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Is the Semiconductor Cycle Turning?

Lim Hui Jie wrote . . . . . . . . .

In the 1965 sci-fi novel Dune, civilisations across the entire universe fight for control over the spice melange trade. A line from the 1984 movie adaptation summarises its importance: “He who controls the spice, controls the universe.”

As explained in the novel, the spice, harvested painstakingly by filtering sand from the vast desert, enabled deep space travel so that trade could flourish and planets prosper.

To a certain extent, today’s semiconductors — essentially made from sand as well — are the spice melange in this millennium.

After all, semiconductor chips sit in the heart of countless devices ranging from the simple TV remote to a supercomputer that can process quadrillions of floating-point operations or flops per second. Without these chips, there would be no electronic devices beyond the simplest ones. There would be no smartphones, radios, TVs, computers, video games as well as advanced medical diagnostic equipment.

Throughout 2020 and 2021, these bits of silicon came under the spotlight when a spike in demand, coupled with closures of factories, ports and airports around the world, led to a global shortage of semiconductor chips.

The immediate impact was felt far and wide. Cars sat unfinished on factory floors while prices of laptops, smartphones and tablets soared. More than a year after its launch, Sony Group Corp’s newest flagship game console, the Playstation 5, is still not widely available while Samsung Electronics delayed the launch of its Galaxy Note smartphone until this year. Meanwhile, Japanese carmaker Toyota Motor Corp was forced to cut production by 40% last September. Other carmakers such as Honda Motor, Ford Motor Company and General Motors Company were similarly impacted.

Viewed from another perspective, in these two years, semiconductors were arguably the most sought-after commodity apart from masks, medical PPE and Covid-19 vaccines.

To alleviate the crunch and tame soaring prices, various semiconductor manufacturers promised capacity expansions with market-leading foundries like Taiwan Semiconductor Manufacturing Corp (TSMC) and Samsung Electronics, which makes chips based on the designs of customers, ramping up investment.

Similarly, Intel Corp, which designs and makes its own chips, is planning to pour substantial capital to raise both its manufacturing capabilities and capacity. In a Sept 8, 2021, report by Reuters, Intel announced it could invest as much as EUR80 billion ($123.85 billion) in Europe over the next decade and open up its semiconductor plant in Ireland for automakers.

Elsewhere, Intel announced In October 2021 it is spending US$20 billion ($27.11 billion) on a new plant in the US state of Arizona. Most recently on Dec 13, 2021, Intel announced it is spending US$7 billion to build a new plant in Penang, where it already has a significant presence for years.

“Industry players are responding to the chip shortage by building capacity, driving yields and supply as rapidly as possible,” Intel CEO Pat Gelsinger told a press conference in Malaysia on Dec 16, 2021. “Overall, the semiconductor industry this year will grow more than it has in the last two to three decades,” he adds.

Meanwhile, TSMC also reported in July 2021 that it plans to build new factories in the US and Japan after previously announcing it will spend US$100 billion over the next three years to expand chip-fabrication capabilities. TSMC also added it will expand production capacity in China and does not rule out the possibility of a “second phase” expansion of its US$12 billion factory in Arizona.

Supply and demand

However, the billion-dollar question (literally speaking) is this: With a surge of new supply projected to come sometime between this year and next year, will the market suffer from overcapacity? Could this then send semiconductor prices crashing, reversing the fortunes of semiconductor companies?

While this “boom and bust” phenomenon had happened regularly in the past, analysts do not think there will be a correction this year because the shortage is a bigger and more immediate worry although there will be some lifting of upward pricing pressure eventually.

In spite of any indications to the contrary, the industry is now at its all-time high. According to the Semiconductor Industry Association (SIA), global chip sales hit a record in 2021 at US$555.9 billion, up 26.2% over 2020. However, the US-based industry body expects a moderation this year, with an estimate of 8.8%. “It’s still really trending very strongly towards increased demand. We’re just not going to get this kind of slingshot effect that we had in the pandemic,” says SIA CEO John Neuffer of the much slower growth seen.

DBS Group Research analyst Ling Lee Keng tells The Edge Singapore that while the semiconductor sector has grown about 25% in 2021, she expects “high single-digit” y-o-y growth in 2022, in line with SIA’s estimates.

Ling expects the industry to hit a cycle peak sometime in 2023. “Then in 2023 or 2024, we could see a surge in new capacity, leading to a drop in the prices of chips,” she says, adding that the drop is only in the “single digits” and that the uptrend will remain intact, albeit at a slower growth rate. She expects the industry to grow at a CAGR of 9% from 2020 to 2025 which is expected to slow to 3% from 2023 to 2025.

PhillipCapital’s senior analyst Terence Chua agrees. “The current shortage is unlikely to be resolved by the end of 2022 and will actually follow through to 2023,” says Chua at a recent presentation.

