest semiconductor company, Samsung has spared no effort in the construction of wafer factories in mainland China in recent years, and it has attracted more and more attention.
Recently, Samsung's second wafer factory in Xi'an, China has been fully put into production.
Previously, Samsung decided to invest $15 billion in its plant in Xi'an, China, which is the company's only overseas memory production base. After investing $7 billion in the first phase in August 2017, the second phase invested $8 billion in 2019. A production line built in the first phase of investment started production in March 2020.
Samsung's Xi'an campus consists of Plant 1 and Plant 2. After the second phase of investment is completed, the NAND flash capacity of Plant 2 will reach 130,000 wafers per month. The capacity of Plant 1 is 120,000 wafers per month. The total output of 250,000 wafers per month is about half of Samsung's NAND flash production in 2020.
Conclusion
The global wafer fab construction is in a historical period of explosive growth. Considering the existing capacity and the incremental capacity, Taiwan and South Korea will still be the most powerful regions in the future, while Japan will be tepid. The Chinese mainland, North America and Europe, which are currently ranked at the bottom three, seem to have more highlights and stronger growth desires, and are expected to become the three focus regions for wafer fab construction in the future.
*Disclaimer: This article is originally written by the author. The content of the article is the author's personal opinion. Semiconductor Industry Observer reprints it only to convey a different point of view. It does not mean that Semiconductor Industry Observer agrees or supports this point of view. If you have any objections, please contact Semiconductor Industry Observer.
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