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This is the highest rise in ten years and comes because of – rather than despite – the Covid-19 pandemic. Trends such as work-from-home, distance education and telephone infrastructure build-out, have helped drive demand.

As a result wafer supply is tight and is expected to be so at least until some point in the 1H21. For processes below 10nm both TSMC and Samsung, the only two foundries capable of such production, are close to fully loaded. However, in the longer term while TSMC may grow even stronger Samsung could experience customer losses in the foundry business, TrendForce predicts

With 4nm and 3nm processes are expected to arrive in 2021 and 2022 respectively extreme ultraviolet (EUV) lithography machines are also becoming more sought after.

 

Annual foundry revenue 2017 to 2021 (millions of US$) and annual growth (percentage). Source: TrendForce.

For mature processes at the 28nm node and above are gradually exhibiting a tight supply, with numerous applications in strong demand – CMOS image sensors, ICs for solid-state drives, RF front-end, WiFi, Bluetooth, and TWS chips. Also WiFi-6 chips and AI memory chips.

Notably, there are almost no semiconductor manufacturing equipment suppliers producing 200mm wafer processing kit at present and the price of this equipment on the second-hand market has skyrocketed (see Used semiconductor equipment broker comes to Europe). As a result 200mm wafer capacity has been in severe shortage in 2020.

This has been impacting supplies of PMICs, used in smartphones and base stations.

Next: TSMC’s expansion


TrendForce estimates that TSMC’s aggressive 5nm capacity expansion will allow it to capture 60 percent of the market for advanced process foundry production by the end of 2021. However, because of the loss of Huawei/HiSilicon as a customer TSMC’s 5nm capacity utilization is expected to fall in 2H20 to between 80 and 95 percent. The arrival of demand from AMD is likely to keep TSMC’s 5nm capacity utilization rate in the 85 to 90 percent range in 2021. It should be pointed out that, from late-2021 to 2022, MediaTek, Nvidia, and Qualcomm will kick-start their 5/4nm mass production, while AMD will ramp up its Zen 4 CPU manufacturing. Moreover, the first batch of outsourced 5nm Intel CPUs is also expected to enter production in 2022 (see Intel goes foundry for 7nm due to yield issues). The enormous wafer demand from these companies have led TSMC to begin expanding its 5nm capacity.

Samsung is actively expanding its 5nm capacity at its new Pyeongtaek fab after receiving major orders from Nvidia but is expected to trail TSMC by about 20 percent in terms of 5nm capacity.

However, as Qualcomm will likely adopt TSMC’s 4nm process technology for Snapdragon 895 manufacturing, Samsung may have only Nvidia and Samsung (LSI) remaining as its major 5nm clients.

Conversely, TSMC is likely to welcome Intel as a CPU manufacturing client, in addition to the existing clientele of Apple, AMD, MediaTek, Nvidia, and Qualcomm. TrendForce believes that demand for TSMC’s 5nm process technology will remain relatively strong and stable, and the 2H22 mass production of the 3nm process will further increase TSMC’s market share.

Related links and articles:

www.trendforce.com

News articles:

Used semiconductor equipment broker comes to Europe

Opinion: Intel is on the path to chip manufacturing exit

Intel goes foundry for 7nm due to yield issues

TSMC, UMC power ahead of foundry market

Foundry market can still grow in 2020, despite Covid-19

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