Taiwanese Semiconductor testing and packaging giant ASE announced today that its subsidiary, ASE Semiconductor, will lease the plant in Nanzih, Kaohsiung, owned by Taiwan’s ASE Test Inc., to expand its packaging capacity.

In the announcement, ASE Holdings revealed that ASE Semiconductor would lease a plant in Nanzih District, Kaohsiung, from its subsidiary ASE Test Inc. The total floor area of the building is approximately 15,600 square meters, with an estimated total usage rights asset value of NTD 742 million (approximately USD 23.8 million).

ASE Holdings stated that the primary purpose of this move is to optimize the overall planning and efficient utilization of plant space within the group, as well as to expand ASE’s packaging capacity.

According to CNA’s report, industry sources believe that ASE’s primary objective with this expansion is to enhance its production capacity for advanced packaging of Artificial Intelligence (AI) chips, but it is not directly related to CoWoS packaging.

Market insiders point out that ASE Holdings has been collaborating with foundry on technologies related to advanced packaging interposers and has CoWoS solutions. The earliest expected time for mass production is by the end of this year or early next year.

Reportedly, according to data, ASE’s Kaohsiung plant contributes to approximately 20% of ASE Holding’s overall revenue. The plant primarily provides services such as packaging, wafer bumping and probing, materials, and final testing.

The Kaohsiung plant is also establishing several smart plants, focusing on high-end processes, including Fan-Out packaging, System-in-Package (SiP), wafer bumping, and FlipChip packaging. These technologies find applications in various fields, including automotive, medical, IoT, high-speed computing, artificial intelligence, and application processors.

ASE actively positions itself in various advanced packaging technologies. Notably, the Fan-Out Chip on Substrate with Bridge (FOCoS-Bridge) packaging technology integrates multiple Application-Specific Integrated Circuits (ASICs) and High Bandwidth Memory (HBM), targeting the customized AI chip advanced packaging market.

In addition, ASE Semiconductor has introduced a cross-platform integrated design tool that combines several advanced packaging technologies, addressing the demands of advanced packaging for AI chips.

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(Photo credit: ASE)

In a bid to revitalize its semiconductor industry, Japan has enticed the sector with subsidies worth trillions of yen, aiming to attract both domestic and international semiconductor companies.

Leading semiconductor foundry Taiwan Semiconductor Manufacturing Co. (TSMC) has invested USD 8.6 billion to construct a factory in Kumamoto Plant, and it is considering building a second plant nearby. According to reports, TSMC is also contemplating a third plant within Kumamoto Prefecture to produce cutting-edge 3nm chips.

Apart from TSMC, major players like Samsung and Powerchip Semiconductor Manufacturing Corporation (PSMC) are actively investing in Japan. The initiatives of these giants have not only influenced semiconductor manufacturing equipment suppliers in Japan but also spurred them to accelerate technological research and expand production capacity.

As a result of these efforts, the investment of Japan’s six major semiconductor equipment suppliers has surged by 70% over the past five years.

TSMC Kumamoto New Plant Aims for Monthly Production of 55,000 12-Inch Wafers

Reportedly, the new chip plant in Kumamoto, Japan, operated by Japan Advanced Semiconductor Manufacturing (JASM), a joint venture between TSMC, Sony, and Denso, is poised for commencing production in the fourth quarter of 2024, while the plant’s production capacity will target a full capacity of 55,000 12-inch wafers per month.

Simultaneously, JASM aims to enhance the local contribution of semiconductor supply chain and ecosystem in Japan from the current 25% to 60% by 2030.

Meanwhile, according to sources cited by Bloomberg, TSMC has informed its supply chain partners that it is considering building a third factory in Kumamoto Plant in southern Japan, codenamed TSMC Fab-23 Phase 3.

TrendForce’s analysis mentioned that Japan’s expertise in semiconductor materials and machinery makes it an attractive location for TSMC’s expansion.