Despite additional supply coming from the foundries, Chua expects these to be soaked up by strong demand from customers like Nvidia, which specialises in graphics processing capabilities that have found new use cases in crypto mining, and Advanced Micro Devices (AMD), which is competing more strongly than before with market leader Intel. He calls the oversupply concerns “overblown” and continues to be bullish on the demand for advanced nodes.

Unlike glovemakers setting up shop from scratch during the pandemic and hitting production targets within months, semiconductors are much more complicated to build and certify. Thus, it takes significantly more time to bring in supply from new plants, he adds. Says Chua, “Although Intel says we’re going to set up a new plant in Europe, in China and Arizona, it is not going to come onstream [quickly enough].”

“When you want to build an advanced chips plant like the way TSMC does, it takes at least one and a half years to do so. Sometimes, Intel even takes longer,” he adds. This could also be delayed by geopolitical problems around the world which could exacerbate the supply shortage although Chua admits it is difficult to gauge the exact impact of these developments.

Other analysts like Phelix Lee of Morningstar are more cautious. He tells The Edge Singapore that the semiconductor industry is “quite close to the peak” this year and expects the shortage to ease in the second half after carmakers resolve their shortage. Come 2023, prices should start moderating and while 2024 could see an oversupply situation happening as more new capacity becomes operational that year and bring about the “tipping point” from a shortage to an oversupply.

“Recent foundry announcements to expand will only add pressure to the next oversupply, as previous cycles dictate,” says Lee, noting that strong year-on-year increases in capital expenditure are often followed by significant slowdowns in market growth. These slowdowns are due to capacity momentarily expanding faster than demand, which leads to aggressive price cuts by foundries to sustain utilisation.


Source : The Edge Singapore

The Lifecycle of a Semiconductor Chip

Gabrielle Athanasia and Gregory Arcuri wrote . . . . . . . . .

With the global economy reeling from a shortage in semiconductor chips, policy makers have turned their attention to strengthening the resilience of the supply chain, recognizing the centrality of this technology to economic growth and national security. This supply chain incorporates the extremely complex and costly processes of harvesting raw materials, designing, manufacturing, packaging, and shipping that are now carried out across the world to produce the variety of semiconductors that go on to live in our toasters, smartphones, computers, buildings, and cars.

To better understand the vulnerabilities in the semiconductor supply chain, we take a closer look at each step in a chip’s life cycle.

What Are Semiconductors and What Materials Are Required for Their Manufacture?

A semiconductor is a physical substance designed to manage and control the flow of current in electronic devices and equipment. The name “semiconductor” comes from the fact that a semiconductor chip is made from material that is neither entirely conductive of electricity nor fully insulating. They are typically created by adding impurities to, or “doping”, elements such as silicon, germanium, or other pure elements to alter their conductivity. A “wafer” of silicon or another semiconductor material is then edited to create complex circuits, which are capable of completing computing tasks. Examples of conventional devices and components built by using semiconductors include computer memory, integrated circuits, diodes, and transistors.

Semiconductors are typically made from one of two elements whose molecular structure when crystalized is secure enough to facilitate and regulate an electrical current: germanium and silicon. Germanium, the element on which the first transistor was developed, is a relatively rare and, therefore, expensive semiconductor. Currently, the U.S. maintains greater than 50% reliance on imported germanium from Belgium and China. U.S. germanium reserves are estimated to be near 2,500 tons, significantly behind China, which leads annual production at 85,000 tons. Silicon, however, is the second-most abundant element on Earth, accounting for roughly 28% of the Earth’s crust. While pure silicon, an ideal semiconductor, does not occur naturally on Earth, it can be synthesized by superheating silicon dioxide with carbon materials.

How are Semiconductors Designed?

While the science that undergirds the logic of a semiconductor’s basic functions is relatively simple, the mass-manufacturing of such small and delicate electrical components requires a complex design process. According to Synopsys, a chip design and verification firm, the process can be broken down into five steps.

The first of these is the architectural design of the chip, wherein the parameters of the chip are determined including its size, desired function, level of power consumption, and preferred cost.

Next is the logic and circuit design. After the parameters are outlined, engineers begin translating the required functions into circuit logic. Today, this process is done on automated logic simulators to verify that everything is in order before production.

Third is the physical design phase. Here, the circuit logic is mapped onto a silicon wafer. Essentially, this is a plan of where each transistor, diode, or other component will sit on the chip.

Finally, the verification and sign-off phases are used to verify whether the designed chip is manufacturable and whether it can withstand the physical stresses of its assigned function. Specifically, added resistance from wiring, signal crosstalk, and variability are all factors to be considered.

How are Semiconductors Manufactured, Packaged, and Shipped?

The process used to print circuits onto silicon-crystal wafers is called “photolithography.” The silicon wafer is coated with a layer of light-resistant material called the “photoresist.” Then, using photolithography, the photoresist is weakened or hardened in certain pre-determined regions by exposing it to UV radiation (light). During a step called “etching” the weakened sections of photoresist are removed. The exposed silicon crystal is then “doped” with impurities to alter its conductivity and create microelectronic components like transistors and diodes. Thousands of these circuits can be printed onto a single wafer side by side, and the wafer will go through a series of other complex steps before it is completed. Finally, each “die” of semiconductor is sliced from the wafer using precision sawing or laser technology.

