According to Semi’s latest statistics, the global semiconductor industry is expected to set a rare fab equipment expenditure record for three consecutive years, which will increase by 16% by 2020. SEMI emphasized in its quarterly “World Fab Forecast” report that this year’s forecast growth rate is 15.5%, and it will be 12% in 2022.
It is predicted that in the past three years, global semiconductor equipment expenditures will increase by about 10 billion U.S. dollars each year, and expenditures will rise to more than 80 billion U.S. dollars by then. Among them, the explosive demand for Electronic products, which are the backbone of communications, computing, healthcare and online services, accounted for most of the sources of expenditure.
SEMI said that fab equipment expenditures have always been cyclical, usually increasing by one to two years, and then decreasing for roughly the same time. However, statistics show that since 2016, investment in fab equipment in the semiconductor industry has continued to grow for three consecutive years. Before that moment, 20 years had passed since at least three years of growth in the semiconductor industry. The last time this happened was in the mid-1990s, when the chip industry had been in development for four years.
Most of the fab investment in 2021 and 2022 will be in the foundry and memory fields.
SEMI pointed out that, driven by leading investment, foundry spending is expected to increase by 23% in 2021, reaching 32 billion U.S. dollars, and remain flat in 2022. Overall memory spending will grow in single digits, reaching 28 billion U.S. dollars by 2021, while DRAM will surpass NANDFlash, and then soar. With the strong growth of DRAM and 3D NAND investment, it will grow by 26% by 2022.
SEMI said that during the forecast period, expenditures in the power and MPU sectors will also grow strongly. Driven by the strong demand for power semiconductor devices, it is estimated that by 2021 and 2022, power will show strong investment growth, 46% and 26% respectively. With the increase of investment in microprocessors, MPU will grow at a growth rate of 40% in 2022.
Semiconductor production is an extremely capital-intensive business, and as process technology advances and manufacturing tools become more expensive, chip manufacturers have to increase their capital expenditure budgets. Now including TSMC, UMC, Samsung, etc. have increased their investment. In 2021, TSMC Capital pointed out that the growth rate was up to more than 60%. Samsung broke the 3 trillion yen mark for the first time and plans to build a factory in the United States. GF doubled its investment , UMC also continued to increase capital and expand production in mature technology, and SMIC raised 45.6 billion yuan in A shares. At present, the epidemic alert has not been completely lifted. Most companies around the world are nervous, and fabs are still making big strides and actively investing. What opportunities do companies see? What is the difference in their investment direction?
TSMC is still a big deal
First of all, in 2019, TSMC’s annual R&D expenditure was US$2.959 billion (approximately RMB 20.9 billion), a record high, an increase of about 4% from the previous year, accounting for about 8.5% of total revenue, and it is a Taiwanese technology. The industry’s highest annual R&D expenditure record.
Let’s take a look at the main achievements of TSMC in 2019. From the perspective of wafer shipments, TSMC’s wafer shipments reached 10.1 million 12-inch equivalents in 2019, and the sales of more advanced processes of 16nm and below accounted for 50% of the overall wafer sales amount is higher than 41% of the previous year. In the advanced process research and development process, TSMC’s 7nm powerful version technology mass production and 5nm technology successful trial production, while developing the 3nm sixth-generation 3D transistor technology platform, it also began to carry out the leading semiconductor industry’s 2nm technology, and aimed at below 2nm. Exploratory research is carried out simultaneously with the technology.
At the Falun Dafa Conference held last week, what surprised the legal person most was the capital expenditure higher than market expectations. TSMC gave another surprise. TSMC’s capital expenditure in 2021 will be as high as 25-28 billion U.S. dollars, compared with the estimated capital expenditure in 2020. 17 billion US dollars, an increase of more than 60%, the highest level in history.