Additionally, Japan’s critical role in semiconductors and raw materials, coupled with collaboration with Sony, provides TSMC with significant advantages. TSMC’s investment in Japan is expected to facilitate access to advanced materials and expertise in CIS technology.

Furthermore, industry speculation suggests that in the future, Japan will not only continue subsidizing semiconductor manufacturing but also enhance collaboration between the semiconductor industry and academia to attract more talent to join the semiconductor industry.

PSMC Japanese Plant Aims for Monthly Production of 40,000 12-Inch Wafers

In late October, PSMC, in collaboration with SBI Holdings, Inc., the Miyagi Prefecture of Japan, and JSMC Corporation, signed a memorandum of understanding. The memorandum confirmed that JSMC’s first semiconductor wafer plant is expected to be located in the Second Northern Sendai Central Industrial Park in Ohira Village, Kurokawa District, Miyagi Prefecture (Second Northern Sendai Central Industrial Park).

The plant will produce 28nm, 40nm, and 55nm chips for automotive and industrial applications, with a planned monthly production of 40,000 12-inch wafers. Previous reports indicated that PSMC plans to construct multiple plants, with the first phase potentially starting construction as early as 2024, involving an investment of around JPY 400 billion (USD 2.6 billion).

The Japanese Ministry of Economy, Trade, and Industry (METI) is expected to provide up to JPY 140 billion in subsidies for the project, targeting operational commencement by 2026. The timeline and plans for the second phase are yet to be determined, with a total investment of approximately JPY 800 billion.

Regarding subsidies, PSMC stated that once Japan announces the subsidy amount for this semiconductor wafer plant investment, all relevant parties will reconfirm the effectiveness of this memorandum of understanding and proceed with the planned construction.

Is Foundry Revenue Expected to Continue its Upward Trend?

In the semiconductor industry chain, the significance of the foundry industry is self-evident. In recent years, the foundry sector has been affected by headwinds in end markets such as consumer electronics. However, as entering the latter half of the year, there are gradually emerging positive signals in the semiconductor industry.

According to TrendForce’s report on December 6th, looking ahead to 4Q23, TrendForce’s anticipation of year-end festive demand is expected to sustain the inflow of urgent orders for smartphones and laptops, particularly for smartphone components.

Although the end-user market is yet to fully recover, pre-sales season stockpiling for Chinese Android smartphones appears to be slightly better than expected, with demand for mid-to-low range 5G and 4G phone APs and continued interest in new iPhone models. This scenario suggests a continued upward trend for the top ten global foundries in Q4, potentially exceeding the growth rate seen in Q3.

According to the Semiconductor Equipment and Materials International (SEMI) report presented at SEMICON Japan 2023 on December 12, the global semiconductor equipment market is anticipated to experience a 6.1% year-on-year decline to USD 100.9 billion in sales for new equipment in 2023, marking the first contraction in four years.

However, the forecast for 2024 shows a reversal, with the semiconductor equipment market expected to grow by 4%, reaching USD 105.3 billion in sales. In 2025, a substantial increase of 18% is projected, surpassing the historical high of USD 107.4 billion in 2022.

SEMI CEO Ajit Manocha has noted that the semiconductor market exhibits cyclical patterns, with a short-term downturn expected in 2023. However, he anticipates a turning point towards recovery in 2024.

The year 2025 is poised for robust recovery, driven by increased production capacity, the construction of new wafer fabs, and growing demand for advanced technologies and solutions.

Major Companies Indirectly Boost Chip Equipment Investment in Japan, Surging 70% in 5 Years

According to a report by Nikkei, the proactive investments by semiconductor giants such as TSMC and Micron in Japan have accelerated technological innovations and production capacity expansion among Japanese chip equipment manufacturers.

The combined investment (including R&D and equipment investment) of Japan’s six major chip equipment firms, namely TEL, DISCO, Advantest, Lasertec, Tokyo Seimitsu, and Screen Holdings, for the fiscal year 2023 (April 2023 – March 2024) is approximately JPY 547 billion, marking a significant 70% increase compared to the 2018 fiscal year.