Silicon chips are extremely fragile microelectronics that can be irrevocably damaged by excessive vibration, temperature fluctuations, or even static electricity. This has spurred the inception of an entire new industry adjacent to semiconductor manufacturing: chip packaging. Packages are meant to protect the semiconductor and facilitate its connection to a larger circuit or board. While packaging innovations and production used to be an entirely separate process, chip manufacturers themselves have begun developing expertise and integrating it into the manufacturing process. The fragility of the semiconductors also affects their shipping process, which must be done by specialized logistics firms.

An Interdependent and International Supply Chain

Because semiconductors are extremely complex products to design and manufacture, a highly specialized global supply chain has developed over the past few decades. The supply chain has four main components: sourcing of raw materials, design, manufacture, and packaging. Complicating matters, different countries specialize in each component.

In terms of raw materials, China is the world’s leading supplier of silicon, accounting for an estimated 64% of total silicon materials in 2019 according to the U.S. Geological Survey.

With regards to the design phase, the United States is still the world’s leader. Seven of the top ten integrated circuit design companies by annual revenue are headquartered in the United States. Often, these firms operate via a “fabless” business model, whereby they design the chips, then license the intellectual property (IP) to firms around the world to produce them. The name “Silicon Valley” is therefore a holdover from the days that the U.S. dominated this global industry.

Yet, for a few decades now, Taiwan has been the undisputed global leader in terms of market share for semiconductor manufacture. Taiwan Semiconductor Manufacturing Co. (TSMC) alone accounts for roughly 54% of all global foundry revenue. South Korea’s Samsung trails TSMC at 17%, while Global Foundries, the largest U.S.-based manufacturing firm, controls 7% of the market. Adjacent to manufacturing, the Dutch firm Advanced Semiconductor Materials Lithography (ASML) is currently the only company in the world that builds lithographic machines powerful enough for the most sophisticated chips. Each machine is comprised of over 100,000 individual parts and costs roughly $150 million. The firm ASML is expected to hit $28-$35 billion in annual revenue by 2025. This makes the Netherlands a key node in the global semiconductor supply chain.

According to the Center for Security and Emerging Technology, the semiconductor assembly and packaging market is extremely diverse, with firms from the United States, Japan, China, South Korea, Singapore, and the Netherlands specializing in inspecting wafers, “dicing” them into individual chips, packaging them, and integrating them into larger electronic components.

These realities mean that each node on the semiconductor supply chain is interdependent on one another. States rely on international trade to move materials, equipment, and products around the world to facilitate the manufacture of this key ingredient in the global high-tech economy.

Full self-sufficiency, therefore, is a difficult and expensive goal to achieve. According to a study conducted by the Boston Consulting Group, if regional supply chains (U.S., East Asia, China, Europe, and others) wanted to reach total self-sufficiency, it would require $1 trillion in incremental up-front investment to meet current levels of semiconductor consumption. It would also result in a 35% to 65% overall increase in semiconductor prices and higher costs of electronic devices for end users. The study also concluded that even to meet projected semiconductor demand in today’s globally connected market, the industry will need to invest at least $3 trillion over the next ten years in R&D and capital expenditure alone.

Recent Strains and Efforts to Alleviate Them

While disruptions in the semiconductor supply chain caused by COVID-19 brought awareness of the global chip shortage into the public domain, the issue predates the pandemic. Given their ubiquity in the devices that power the modern digital economy, demand for chips has been skyrocketing for decades, and will continue to increase along with demand for technologies like mobile phones and electric vehicles according to a recent report by Accenture. As the industry struggles to keep pace, ‘black swan’ events like earthquakes, floods, and fires (such as the blaze at the Renesas chip manufacturing plant in Japan) have had disastrous cascading effects. Pandemic-related lockdowns and border closures only exposed and aggravated the supply chain’s inherent fragility caused by its international nature and intensifying global demand.

In response to these developments, policy makers around the world have unveiled plans to bolster their domestic manufacture of semiconductors to mitigate the worst effects of supply chain breakdowns. In Europe, the European Commission has drafted legislation to mobilize over €43 billion in public and private funds to double its share of the global semiconductor manufacturing market by 2030. Meanwhile, in the United States, lawmakers continue to debate the CHIPS for America Act and the FABS Act, which provide lump-sum and tax-based incentives for chip manufacturers to “onshore” their operations. These efforts, while they have yet to take effect, will be the first steps in strengthening regional and national resiliency against future crises plaguing the supply chain of this critical technology.


Source : Center for Strategic and International Studies

It’s the Best and Worst of Times for Semiconductor Supply Chains

Nicolás Rivero wrote . . . . . . . . .

