Looking around at the present, the epidemic dividend dissipated, coupled with the impact of global hyperinflation, consumer electronics as the representative of the multi-terminal market demand shrinkage, resulting in a sharp rise in supply chain inventory difficult to digest, the market weakness is difficult to reverse, the semiconductor market into a downward cycle.
In the face of customers' big moves to amend wafer casting orders, foundries have slowed down their investment/expansion progress, while actively adjusting their product portfolio to find a new round of growth tracks.
Automotive track first among them
Foundries are actively laying out the automotive chip track, for the following reasons.
Automotive market increment is large, production capacity continues to be tight: the overall size of the automotive chip accounts for 10% of the overall IC market up and down. But with the automotive industry towards intelligent, electrification and other trends upgrade transformation, automotive chip demand is exploding growth.
On the other hand, compared to the weak trend of the consumer electronics market, the chips required by the automotive industry are still tight, such as automotive-grade MCU, interface chips, power supply chips, power semiconductors, etc. The supply-demand conflict is still very tight, still facing shortages and premiums.
Industry chain model adjustment: automotive chip is a highly competitive and long dominated by the European and American IDM manufacturers "wolf zone", foundries in the past in the field of automotive chip investment and business expansion will always be insufficient. But with the upgrading of the automotive industry, chip usage is growing, and the main control chip, AI chip, as well as digital cockpit, autonomous driving and other chip processes are evolving in the direction of high computing power and advanced processes, traditional automotive chip suppliers to provide the chip is increasingly difficult to meet the host factory for the product iteration speed, cost and performance requirements, prompting the foundry's business focus also began to tilt to the field.
After the "core shortage wave", the automotive industry chain is reshaped: In the past year or so, many automotive companies have limited their vehicle production capacity due to the "core shortage" problem. Therefore, OEMs who understand the importance of the supply chain began to choose to skip Tier1 and other intermediate manufacturers, directly with chip companies and foundries to reduce the risk of chip supply.
Driven by multiple factors, foundries began to see the automotive chip market, have increased layout efforts.
TSMC, Samsung two master the cutting-edge advanced manufacturing process of the wafer foundry fully benefit.
In May this year, NXP announced the use of TSMC 5nm process to build a new generation of S32 series of automotive processors. At the same time, it announced that it has cooperated with TSMC to develop 5nm ASIL D security grade SoC chips; in addition, Qualcomm, Nvidia and other manufacturers launched digital cockpit and autonomous driving chips are dependent on its advanced process, and some products have been mass-produced and installed in vehicles.
In the MCU field, automotive MCU produced by TSMC has occupied about 70% of the market share, Infineon, ST, NXP, TI, Renesas Electronics and other major suppliers of MCU using TSMC foundry. SMIC and Hua Hong are the main domestic MCU foundries.
Last year, TSMC also launched the N5A process, which it claims is the world's most advanced automotive semiconductor technology and is being certified to the automotive industry's stringent quality, reliability and functional safety standards, including AEC-Q100, ISO 26262 and IATF16949, and is expected to be released in the third quarter of 2022.
Data shows that TSMC's revenue from the automotive segment grew 64% year-over-year in 2021, ranking first in all industries.
At a time of relative weakness in cell phones and consumer electronics, Lin also suggested car manufacturers and automotive chip makers to build buffer stocks and plan capacity well in advance to avoid chip shortage problems.
Talking about the future development of the automotive market, Lin Zhenming is optimistic about the three major development trends of ADAS, automotive communication system upgrades, and domain controllers, and he believes that these three trends will continue to increase the amount of automotive semiconductors in the future.
Samsung: planning a new automotive chip factory
Samsung is also one of the beneficiaries of advanced process automotive chips. Among them, Amba to smart cockpit as the main battlefield of the 5nm CV5 chip, and following the Tesla HW 3.0 processor 7nm HW 4.0 orders are built by Samsung foundry.
In April 2021, in order to alleviate the shortage of chips, Samsung helped Telechips Semiconductor Design in South Korea to successfully test-produce 32nm automotive-grade MCU, which is the first self-developed automotive-grade MCU product in South Korea.