On December 13, Tokyo Electron Limited (TEL) President Tony Kawai stated at SEMICON Japan 2023 that the semiconductor market is projected to exceed USD 1 trillion by 2030, highlighting the immense potential within the industry.

On December 14, Hisashi Kanazashi, the Duputy Director at METI of Japan, noted that top overseas semiconductor firms plan to collaborate with Japan’s strength in “equipment” and expand their research and development presence in Japan.

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(Photo credit: TSMC)

Source to TrendForce, the most recent update on solar materials pricing indicates an ongoing decline in Polysilicon and Module prices, while Wafer and Cell prices are holding steady for the time being.

• Polysilicon

Polysilicon prices continue to decline throughout the week. The mainstream concluded price for mono recharge polysilicon is RMB 64/KG, while mono dense polysilicon is priced at RMB 62/KG and N-type polysilicon is currently priced at RMB 66/KG.

Looking at the market transaction dynamics, there’s not a significant volume of orders being placed. Some companies are gearing up for December’s order negotiations. Observing the price trend, polysilicon manufacturers are adjusting prices for both new and existing orders. Even some previously high-priced orders have experienced declines.

Furthermore, the average price of N-type polysilicon in new orders is generally below the 70000 yuan/ton mark. On the supply side, numerous projects are now in production, leading to a constant increase in the marginal increment of polysilicon and further swelling polysilicon inventory. Consequently, polysilicon manufacturers are grappling with increased pressure to de-stock.

Despite a month-on-month rise in operation rates for professional wafer manufacturers, creating additional demand for polysilicon, the surplus supply remains challenging to address.

This week, polysilicon prices continue their downward trajectory, and there’s a significant oversupply of polysilicon. Moreover, with customer installation demand still not turning positive, crystal pulling manufacturers are adopting a pessimistic stance toward future polysilicon prices, displaying a cautious approach to purchasing polysilicon.

On the flip side, polysilicon manufacturers are determined to maintain current prices and show no signs of reducing prices to clear inventory. In conclusion, a tug-of-war in pricing dynamics is evident between buyers and sellers.

• Wafer

The prices of wafer have maintained stable throughout the week. The mainstream concluded price for M10 P-type wafer is RMB 2.30/Pc, while G12 P-type wafer is priced at RMB 3.30/Pc and M10 N-type is priced at RMB2.40/Pc.

On the supply side, wafer inventory has returned to the reasonable range, sitting at approximately 1.3-1.5 billion pieces. Analyzing various wafer types, the inventory of 210mm P-type wafers has seen a notable decrease, with the consumption rate slowing due to weakened demand.

With the alleviation of inventory pressure, specialized wafer manufacturers are ramping up their operational rates, resulting in a slight month-on-month increase in wafer output. Turning to the demand side, cell manufacturers are indicating a reduction in the production of 182mm P-type cells, while there’s no change in output for other cell types.

Consequently, the purchasing demand for 182mm P-type wafers is expected to decrease. Although wafer prices are holding steady this week, considering the divergent operational rates among downstream cell manufacturers, a future divergence in prices between N-type and P-type wafers is anticipated.

Moreover, attention should be directed towards whether the demand and supply relationship can sustain stable prices after the higher wafer activation rates lead to an increase in wafer output during the same period.

• Cell

Cell prices have maintained stable this week. The mainstream concluded price for M10 cell is RMB 0.46/W, while G12 cell is priced at RMB 0.56/W. The price of M10 mono TOPCon cell is RMB 0.49/W.

On the supply side, cell inventory can currently sustain for about six to seven days, but the pressure on inventory is mounting as downstream demand gradually declines. We’re currently in the midst of the technology iteration phase for N-type and P-type cells.