TSMC’s Chief Financial Officer Huang Wende stated in this week’s analyst and investor earnings conference call: “In 2021 of the US$2.5 to 28 billion capital expenditure, about 80% of the capital budget will be allocated to advanced process technologies, including 3nm, 5nm and 7nm. About 10% of the funds will be used for advanced packaging and mask manufacturing, and about 10% of the funds will be used for special technologies.”
“Capital expenditure in 2021 is mainly used for the expansion of N5 (at least 2 times its current 55-60k WPM capacity), and the construction of N3 is limited to the pilot line/initial production (+ 10-15k WPM, although we expect N3’s Capacity is similar to that of N5) after full expansion),” Szeho Ng, an analyst at China Renaissance Securities, wrote in a report to customers on Friday.
In the next few years, due to the industry trend of 5G and HPC related applications, the company will bring a higher compound annual growth rate. Apple is already a major customer of TSMC’s advanced nodes. As it transitions to PCs and internally designed modems to its own Apple chip SoC, Apple may greatly increase its orders to foundries in the next few years, which will further promote TSMC’s lead Manufacturing technology needs. In addition, Intel will also outsource more products to TSMC in the next few years, which will be another factor that will increase the demand for complex manufacturing processes in foundries. For TSMC, long-term business opportunities are in sight, and it is bound to make full investment in response to the strong demand in the HPC market.
Samsung in troubled times
Following the death of legendary leader Samsung Chairman Lee Kin-hee in October 2020, Samsung Electronics Vice Chairman Lee Jae-yong was sentenced to 2 years and 6 months for bribery in a bribery case. At present, Samsung’s various departments are temporarily managed by professional executives, but Samsung’s investment plan is still in progress.
According to the Wall Street Journal recently, documents and people familiar with the matter revealed that South Korea’s Samsung Electronics is considering investing up to $17 billion to build a chip manufacturing plant in Arizona, Texas or New York. According to one of the people familiar with the matter, Samsung is looking for two locations in and around Phoenix, two locations in and near Austin, and a large industrial park in Guernsey County in western New York.
Beginning in 2021, in order to respond to the NAND demand brought about by the popularization of artificial intelligence (AI), the Internet of Things (IoT), and 5G, Samsung has established a long-term plan for “Semiconductor Vision 2030”. The goal is to “in the next 10 years” Dominate the foundry market. Although there is still a big gap in global market share with TSMC, Samsung is constantly increasing both in technology and investment.
It is not difficult to see from Samsung’s recent layout that it is fully optimistic about the market prospects of 5G mobile phones and SSDs in 2021. According to the Nikkei News, Samsung Electronics’ semiconductor division’s equipment investment in 2021 is expected to exceed the 3 trillion yen mark for the first time, and will continue to hit a record high. It is reported that the first phase of the second phase in Xi’an in 2020 has been put into production, and the construction of the second phase of the second phase of the project has begun, which will be completed in the second half of 2021. At the same time, Pyeongtaek P2 factory has invested 8 trillion won to build a new NAND Flash production line, and plans to start mass production in the second half of 2021, and plans to build a new P3 factory.
In 2020, Samsung has begun mass production of 5nm EUV products at the Hwaseong plant, while increasing the foundry capacity of its Pyeongtaek plant in South Korea and expanding the scale of 5nm EUV mass production.
Intel whose future is uncertain
Intel’s development of advanced technology in recent years has been unsatisfactory. Considering that Intel’s past 14-nanometer and even more advanced manufacturing processes required higher investment than TSMC to improve efficiency, Intel did not have a good return on investment and mass production. The US industry According to research and judgment, Intel will focus more on the design and development of high-margin products in the future. In addition to the manufacturing part, Intel will gradually develop in the direction of fabless in the next three to five years.
In particular, Intel’s new prospective CEO Pat Gelsinger will take office on February 15. Wall Street analysts believe that Gelsinger has a keen understanding of technology and is expected to be bold and help Intel to successfully transform into a fabless in the next few years. Focus on advanced design technology and patent authorization.