UMC: take the key certification, through the first tier of major manufacturers
For the layout of automotive chips, UMC emphasizes that in the company's operational planning, automotive chips are indeed one of the focus areas and spindles for the layout of special processes.
UMC's official website shows that its automotive process covers 0.5μm to 22nm, including logic, high-voltage process, BCD process, embedded non-volatile storage and MEMS technology for intelligent cockpit, ADAS, body control, infotainment and other applications.
The supply chain pointed out that UMC has obtained Infineon, NXP, Texas Instruments, Microchip Technology and other automotive chip makers large orders, these customers in the global automotive chip market share of more than 30%, UMC shouted "how much capacity are received. UMC has never commented on customers and orders, it stressed that the automotive market demand is still very strong, not only this quarter capacity utilization rate of more than 100%, continued to exceed demand, is expected to the end of this year, supply and demand will also continue to maintain such a strong situation.
Microchip: Expansion of automotive chip production capacity
In 2021, Gracore's automotive chip shipments have more than doubled from 2020, but this is still not enough to meet the market demand. Gecore plans to invest more than $6 billion in global factories to increase production for automotive chips, but it will take time to see results.
Powerchip: Automotive market will be the next mainstream trend
According to the power accumulation electricity chairman Huang Chongren revealed, and TSMC president Wei Zhejia discussed the topic of automotive semiconductor business opportunities, the two believe that automotive chips are less than 14nm advanced process, most or more than 28nm mature process, so we all have opportunities, and bring more business opportunities than cell phones. Huang Chongren, the future of the car in AI, automation applications will be more and more, the automotive market will be the mainstream trend to drive the next wave of chip design and foundry.
Hua Hong: advancing into the automotive grade chip market
In June 2021, Hua Hong Semiconductor and Jiaxing Star Semiconductor held the "Hua Hong Semiconductor Automotive IGBT and 12-inch IGBT mass production ceremony" and signed a strategic cooperation agreement, representing the full-scale entry of Hua Hong Semiconductor into the automotive chip market.
JINHE: Accelerated Automotive Certification
In the first quarter of 2021, JHD started to cooperate with some high quality customers to develop automotive chips. By the first quarter of 2022, JHD has achieved mass production of 110nm automotive center console display driver chip, mass production of 90nm automotive monitoring image sensor chip, and mass production of 90nm automotive control area AMOLED LCD knob display driver chip.
Looking ahead, Epistar will promote the development of automotive-grade chip foundry business from itself and the industry chain. First, we will continue to promote chip development and automotive certification, and cooperate more extensively with more customers in the field of automotive chips, including touch display integrated automotive chips, automotive fingerprint recognition chips, automotive microprocessors and automotive power chips.
Currently, Epistar has completed AEC-Q100 certification for 90nm display driver chips and 110nm display driver chips; in addition, AEC-Q100 for 55nm display driver chips, 110nm microprocessor chips, 110nm power management chips and 90nm image sensor chips will be completed in 2022.
Morgan Stanley in the "automotive electronics full speed ahead" as the title of the latest report stressed that will continue to be bullish on the automotive electronics market, the market size is expected to reach $ 287 billion in 2025, with an average annual compound growth rate of 12%, much higher than the smartphone and PC only 3% level.
Overall, the strong market demand for automotive chips may become a major driver to support the continued growth of the global semiconductor industry, and is one of the next key layout tracks for foundries.
Outside of automotive, what other tracks deserve attention?
In the global overall economic visibility is low, electronic product consumption power has not seen an upturn in the market conditions, fab process diversification and unique development has become the key to foundry operations.
In the face of the current market situation, many companies in charge of the earnings presentation have expressed their views on the evolution of future production capacity trends: despite the weak demand for consumer electronics, but the east is not bright, such as HPC, automotive chips, industrial control, AIoT and other areas are still in a hot situation, the semiconductor industry's "Song of Ice and Fire "is being staged.