The production capacity of 182mm P-type cells has significantly dropped, leading to a decline in its OEM fees to 1.0-1.2 yuan. Given the current cell price and the manufacturing cost, the production line for 182mm P-type cells is operating at a loss, while the 210mm P-type cells are still profitable, thanks to orders this month.

However, as order deliveries conclude, the tense supply and demand dynamics are expected to ease. On the demand side, downstream module prices continue to slide, prompting module manufacturers to push for a reduction in cell prices. Additionally, customer demand is sluggish, and buyers are adopting a more cautious approach to future purchases.

This week, cell prices remain relatively stable, but production of 182mm P-type cells has been significantly reduced due to sustained losses, leading to a simultaneous decline in demand and supply. Nevertheless, there is still support from order deliveries for 210mm P-type cells.

In conclusion, with module prices consistently decreasing, we anticipate that cell prices will face increasing pressure in the coming weeks.

• Module

Module prices have gone down throughout the week. The mainstream concluded price for 182mm facial mono PERC module is RMB 1.03/W, 210mm facial mono PERC module is priced at RMB 1.04/W, 182mm bifacial glass PERC module at RMB 1.04/W, and 210mm bifacial glass PERC module at RMB 1.05/W.

On the supply side, prices quoted by leading manufacturers to their dealers have plummeted to less than 1 yuan/W, and bidding prices for recent projects are hitting unprecedented lows. The competition among module manufacturers has reached a fever pitch, driving prices in the sector to their rock bottom.

As the N-type and P-type technology undergo iteration, production capacity is slated to be officially cleared at its current low price. Shifting to the demand side, October saw a month-on-month decrease in new PV installations, indicating a clear decline in installation demand, according to statistics from the NEA.

Although distributed PV installed capacity remains robust, it cannot sustain a significant increase, and centralized ground installations are entering their off-season. Additionally, there’s no indication of a rebound in overseas demand, making it challenging for customer demand for module purchases to turn positive.

As the year draws to a close and earinings reports will be reported, manufacturers are grappling with the pressure to meet annual goals, intensifying the need to clear inventory. However, they find themselves in a precarious position in negotiations with customers, compelling them to further reduce prices to facilitate more shipments.

In summary, module prices are experiencing a decline this week and are anticipated to further decrease in the near future.

The semiconductor industry in China is gradually recovering in response to shifts in downstream demand in the end of November. This positive trend is reflected in the industry’s dynamics of investment and financing.

There have been nearly 40 financing events in the semiconductor industry. Sectors such as storage chips, MEMS, automotive-grade chips, third-generation semiconductors, and semiconductor materials/equipment are particularly attracting capital. Companies in the spotlight include SCY, Sinopack, YT Micro, Oritek, Analogysemi, Konsemi, and UniSiC.

SCY: Advancing Core Storage Technology 

Shenzhen-based SCY has successfully concluded Series B strategic financing, led by Xiaomi Industry Fund and joined by several upstream and downstream companies. The funds raised will be dedicated to enhancing core storage technology, research and development, furthering global strategies. SCY aims to establish its own storage brands, SCY and WeIC, in the terminal market. The company has achieved a breakthrough in the second-generation Flip Chip advanced packaging technology, with the full-scale production of its self-developed 512GB UFS3.1 storage chip. The expectation is to achieve mass production of 1TB capacity UFS3.1 next year.

Sinopack: Advancements in Ceramic Packaging 

Sinopack has completed Series B strategic financing, earmarking the capital for production line construction and research and development to stimulate the company’s second growth curve. Established in 2009, Sinopack focuses on ceramic packaging applied in optical communication, wireless communication, and other fields. The company has successfully developed precision ceramic components with core materials such as aluminum oxide and aluminum nitride. Sales revenue in the first half of 2023 has already surpassed the entire year of 2022.

YT Micro: Driving Automotive-grade Chip Innovation

Jiangsu-based YT Micro has successfully secured Series B1 round financing. The company specializes in automotive-grade chips design. With deep collaborations with numerous automotive OEMs  and automotive component companies, YT Micro has executed 300+ specified projects, resulting in millions of shipments. Future plans include increased investment in the research and development and mass production of high-performance automotive processor chips, expanding industrial ecological cooperation, and strengthening strategic business collaborations with OEMs and Tier1.

