Europe's three largest chip giants re-examine their supply chains

At the Electronica 2024 CEO Roundtable held just last week, the CEOs of three chip giants, Infineon, NXP and STMicroelectronics, appeared together. The three CEOs collectively expressed their concerns about Sino-US relations. At the same time, they also reached a consensus that China is playing an increasingly important role in the global semiconductor supply chain, especially in the electric vehicle and industrial fields.

The discussion mentioned that the policies and restrictions of China and the United States have had an impact on the global semiconductor supply chain, and companies need to adapt to these changes. At the same time, as China is investing heavily in the semiconductor industry, including building new wafer fabs, to reduce its reliance on external supply chains, European companies also need to understand the "Made in China" strategy and actively expand their production and R&D layout in China, as well as their cooperation with Chinese partners.

On the one hand, China has long been a key market for European semiconductor giants. At the same time, with the uncertainty of the global economy, the three European semiconductor companies have all changed their supply chains to meet China's strong market demand and the global downturn.

Infineon: Reducing Power Device Costs in All Directions

Infineon, which is making full efforts in silicon, silicon carbide and gallium nitride, is constantly reducing the costs of these three types of products. In addition, Infineon also announced that it would temporarily suspend the expansion of Kulim Phase II to ensure the implementation of the "correct" capacity plan.

First, in terms of silicon, Infineon announced the launch of the world's thinnest silicon power wafer on October 29, becoming the first company to master the handling and processing technology of 20μm ultra-thin power semiconductor wafers. This breakthrough reduces the thickness of the wafer by half (from 40μm to 20μm), reduces the resistance by half, and reduces power losses by more than 15%, paving the way for more energy-efficient power systems. In contrast, the wafer thickness of Chinese competitors is between 80μm and 100μm, while that of Western and Japanese competitors is 40 to 60μm. This technology will be mainly used in DC/DC converters for AI servers. However, it is worth noting that this is also one of the few domestic processes that are directly compared with Infineon. At least it has made it to the table, which also proves Infineon's attention to its Chinese competitors.

Secondly, in terms of silicon carbide, with the opening of the third plant (Kulim 3) in Kulim, Malaysia (the first phase of construction officially started operation on August 9), Infineon is expected to become the most competitive silicon carbide technology supplier in the industry. At the same time, the plant will become the world's largest and most competitive 200mm silicon carbide power semiconductor wafer plant. Previously, Infineon said that it would invest up to 5 billion euros in Kulim for expansion in the next five years.

Infineon's silicon carbide has four advantages: in terms of raw material supply, it has more than 6 suppliers of wafers and crystal rods; it has advanced trench technology, which is 30% higher than planar silicon carbide in performance; it has the industry's best packaging solutions, and achieves the highest power density with the support of .XT technology; it has decades of experience and not only has the broadest product portfolio, but can also provide customized solutions.

It is worth mentioning that Kulim 3 will establish flexible supply with Infineon in Villach, Austria. At present, the 200mm SiC pilot project of the Villach plant is progressing smoothly, the selected large-scale technical qualification is almost completed, SiC raw materials are supplied by multiple parties, and the wafer yield is better than or equal to 150mm. According to Infineon's plan, Villach and Kulim will fully transition to 200mm within 3 years of qualification, and will start to launch 200mm-based products in Q1 2025 and develop new products on 200mm.

Combined with previous news, plus the planned 200mm SiC conversion in Villach and Kulim, Infineon expects that investment in silicon carbide will bring annual SiC revenue potential of approximately 7 billion euros by 2030. Infineon's investment in manufacturing will also support Infineon's goal of achieving a nearly 30% SiC market share by 2030.

Finally, in terms of gallium nitride, Infineon announced on September 12 that it had taken the lead in developing the world's first 300mm gallium nitride power semiconductor technology. According to Infineon, this technology can completely change the rules of the game in the industry. Compared with 200mm wafers, 300mm wafer chip production is not only more advanced in technology, but also because of the increase in wafer diameter, the number of chips on each wafer has increased by 2.3 times, significantly improving efficiency. At present, Infineon has successfully produced 300mm GaN wafers using the integrated pilot production line of existing 300mm silicon production equipment at the Villach plant.

NXP: Continue to leverage the advantages of hybrid IDM

NXP expects its wafer usage to increase 1.5 times between now and 2030.