Chips are in short supply. Chips are over-supplied. Chip manufacturing has expanded too fast and surpassed demand, but also can’t scale up fast enough to meet demand. The chip business is booming. Chip stocks are falling.

It’s a confusing time to figure out what’s going on in the semiconductor industry.

To understand the contradictions in semiconductor supply chains right now, it’s important to keep in mind that there are many types of chips, built in very different ways. Older generations of chips used to control basic mechanical functions in cars and dishwashers are built using equipment that has been around since the 2000s, while the cutting-edge chips that render graphics and run AI models in the latest smartphones and computers require ultra-precise machinery.

The state of the semiconductor sector is so muddled because the production of some types of chips has already ramped up enough to meet demand, while manufacturing for other types of chips is still catching up. Overall, though, these conflicting storylines are a sign that the chip shortage is finally starting to ease.

Semiconductor supply is rising, and demand is easing

The overall production of semiconductors is rising around the world. TSMC, the world’s biggest chipmaker, increased its planned investment in new plants and equipment from $30 billion in 2021 to $44 billion in 2022. China has invested about $50 billion since 2014 to support domestic chip production, while US lawmakers are (maybe) on the verge of doling out $52 billion in subsidies and incentives for new semiconductor plants in the US.

Meanwhile, South Korea’s Ministry of Economy and Finance reports that Korean chipmakers are sitting on a rapidly growing stockpile of unsold chips. The country, which is the world’s biggest producer of memory chips for electronics like laptops and smartphones, hasn’t seen its semiconductor inventory rise this fast since 2018.

Plenty of chips for smartphones and laptops, but not for cars

Chipmaker Micron Technologies warned investors on June 30 about a looming glut of high-tech memory chips used in smartphones and laptops. Consumer demand for those devices unexpectedly dropped thanks to rising inflation, sagging consumer spending in China, and fears of an impending recession, according to CEO Sanjay Mehrotra. “Given the change in market conditions, we are taking immediate action to reduce our supply growth trajectory,” he said.

Micron Technologies predicted that its smartphone division would ship about 130 million fewer chips than expected this year and its PC division would cut sales by about 30 million chips—a 10% drop in both categories. The downturn will last at least half a year, chief business officer Sumit Sadana predicted, unless a recession hits and brings demand down further.

Meanwhile, automakers are complaining they still can’t find enough low-tech chips to keep their assembly lines running at full capacity. GM, Toyota, and Honda each told investors their sales had slumped in the most recent quarter because of the ongoing chip shortage. Collectively, automakers will build an estimated 3 million fewer cars this year for lack of semiconductors.

Semiconductor stocks are feeling recession fears

Investors are watching semiconductor supply rise while contemplating the possibility that inflation or a recession will cause a drop in consumer demand for everything that uses chips, including electronics, appliances, and even cars. As a result, chip stocks have been plummeting, even though semiconductor sales are still historically high and chipmakers are recording record revenues. The Philadelphia Stock Exchange Semiconductor Index, which tracks big chip manufacturers, has fallen nearly 40% this year, after doubling in value during the pandemic.


Source : QUARTZ

Russia’s War in Ukraine Could Spur Another Global Chip Shortage

Morgan Meaker wrote . . . . . . . . .

On Thursday morning, explosions rocked at least seven cities in Ukraine, heralding the start of a full-scale Russian invasion. Among Putin’s first targets was Odesa, a seaside city huddled around the Black Sea, and one of the country’s busiest ports. But it is also home to a little-known company called Cryoin, which plays a big role in the global production of semiconductors.

Cryoin makes neon gas, a substance used to power the lasers that etch patterns into computer chips. It supplies companies in Europe, Japan, Korea, China, and Taiwan, but most of its neon is shipped to the US, the company told WIRED. Now analysts are warning that the ripple effects caused by disruption to Cryoin’s supply could be felt around the world.

Cryoin’s production of neon and other gases ground to a halt on Thursday as the invasion began, says business development director Larissa Bondarenko. “We decided that [our employees] should stay at home for the next couple of days until the situation is clearer, to make sure that everyone is safe,” she says, adding there was no damage to the facility as of Monday. Despite plans to restart production over the weekend, missiles over Odesa meant it was still too dangerous. Bondarenko, who lives half an hour away from the site by car, says she has been sleeping in her basement. “Thank God we have one in our house.”

Semiconductors act as the technological brains in our phones, laptops, smart homes, and even cars. The industry is already wrestling with shortages as it struggles to keep up with pandemic demand for devices. In 2021, chip shortages restricted production for almost every major carmaker, with companies like General Motors shutting entire factories as a result. Apple, one of the world’s largest chip buyers, told manufacturers in October that it would make 10 million fewer iPhones in 2021 than planned due to chip shortages, according to Bloomberg.