Oritek: Pioneering Intelligent Automotive Solutions

Oritek stands as China’s first provider focusing on the third generation of intelligent automotive E/E architecture. The company’s Longquan series chips cater to smart automotive terminal-side intelligent components, smart local processing unit, and integrated central computing units for parking and charging in 2023. The Longquan 560 chip was unveiled in 2023.

Analogysemi: Advancing Analog and Mixed-signal Chips

Founded in 2018, Analogysemi concentrates on analog and mixed-signal chips, applied across various markets like industrial, communication, medical, and automotive. The company has successfully entered the automotive electronics field, achieving mass production of products such as automotive-grade DC brushed motor drivers, widely used in automotive electronic components.

Konsemi: Elevating Embedded Storage Solutions

Established in November 2018, Konsemi focuses on the research and development of embedded storage controller chips and modules. It stands among the few Chinese manufacturers independently designing a complete range of embedded storage chips. With applications spanning smart TVs, set-top boxes, mobile devices, smart wearables, communication devices, drones, industrial robots, and new energy vehicles, Konsemi’s self-developed eMMC product has received certifications from mainstream manufacturers and is integrated into the supply chain of renowned brands, with sales reaching millions.

UniSiC: Leading in Power Semiconductor Device Testing

UniSiC has successfully concluded a billion-yuan strategic financing, earmarked for forward-looking product research and development and global expansion. Established in 2020, the company focuses on power semiconductor device testing and high-frequency power electronic applications. With successful developments in silicon carbide technology and securing multiple orders, UniSiC’s SiC ATE product has commenced overseas installations.

Recent reports from the IC design industry suggest that TSMC, the leading semiconductor foundry, is contemplating a slight price concession for certain mature processes next year, marking a return after three years. Despite its reputation for firm pricing, TSMC’s willingness to make concessions is seen as a response to a decrease in capacity utilization. According to UDN News, this shift may indicate the broader trend of semiconductor foundries facing pricing pressures due to lower capacity utilization.

Known for its stable pricing with minimal fluctuations, TSMC typically offers single-digit percentage annual concessions to clients. The reported concession for specific mature processes is estimated to be around 2%. TSMC, however, declined to comment on these pricing adjustments.

Several IC design companies have confirmed ongoing negotiations with TSMC regarding price concessions for the upcoming year. One disclosed that TSMC’s concession method involves settling after the completion of a full quarter’s production, offsetting the next quarter’s mask costs. This approach allows for low single-digit percentage concessions in the following quarters.

Industry sources suggest that other semiconductor foundries have already taken significant measures, such as direct price reductions on large orders and providing additional free wafer allocations, aiming to boost capacity utilization. Chinese chipmakers initiated price reductions earlier and more aggressively than their Taiwanese counterparts, maintaining TSMC’s relatively firm pricing.

The news of TSMC considering concessions for certain mature processes, while not a direct price reduction, holds indicative significance. It is likely to exert pricing pressure on other industry players with mature processes before the peak season arrives in the latter half of next year.

During the semiconductor shortage in recent years, TSMC initially refrained from raising prices. As a result, its pricing remained relatively lower, even the lowest, compared to other industry players who significantly increased their prices. TSMC reportedly canceled concessions in 2021 and 2022 and initiated a rare price increase at the beginning of 2023, rumored to be in the range of 3% to 6%.

However, with the semiconductor market reversing, the supply chain has been gradually adjusting inventory since the second half of 2022. In the first half of this year, TSMC reportedly introduced an “increase quantity feedback plan,” offering additional mature process wafer allocations for orders reaching a certain quantity.

Although TSMC relies on advanced processes for over 50% of its revenue, with mature processes not being its primary focus, they remain a market consideration.

(Image: TSMC)