The Tech Week that was... Aug 30~ Sept 3

Welcome to the latest edition of my weekly newsletter bringing you all the key semiconductor and technology news from around the world in one easy read.?

?Let’s start this week with the latest market analysis news.

Trendforce has reported that foundry revenue in Q2 2021 reached new historical highs once again with a 6% QoQ growth due to increased ASP’s and strong demand.?Chip demand remained high due to factors such as post-pandemic demand, industry-wide shift to 5G telecom technology, geopolitical tensions, and chronic chip shortages.?TSMC remains in top position with revenue of US$13.3billion which accounted for 52.9% market share but TSMC's revenue grew less than the other top 10 foundries in Q2 at 3.1% QoQ due to various fab disruptions and also because it did not increase ASP’s unlike other foundries, something TSMC has corrected last week.?Samsung is in 2nd position with 17.3% market share followed by UMC at 7.2%.

According to IDC, shipments of smartphones are expected to grow 7.4% in 2021, reaching 1.37 billion units, followed by 3.4% growth in 2022 and 2023, respectively.?The 2021 growth can be attributed to a healthy 13.8% growth from iOS devices combined with 6.2% growth from Android, however shipments were essentially flat compared to pre-pandemic 2019 levels.

Trendforce is forecasting that the GaN power device market will grow at 78% CAGR through 2025 driven in part by demand from electric vehicles, and also from telecom base stations, converters, and charging stations demand. Annual revenue for the segment is expected to reach US$850million by 2025 up from US$48million in 2020.

According to TECHCET, semiconductor materials revenues will top US$57billion this year, growing between 8% to 30%, covering the spectrum of materials segments. CAGR for all materials is estimated to be at least 5.3% through 2025. The highest growth segments include wafers, equipment components, precursors, cleans, CMP, and photoresists. With the large number of new Fabs coming on line in the coming years there is hugh upside potential for the market.

Global Chip Shortage

The impact of the chip shortage on automakers manufacturers continues to be felt around the globe with many new announcements on the impact this week. ?Daimler reported it expects a significantly lower Q3 sales for Mercedes due to plant closures caused by lack of chips. GM said it will reduce production at most of its North American car assembly plants due to the chip shortage. ?Renault announced the temporary halt of its Flins plant in France till next Tuesday due to the chip shortage.?Chinese EV maker Nio has cut its delivery forecast for Q3 due to uncertain and volatile semiconductor supplies. Whilst in India Maruti Suzuki warned that production in September will drop 60% due to the chip shortage.?Whilst Ford will again trim its U.S. truck production due to the ongoing semiconductor chip crisis.?Stallantis also reported that production at its Sevel plant in Italy will be suspended next week due to the chip shortage.

The global chip shortage is certainly changing the dynamics of foundry and OSAT supply chain away from the historical normal, with ASP price increases and customers signing long term deals and funding for capacity now quite standard.?Taiwans 2nd largest foundry UMC, said this week that an increasing number of its customers have been signing longer agreements up to 3years to secure chip supply, with capacity now fully booked into next year.

The trade war between the US and China potentially now seems to be turning from tariffs to blocking acquisitions.?This week the U.S. Treasury Department said the acquisition of Magnachip Semiconductor Corp by a Chinese Wise road Capital private equity firm posed "risks to national security", and looks set to block the deal.?The Chinese media have responded to this by saying that the US blocking of Chinese acquisitions of global tech firms is a “red flag”.?

Chinese foundry SMIC has announced it will build a new Fab in the Lin-Gang Pilot Free Trade Zone, near Shanghai.?It will invest US$8.87billion with capacity for 100,000 300mm wafer starts per month.?The fab will produce mature production technologies (>28nm) for a wide range of applications.?

SK Siltron CSS LLC, a US subsidiary of Korean conglomerate SK Group, plans to invest almost $303 million to expand SiC wafer production in Michigan.?The expansion will more than double the company's Michigan employee base and add a new site in Bay City, Michigan, to join its existing site in nearby Auburn.

Taiwanese memory manufacturer Winbond is planning to hire 400 engineers for it’s new fab in Kaohsiung according to the company and once at full production he new facility will add 25% to it’s overall capacity.

Other Industry News

According to the newspaper Nikkei Asia, Google is planning on using it’s own CPU for it’s Chromebook laptops and computers from 2023.?They will be based on Arm architecture. Google has already announced it will use it’s own chip ?called Tensor to power it’s next generation smartphones.?Google is following the same path as Apple in moving away from using Intel chips to designing it’s own processors.

SEMI is urging US policymakers to act quickly, as it has been many many months since the US congress first announced plans to support the semiconductor industry with finding for setting up semiconductor manufacturing in the US, but to date the US$52billion funding under the CHIPS for America Act is still pending Congress approval despite bipartisan support, whilst the FABS Act which will offer refundable 25% tax credits for semiconductor equipment and facilities is still pending both chambers approval.?As such so far the programs remain unfunded.

To end this week, 3DinCities has a good summary of day 2 of SEMI’s “Innovation for the Transforming World” conference which featured an outlook on semiconductor market growth over the next 2-3 years. One point that stands out is that based on current announcements, between 2020 and 2022 the industry is adding around 2.9 million 300mm wafers per month and ~980k 200mm wafers ?per month resulting in an overall 17 % increase in wafer capacity.

That's all for this week. If you enjoyed what you read, why don't you subscribe to my free newsletter and automatically stay up to date with all the industry news.

Stay safe and healthy... bye.