But Russian aggression in Ukraine is making the industry nervous that these shortages could be intensified by a repeat of 2014, when prices for neon gas spiked by 600 per cent in response to the annexation of Crimea. Last week, US and Japanese governments were scrambling to make sure that will not happen again, pressuring their chip industries to find alternative sources of this obscure gas before it’s too late.

Ukraine is just one of a series of choke points in the global semiconductor industry. Around half of the world’s neon gas comes from the country, TechCet, an electronic materials advisory firm which advises some of the world’s biggest chipmakers including Intel and Samsung, told WIRED.

Ukraine’s neon industry was built to take advantage of the gases produced as byproducts of Russian steel manufacturing. “What happens in Russia is that those [steel] companies that have the facility to capture the gas will bottle it and sell it as crude,” says Lita Shon-Roy, president and CEO of TechCet. “Then someone has to purify it and take out the other [gases] and that’s where Cryoin comes in.”

When Russia annexed Crimea in 2014, the world’s chipmakers were even more dependent on Ukraine because the country supplied around 70 percent of neon gas. “There were delays in shipments because of border crossing issues,” says Shon-Roy, and the raw materials needed to make neon were also in short supply. “Russia was focusing a lot of their efforts on war and not making steel.”

Burned by that experience, the chip industry scrambled to diversify its supply. A company called Cymer, which is owned by Dutch chip giant ASML and makes the lasers used to draw patterns on advanced semiconductor chips, tried to reduce its consumption of neon. “Chipmakers are concerned about recent escalation of neon prices and supply continuity,” David Knowles, vice president and general manager of Cymer, said at the time, without specifically mentioning Ukraine.

Bondarenko says the price spike in 2014 was mainly caused by a feud between rival neon producers Cryoin and Iceblick, which is no longer operating. However, if access to Russian crude does become an issue, she says, Cryoin has enough supplies to keep production going until the end of March. If that runs out, she claims there are Ukrainian crude producers that Cryoin can turn to as alternatives.

Instead she is more worried about getting neon out of the country. “Borders right now are very overloaded as people, civilians, are trying to evacuate,” she says. “If the authorities of countries where our clients are located are able to influence the border situation for the commercial shipments then that would be a great help [and] it will not affect the whole industry worldwide.”

Chipmakers have played down how much they will be affected by the crisis in Ukraine. “There’s no need to worry,” Lee Seok-hee, CEO of South Korean chipmaker SK Hynix, said last week, adding the company had “secured a lot” of materials. Koichi Hagiuda, the minister of economy, trade, and industry in Japan, said Japanese chipmakers are not expecting a “major impact” on their operations because they can source materials elsewhere. The country imports 5 percent of gases used in semiconductor production from Ukraine.

But there are signs that despite the warning of 2014, Ukrainian neon still plays a major role in the industry. ASML told WIRED it sources “less than 20 percent” of the neon it uses in its factories from Russia or Ukraine. “Along with our supplier we are investigating alternative sources in the event of a supply disruption from Ukraine and Russia,” a spokesperson says.

There are concerns that the US is even more vulnerable. Last week, the White House urged US chipmakers to find alternative suppliers, Reuters reported. “We see huge amounts of imports coming into the US from [Russia and Ukraine],” says TechCet’s Shon-Roy. “It is my educated assessment that what’s coming into the US from Russia and Ukraine could be as much as 80 to 90 percent of all [neon] imports.” US chipmaker Intel did not respond to a request for comment.

But sourcing neon from elsewhere will not be easy. Any disruption in Ukraine will hit chipmakers at a time when the industry is already under intense pressure from post-pandemic demand. “The drive behind increased production is so strong that it is causing strain in the supply chain everywhere, even without a war,” Shon-Roy adds. “So there is no excess supply of this kind of gas that I know of, not in the Western world.”


Source : WIRED

Infographic: The Global Semiconductor Supply Chain

See large image . . . . . .

Source : Visual Capitalist

Stellantis, Foxconn Partner to Design and Sell New Flexible Semiconductors for Automotive Industry


See large image . . . . . .

Stellantis N.V. and Hon Hai Technology Group, (“Foxconn”) today announced the signing of a non-binding memorandum of understanding to create a partnership with the intent to design a family of purpose-built semiconductors to support Stellantis and third-party customers.

“Our software-defined transformation will be powered by great partners across industries and expertise,” said Carlos Tavares, Stellantis CEO. “With Foxconn, we aim to create four new families of chips that will cover over 80% of our semiconductor needs, helping to significantly modernize our components, reduce complexity, and simplify the supply chain. This will also boost our ability to innovate faster and build products and services at a rapid pace.”

This partnership was announced as part of the Stellantis Software Day 2021 event where the Company unveiled STLA Brain, the new electrical/electronic and software architecture launching in 2024 across Stellantis’ four battery electric vehicle-centric platforms – STLA Small, Medium, Large and Frame. STLA Brain is fully OTA capable, making it highly flexible and efficient.