Intel Chairman Omar Ishrak mentioned in a public statement that the Intel board of directors, after careful consideration, concluded that it is now a critical moment for Intel’s transformation. Gelsinger’s technical and engineering expertise is the right time to change management. The current CEO Bob Swan will also ensure The management is seamlessly integrated.
According to the supply chain, Intel’s direction of expanding outsourcing will remain unchanged. It will adopt two approaches of “core chips (CPU)” and “non-core chips (chips other than CPU)” to gradually increase the proportion of Taiwan’s manufacturing. The order volume will start at least 10%, and TSMC and UMC are expected to receive orders. Among them, the most concerned Intel core chip, that is, the central processing unit (CPU) outsourcing foundry orders, are all taken by TSMC alone.
It is understood that in terms of outsourcing of Intel’s non-core chips (chips other than CPU), about 20% to 30% have been outsourced by TSMC and UMC respectively; Intel subsidiaries have also handed over data chip testing to KYEC and ASE Project cooperation such as investment control has also been added this year.
The industry believes that Intel has been cooperating with Taiwan’s supply partners for non-core products for many years. According to sources, Intel has also accelerated its strategy of outsourcing non-core products starting this year. It will be increased by at least 10% due to the transfer, and several projects are in progress at the same time.
The US industry has judged that instead of spending the money on several delayed production, Intel should focus more on the development of existing advanced technology and patent licensing, and develop into a fabless factory focusing on chip design, which is more able to play and create Intel semiconductors. Core technical capabilities.
However, according to anandtech’s report, Intel CEO Bob Swan’s remarks at a rare round table meeting held recently concluded that it sounds like Intel will almost certainly keep its fab. Bob has repeatedly pointed out that Intel’s main advantage is that it is a vertically integrated company and has the resources to expand its production scale to meet customer needs and respond to surges in demand. Obviously, the question of whether Intel will have sufficient competitive manufacturing technology to maintain such high demand still exists. This isolated explanation still exists, but our explanation of this shows that keeping Intel inside the fab can make Intel a customer Supply the need to maintain agility, which may not be possible when using third-party resources.
Therefore, it can be said that Intel’s development in the fab has yet to be cleared of the fog.
UMC to develop mature technology
Judging from the global revenue trend of pure wafer foundry, apart from the high gross profit of the most advanced technology led by TSMC, the revenue of other global fabs mainly comes from stable and mature technology. According to Omdia’s recent research report, 28nm It will become a long-node process technology for semiconductor applications in the next 5 years. Among the pure foundry companies, UMC, Globalfoundry, SMIC, etc., have steadily improved performance on 28nm (and related derivative processes) and introduced various new products to meet the different needs of customers.
Therefore, UMC is also committed to increasing 22 and 28 nanometer production capacity. UMC’s 12-inch production capacity is distributed in Nanke 12A, Xiamen Lianxin and Japan, etc. Nanke’s 12A monthly production capacity exceeds 87,000 pieces. Due to increased market demand and insufficient production capacity, UMC’s board of directors approved the capital budget for an increase of NT$28.656 billion at the end of last year. Depending on order requirements, it can be extended to 20, 22 or 14 nanometer manufacturing processes. UMC pointed out that at present, nearly half of Nanke’s P5 plant has installed equipment, and the monthly production capacity of one plant is about 25,000 pieces. UMC estimates that capital expenditures this year will be higher than last year’s 1 billion U.S. dollars.
In response to the issue of production expansion, UMC General Manager Jian Shanjie said in an interview with the media in November last year that UMC has decided to suspend the development of processes below 14 nanometers, mainly with mature processes and special processes, and subsequent expansions. The direction will mainly be 12 inches, especially 22nm and 28nm. The production capacity will increase significantly. It is expected that the Xiamen factory will increase the production capacity of 6,000 pieces in the middle of next year. As for the Taiwan factory, the first 40nm will be changed to 28nm, and the second will increase. Machines and equipment, so the production capacity of the Taiwan plant will also increase.