To this end, NXP has developed a detailed hybrid manufacturing model, especially for front-end processes, which will be reduced from the current 40% to 20% by 2030, while the back-end ratio will remain unchanged.

Two breaking news: one is that TSMC Europe has jointly established ESMC with NXP, Bosch and InfraScience; the other is that NXP and World Advanced have jointly established VSMC in Singapore.

The full name of the joint venture ESMC is European Semiconductor Manufacturing Company. The project is planned based on the framework of the "Chips Act" announced by the European Commission and is located in Dresden, Germany. The planned joint venture will be 70% owned by TSMC, and Bosch, Infineon and NXP Semiconductors will each hold 10%. The factory is expected to start production for the first time in 2027, with a wafer production capacity of 40,000 wafers per month. Using TSMC's 28/22nm CMOS and 16/12nm FinFET process technology, it can produce about 40,000 300mm wafers per month.

According to NXP's plan, the $500 million in equity financing will support NXP's annual revenue of $2 billion.

The joint venture VSMC stands for VisionPower Semiconductor Manufacturing Company, with a total investment of US$7.8 billion, and NXP will hold a 40% stake. The joint venture will officially start construction in the second half of 2024, and plans to achieve mass production and start supplying the first batch of chip products to customers in 2027. It is expected that the monthly production capacity of 100-inch wafers will reach 55,000 pieces by 2029.

According to NXP's plan, the $2.8 billion in equity financing will support NXP's annual revenue of $4 billion.

NXP will continue to increase investment in its packaging and testing plant in Kuala Lumpur, Malaysia, to 6Mu/week. According to the plan, the investment of US$1.1 billion will support NXP's annual revenue of US$3 billion.

NXP specifically mentioned the Chinese market. In China, NXP selected TSMC Nanjing, SMIC, and Huahong to develop different types of products at 16/28nm, 40nm, and 180nm. The Tianjin packaging and testing plant completes 80% of internal manufacturing, and 20% is achieved externally.

STMicroelectronics: Reshaping manufacturing operations and adjusting structural costs

At an investor summit hosted by STMicroelectronics (ST), ST reiterated its ambitious goal of achieving revenue of more than US$20 billion by 2030 and expects operating profit margins to exceed 30% by then.

ST is executing its Manufacturing Reinvention Plan, which involves reconfiguring and optimizing its manufacturing operations, through which ST expects to achieve savings of up to hundreds of millions of dollars compared to its current cost base by 2027, which will help the company achieve an operating profit margin of 22% to 24%.

ST continues to innovate in BCD and other wide bandgap technologies to increase design flexibility and performance. The company continues to make progress in energy-efficient applications of silicon and wide bandgap materials, particularly in silicon carbide (SiC) and gallium nitride (GaN) technologies.

Through its global partner network, ST aims to help customers reduce development time and costs, shorten time to market, and gain higher market share, revenue and sales growth.

ST also pays special attention to the multiple supply of manufacturing. The front-end high-quality manufacturing centers include the Agrate 300mm mixed-signal plant in Italy, the Catania 200mm SiC (vertically integrated) plant in Italy, the Crolles 300mm digital plant in France, and the Sanan joint venture 200mm SiC plant. The back-end high-quality manufacturing centers include the Muar advanced lead and panel-level packaging plant in Malaysia, the Shenzhen power packaging (module, discrete, KGD) in China, and the Kirkop full industrial 4.0 packaging plant in Malta.

In terms of proportion, ST's front-end wafer external foundry accounts for 20%, and back-end packaging and testing external foundry accounts for 35%.

Differentiated technologies are the foundation of ST, including MEMS, smart power BCD, FD-SOI CMOS, discrete, power MOSFET, IGBT, SiC, GaN, eNVM CMOS, vertical smart power, optical sensing solutions, etc. The basis for realizing these solutions is packaging technology, including lead, lamination, sensor module, wafer level.

In the differentiated solution, ST has also made certain product plans, including: BCD Auto (BCD GaN electromagnetic isolation), fourth/fifth generation SiC technology, super junction/LV/HV PMOS, six-axis MEMS, pressure sensors, 3D stacked sensors, planar optical components, 55nm BiCMOS, 28nm RF FD-SOI, 40nm analog ePCM, 18nm FD-SOI ePCM.