“As a leading global technology company, Foxconn has the depth of experience in manufacturing semiconductors and software – two key components in the production of electric vehicles. We look forward to sharing this expertise with Stellantis and together tackle the long-term supply chain shortages, as we continue with the expansion into the electric vehicle market,” said Young Liu, Chairman & CEO of Foxconn Technology Group.

The collaboration will support Stellantis’ initiatives to reduce semiconductor complexity, design an all-new family of purpose-built semiconductors to support Stellantis vehicles, and provide capabilities and flexibility in this area of growing importance as vehicles become increasingly software-defined.

The partnership will leverage Foxconn’s domain know-how, development capabilities, and supply chain in the semiconductor industry, as well as Stellantis’ expansive automotive expertise and significant scale as a lead customer for the enterprise.
Foxconn has a long-running history of developing semiconductors and applications within consumer electronics, which will expand to the automotive space with the guidance and demand of a world-class mobility partner. These same semiconductors will be utilized within the Foxconn EV ecosystem as Foxconn continues to extend its capabilities in electric vehicle manufacturing.

Today’s announcement marks the second collaboration between Stellantis and Foxconn. In May, the companies announced the Mobile Drive joint venture aimed at developing smart cockpit solutions enabled by advanced consumer electronics, HMI interfaces and services that will exceed customer expectations.


Source : Stellantis

The Rising Tide of Semiconductor Cost


See large image . . . . . .

Doug wrote . . . . . . . . .

There’s a quiet upheaval happening in the semiconductor industry. The rules that have always governed the industry are fraying, undoing assumptions that we took for granted, that was pounded into us in school. The irreproachable Moore’s Law, that exponential progress will make things cheaper, better, and faster over time, is dead.

People are starting to appreciate that making a chip is not easy. Shortages and the geopolitical concentration of TSMC and ASML have awakened the popular imagination and have highlighted the science-fiction-like process of chipmaking. The road ahead has obstacles that aren’t widely appreciated. Making a semiconductor is going to get even harder, more expensive, and more technical. In other words, the challenges are going to accelerate.

To operate in the future, chipmakers will need more scale, more talent, and more money. I’ve written about this before, but I want to dive deeper into what’s driving the rising costs of making a semiconductor. It affects the entire range of chips, from the most advanced chips to the most basic. The trend is not new, it’s already been happening, but I believe now it will start to pick up speed. And the price increases will likely impact every person on earth. This inflationary cost is not transitory.

To understand how we got here, I want to first refresh you on the death of Moore’s Law. We’ve topped out the growth in transistor-energy scaling, frequency scaling, and we’re starting to hit the end of multi-core scaling in transistor-density increases. But more important than the end of those trends, cost scaling has ended. While we continue to improve transistor density through new techniques, each one layers additional costs.

ASML, in its investor day, made a bold statement that Moore’s Law will continue with system-level scaling. Another name for this is advanced packaging. But these costs are additive to the already escalating costs of making a smaller transistor.

While I believe Advanced Packaging is going to solve the transistor-density problem, I don’t believe it will make chips cheaper. In fact, transistors per dollar have gotten more expensive since the early 2010s.

I want to focus not just on the technological headwinds, but the cost headwinds. One of the major historical assumptions of Moore’s Law is that not only would your transistors double every two years, but the cost of the transistors would decline. No longer. The chart below is from Marvell’s 2020 investor day. The bar for 28nm was approximately 2011-2012.

What’s interesting is that a qualitative change happened around 28nm, as it was one of the last planar nodes. Planar in plain language is a two-dimensional surface (plane), while FinFET – the technology that replaced planar – introduced a “fin” into the transistor to jut upwards, creating a 3D structure instead of a 2D structure. We are now on the verge of yet another gate transition – gate-all-around (GAA), which is an even more 3D-intensive structure. As we switch to GAA or the next iteration of gate technology, I believe that the cost increases per 100m gates will continue to increase, just like they did for FinFET over planar. This is driven by the increased complexity of making these chips — namely, the added number of steps in manufacturing.

It isn’t just this transition that’s pushing costs higher. The lagging edge — older chips — is starting to get more expensive, too. The story here is not technological, but rather economic, and what was once ample capacity with commodity-like returns is starting to become in-demand. Businesses are not willing to add capacity unless subsequent price increases follow. This is another key driver, not just on the most advanced but in the older chips as well.

Finally, not just old chips and new chips, but the companies that make the chips (semiconductor fabs) are becoming more consolidated and more strategic. There really isn’t a lot of room at the leading edge, where the most advanced chips are made. This is the third driver of semiconductor costs, that fabs that offer a one-of-a-kind product are passing their rising costs on to customers. TSMC is not a price-taker, and the world is reliant on its products. Despite the increasing costs, they’re are starting to extract larger profits. Fabless companies have no choice but to pay more.

Each of these themes deserves a deeper dive. I’ll start first with my favorite topic: Semicap – or the tools that are required to make a chip.

Industry Consensus: Semicap Cost Intensity Will Go Up

One of the universal themes this earnings season was the higher cost of tools to make semiconductors.