TSMC: 5G and HPC market growth is strong
To global foundry leader TSMC, for example, its operating income from a variety of sources, and does not simply rely on consumer electronics. TSMC said: "From the recent boom, 22Q2 growth mainly benefited from strong demand from HPC, IoT and automotive. Looking ahead, 5nm and 7nm will continue to contribute to demand."
An investor at the conference asked, "Do you think the inventory adjustment cycle through the first half of 2023 will be like 2018-2019?" TSMC argued, "This time is also a typical cycle adjustment, and the inventory adjustment may last for several quarters through the first half of 2023, but this time it will not be like the adjustment of the Great Recession cycle like in 2018."
UMC said that the weakness in consumer electronics will be offset by other strong demand as demand for automotive, industrial and servers remains stable, with one elimination and one increase.
Samsung Electronics: special process and advanced process "two blooming"
Korea Economic News reported that Samsung Electronics, which is committed to developing the most sophisticated semiconductor foundry process, has adjusted its strategic direction to expand its investment in "traditional and specialty" processes.
In simple terms, semiconductor foundry processes are broadly divided into cutting-edge, traditional and specialty processes. Traditional processes are the "standard" processes, or "old processes", born from the process of technology development by semiconductor foundries from the past, such as 10nm, 14nm, 28nm, 65nm and 180nm, while specialty processes are customized improvements of traditional processes for specific customer companies.
In the advanced process section, Samsung believes that with the significant growth of the HPC, AI, 5G/6G connectivity and automotive application markets, the demand for advanced semiconductors is increasing dramatically, making innovation in semiconductor process technology critical to the business success of its foundry customers. To this end, Samsung has highlighted its commitment to make its most advanced process technology, 1.4 nm, available for volume production in 2027 and plans to more than triple its advanced node capacity by 2027.
Overall, Samsung Electronics' semiconductor foundry division plans to triple in size by 2027, with mobile remaining the largest segment, but the HPC/Automotive market growing 3.5 times to almost the same size. Non-mobile applications, including HPC and automotive, are expected to exceed 50% of its foundry portfolio by 2027.
Hua Hong: Promote diversified development strategy
Hua Hong's financial results reveal that in a market environment where demand is structurally differentiated, Hua Hong will steadfastly advance its diversification strategy by laying out more advanced "specialty IC + power device" processes into "8-inch + 12-inch" production platforms to provide more comprehensive and better quality products for global customers. We will provide more comprehensive and better quality specialty process foundry technology and services to our global customers.
To further strengthen the company's leading position in the specialty process area and to capture opportunities in emerging markets such as automotive electronics and new energy, Hua Hong will continue to focus on non-volatile memory, power devices, analog and power management, logic and RF, and other specialty process platforms to provide superior product solutions to global customers," said Junjun Tang, President and Executive Director of Hua Hong. In addition, some foundries are also focusing on the development of new products and services.
The third generation has the characteristics of high power, high frequency and low loss, and has certain advantages in power devices. With the development of electric vehicles, the development of wide band semiconductor is very fast and the popularity is very wide. From the current layout, TSMC, UMC, World Advanced and other major foundries have joined this highly competitive third-generation semiconductor battle.
The current UMC, the world advanced have been to 8 inches, I believe that in the near future, foundries in the third generation of semiconductor field will pay one after another, this industry will also become more exuberant.
Write in the end
After a year of "lack of core up", the trend of supply and demand in the entire semiconductor industry has shifted from a comprehensive shortage to a structural shortage.
Consumer electronics, cell phones and other stock markets have entered the de-stocking phase, and in the face of customers' big moves to amend wafer casting orders, foundries have slowed down expansion progress, while actively adjusting product mix to automotive, industrial control, 5G, IoT and other applications with more stable pulling power.
It can be seen that, in the global overall economic visibility is low, electronic product consumption power has not seen an upturn in the market conditions, foundry process diversification layout, dynamic adjustment of product and capacity structure and unique development has become the key to the development of foundries, but also in the big wave through the fog of the industrial cycle, seeking new growth curve of the know-how.