Driven by 5G, AIOT, and automotive electronics, UMC believes that even if the number of mobile phones shipped does not increase, it will be good and helpful for semiconductors. In the long term, the silicon content of 5G chips is 2.5 times that of the past.
Ambitious GF
After drastically changing its strategy in 2018, GlobalFoundries has become more cautious overall. But its 22FDX platform seems to be very successful. In October 2020, GlobalFoundries 22FDX reached the milestone of shipment and has shipped 350 million chips produced using its 22FDX node. GF also announced 22FDX+, which will be produced in Fab 1 in Dresden, Germany, in the first quarter of 2021. The platform is aimed at a wide range of applications in IoT, 5G, automotive and satellite communications.
GlobalFoundries has been operating for decades in Fab 1 in Dresden, Germany and Fab 8 in Malta County, New York, and is still one of the company’s main forces. Currently, Fab 1 can use 22FDX, 28SLP, 40/45/55NV and BCDLite technology to process wafers. GlobalFoundries plans to launch 400,000 to 500,000 wafers per year in 2020/2021, but it also plans to expand its production facilities. Seeing the high demand for these technology nodes, GlobalFoundries plans to double the capacity of its fabs to 900,000 to 1 million wafers in the next few years.
In the past, GlobalFoundries spent about 700 million U.S. dollars a year on expansion, but seeing that the demand for products in 2021 is so strong, they plan to double it to about 1.4 billion U.S. dollars to upgrade it to include Fab 1 and Fab 8. Manufacturing facilities.
Especially now that the global shortage of automotive chips is disrupting the production of car manufacturers from Toyota Motor Corporation to Volkswagen, this is becoming a growth opportunity for global chip manufacturers. Mike Hogan, head of Globalfoundries, also said that the company is operating its factories at an unprecedented speed and prioritizes automotive chips to meet demand.
In addition, Globalfoundries is expected to complete the IPO in the second half of 2022. They said they hope to reach certain financial milestones before going public, and due to the growing demand for chips, Globalfoundries is quite sure to reach this goal in 2022.
SMIC is full of uncertainty
A few days ago, SMIC was included in the “blacklist” by the United States, but considering their status in domestic fabs, their future layout will also have an impact on the industry.
Looking back at 2020, SMIC has also made a lot of investment, especially the listing on the Science and Technology Innovation Board, which raised huge funds and injected more capital support for the company’s development.
On July 16, 2020, the mainland semiconductor foundry giant SMIC will officially land on the Sci-tech Innovation Board, becoming the first domestic red-chip technology innovation company to achieve “A+H” at the same time, and it will also become A-share Leading technology stock company and one of the semiconductor companies with the highest market value.
According to the announcement issued by SMIC, the company’s net proceeds from the public offering of shares on the Sci-tech Innovation Board are 45.6 billion yuan, which will be used for the 12-inch chip SN1 project, mature technology production line construction projects, advanced and mature technology research and development projects, and reserve funds. Supplement working capital.
On December 4, 2020, SMIC issued an announcement stating that the company’s wholly-owned subsidiary SMIC, the National Integrated Circuit Fund II and Yizhuang International Investment Corporation have entered into a joint venture contract to jointly establish a joint venture SMIC Capital Integrated Circuit Manufacturing (Beijing) ) Co., Ltd., with a registered capital of 5 billion U.S. dollars and a total investment of 7.6 billion U.S. dollars (about 50 billion RMB). Its business scope includes the production of 12-inch integrated circuit wafers and integrated circuit packaging series.
On the journey of semiconductor fabs, some people take capital and technology to make great strides forward, some choose to camp and consolidate mature technologies when they are just enough, and some people withdraw from the stage of history to specialize in other technologies. But undoubtedly, the competition among fabs continues, capital is constantly pouring in, new technologies are constantly iterating, and old technologies are constantly being introduced.
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