The drastic price increase is broad-based and is across DRAM, NAND, and Logic. Given that 5nm is in production today, this is not a prediction, but a trend that’s going to continue. The primary driver is not only the rising costs of tools such as EUV, but the rising number of steps to make a chip. Below is a graphic that shows the increase of steps over time.

It’s just not Tokyo Electron making the call for higher intensity alone. This most recent earnings season, TSMC, Lam Research, KLAC, and other Semicap companies called out rising intensity. I think all else being equal, the cost of 100K wafer starts should start to rise low- to mid-single digits per chip at the leading edge. Another way to look at this is from the top-down perspective. I compared the total capacity shipped in Million Square Inches (MSI) and compared this to wafer-fab equipment growth. Think of this as total volume versus the spending to make more wafers.

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Read more at Fabricated Knowledge . . . . .

Taiwan’s TSMC to Build First Chip Plant in Japan

Yuri Kageyama wrote . . . . . . . . .

Japanese electronics maker Sony and TSMC of Taiwan said Tuesday they plan to jointly build a computer chip plant in Japan with an initial investment of $7 billion.

The plant in the southwestern city of Kumamoto will be the first foundry in Japan for TSMC, one of the world’s leading chipmakers. Construction will start next year for the plant to be up and running by 2024, employing 1,500 high-tech professionals.

The move comes as a supply crunch in chips has slammed various Japanese companies, including automaker Toyota Motor Corp. and video-game maker Nintendo Co., as lockdowns and other coronavirus measures in parts of Asia have hurt chip production.

Sony Semiconductor Solutions Corp., a wholly owned subsidiary of Sony Corp., will be a minority stakeholder, with less than 20% equity, investing $500 million in the new TSMC subsidiary, Japan Advanced Semiconductor Manufacturing.

The overall investment is getting “strong support from the Japanese government,” the joint statement said.

The deal is subject to regulatory approval.

Terushi Shimizu, president of Sony Semiconductor Solutions, said the global semiconductor shortage was expected to continue. The partnership with TSMC will help not only Sony but also other companies, he said.

There has been speculation other Japanese companies, such as Toyota Motor Corp., may join the project, but TSMC declined comment, saying nothing was decided.

“We are pleased to have the support of a leading player and our long-time customer, Sony, to supply the market with an all-new fab in Japan, and also are excited at the opportunity to bring more Japanese talent into TSMC’s global family,” said Chief Executive C.C. Wei.


Source : AP

北京大学成立集成电路学院

记者: 孙竞 . . . . . . . . .

日前,北京大学宣布成立集成电路学院。记者了解到,北京大学集成电路学院以“多学科交叉、产教融合、注重实践”为办学特色,着力集成微纳电子、电子设计自动化、集成电路设计、集成电路制造、集成微纳系统五个重点方向,培养交叉复合型集成电路人才,提高集成电路科学研究与工程应用水平,与国内龙头企业携手支撑和推动集成电路技术与产业的持续发展。

集成电路学院名誉院长王阳元院士在成立仪式上指出,当前“天时、地利、人和”的条件是我国集成电路发展的最佳时期,集成电路已进入了高速发展期。自力更生、掌握核心技术、解决“卡脖子”问题已成为“从庙堂之高”到“江湖之滨”广泛的共识。他认为,学院头等大事是抓好人才培养工作,要培养出爱国、奉献、“敢将热血洒春秋”的高素质人才;同时要坚持原始创新,加强基础和应用基础研究工作,并且将我们的原始创新及时地转化到产业中去。

据悉,北京大学集成电路学院将加强与北京大学计算机、数学、物理、化学、材料等多个优势学科的交叉融合,深化与集成电路产业多环节龙头企业的合作,构建“人才培养、科学研究、产业促进”三位一体的集成电路创新生态,建设具有北大特色的“集成电路科学与工程”一级学科,打造国际一流的集成电路人才培养和科技创新高地。

记者观察到,截至目前,国内已有多所高校成立集成电路学院。7月14日,华中科技大学集成电路学院正式揭牌。该学院以服务国家重大战略和区域经济发展为目标,建设存储器、传感器、光电芯片、显示器、化合物半导体等特色方向。4月22日,清华大学成立集成电路学院,在国内首次提出“1+N”联合机制,布局纳电子科学、集成电路设计方法学与EDA、集成电路设计与应用、集成电路器件与制造工艺、MEMS与微系统、封装与系统集成、集成电路专用装备、集成电路专用材料等研究方向。


Source : 人民网


Read also at Peking University

芯怀天下 集成梦想——北京大学成立集成电路学院 . . . . .

紫光被申破產重整 內地半導體強國夢再受挫

作者: 薛偉傑 . . . . . .

7月9日,內地的紫光集團發表公告透露,在當日收到北京市第一中級人民法院的通知,其債權人徽商銀行以紫光集團不能清償到期債務、資產不足以清償全部債務兼且明顯缺乏清償能力、具備重整價值和重整可行性為由,已向法院申請對紫光集團進行破產重整。該集團將依法全面配合法院進行司法審查,積極推進債務風險化解工作,支持法院依法維護債權人的合法權益。

紫光集團又回應內地媒體表示,被債權人申請破產重整並未對集團屬下公司的日常生產經營造成直接影響,目前集團屬下公司生產經營活動均正常開展。而法院是否受理、集團是否進入重整程序,尚存在不確定性。

早在大半年前,紫光集團已被踢爆出現周轉困難,到去年底已無法償還多批到期的境內外債券,出現多宗債務違約事件,當時該集團已強調,積極推進債務風險化解工作。

但大半年後,仍然發展至被申請破產重整,不能不說是令人失望。事件曝光後,成為兩岸網絡上的大新聞,更被認為是內地半導體強國夢的一大挫折。

曾豪言「併購聯發科、收購台積電」

由2013年起,紫光集團通過多次併購,成為了內地最大的綜合性半導體企業。2015年,紫光集團董事長趙偉國到訪台灣,更豪言要「併購聯發科、收購台積電」,其財大氣粗的作風令人側目。趙偉國在內地媒體面前也毫不避諱他鍾情資本運作方式,但目前紫光集團正面臨被自己掀起的資本風暴吞噬的危機。

在趙偉國的主導下,由2013年開始,紫光集團就開始了「併購之旅」:先後收購在美國上市的晶片設計公司展訊通信、物聯網晶片公司銳迪科微電子,HP惠普旗下的雲端網路設備公司華三通信。之後,還斥資38億美元取得硬碟生產商Western Digital的15%股權,成為最大股東。還收購法國微連接器公司Linxens接近100%股權。甚至曾經打算收購美國最大的記憶體生產商Micron,只是美方不接受。在大約6年時間,紫光集團以及其屬下企業先後對20多家企業發起了併購要約,投入資金超過1000億元人民幣。

「短貸長投」造成財務危機

有些觀點認為,由於起步較遲,紫光集團主要通過大規模併購,來變成半導體巨頭,屬無可厚非,而該集團亦已經擁有「國際級競爭力」。但亦有人擔憂,半導體行業資金技術非常密集,投資回報周期長,倚靠高槓桿的融資方式來收購,會令集團的負債規模過大,財務結構失衡,暗藏風險。現在看來,顯然是後一種觀點較為準確。

問題爆發的確源於融資結構失衡。因為紫光集團的負債較多為高息的短債,但投資回報卻是相當長的事情。加上當初的估計過份樂觀,旗下有部分公司遲遲未能獲得顯著的市場佔有率,卻需要持續投入資金,例如生產記憶體晶片的「長江存儲」,以及設計手機處理器的紫光展銳等。於是,該集團的流動資金嚴重吃緊,要靠不斷發新債來償還舊債或應付營運所需。

據內媒報導,截至2020年6月,紫光集團的總負債規模達到2029.38億元人民幣,比2012年底的46.47億元人民幣暴升了接近44倍。更值得關注的是,在這2029.38億元的債務當中,流動負債為1192.11億元。此外,融資環境也發生了變化。在2019年第一季之後,紫光集團就開始難以通過債券市場持續發新債券,因而在去年底連環爆出債務違約事件。

一般認為,在趙偉國2009年以他的健坤集團購入紫光集團的49%股份之前,紫光集團的情況並不算好。他入主紫光集團初期,的確有拯救和壯大該集團的功勞。而他主導紫光集團以160億元人民幣的高價收購展訊和銳迪科兩間晶片設計公司之後,瞬即獲Intel出資90億元人民幣購入紫光集團旗下併購展訊和銳迪科的主體公司紫光展銳的20%股權,以公司價值計,的確是「有賺」。對此,趙偉國曾得意地說:「企業併購是花錢的,但紫光通過併購發展壯大,我們把收購變成了賺錢的方式。」

但問題是,趙偉國有些貪勝不知輸,過份相信自己的併購和高槓桿營運能力,最終引致資金鏈斷裂。有些財資界人士指出,內地的民風過於急功近利,只求在最短時間內快速進入行業,利用高資本槓桿來買到規模及地位,而非發展壯大。而有些內地企業亦覺得,只要跟著政府政策發展,自己就一定不會是輸家,出了事也會有人埋單。

無疑,以紫光集團現時的規模和重要性,顯然是「大到不能倒下」。而它旗下的幾間晶片設計公司以及生產記憶體晶片的長江存儲,也是比較值錢的。此外,紫光集團還持有中芯國際的股份,是後者的主要股東。但為了解決債務問題,它很可能要賣出這些比較值錢的公司的部分股權。

最重要的是,這次事件對於內地半導體企業日後的融資、收購合併、吸引境外人才(包括台灣人和美籍華人)等等,肯定會帶來不良影響。內地官方和企業都必須吸取其教訓。


Source : Ming Pao