The global chip shortage is still spreading, and the price increase is rising one after another. Even in the digital age, there is no electronic device that does not require analog chips, which are a key component in many of today's devices and are the focus of the shortage. On the one hand, the supply imbalance caused by the suspension of production caused by the epidemic and natural disasters, on the other hand, the demand for new energy vehicles and 5G is expanding faster than the reaction speed of chip manufacturers. According to IHS Markit's analysis, analog chips are likely to become a major constraint on automotive production over the next three years, following the 2021 MCUs. As a result, a number of analog chip manufacturers began to expand production and invest in a big way to cope with future development needs and maintain a leading position.
Analog chip manufacturers generally adopt the IDM model, preferring to design, manufacture and sell their own chips. Since the historical cyclical problems of booms and busts are notorious in the analog industry sector, analog chipmakers have been wary of expansion. But now, we're seeing that basically all analog chip manufacturers have begun a significant expansion move.
According to ic insights, the top ten analog chip manufacturers in 2020 are TI (Texas Instruments), ADI (Airnold), Skyworks (Sijiaxun), Infineon (Infineon), ST (ST), NXP (NXP), Maxim (Maxim), ON Semi (ON Semi), Microchip (Microchip), Renesas (Renesas). The 10 companies combined analog IC sales of $35.4 billion, accounting for 62 percent of the total analog IC market last year of $57 billion. In addition, Toshiba is also a large analog chip manufacturer, and its investment plan is also very clear.
Texas Instruments spends $3.5 billion a year
Texas Instruments recently released a capital expenditure plan for the next few years, and by 2025, Texas Instruments will spend about $3.5 billion a year on chip manufacturing, which represents more than 10% of TI's annual revenue for the year, according to Wall Street's current forecasts. Over the past decade, Texas Instruments' average R&D expenditure has accounted for 5% of annual revenue. From 2026 to 2030, it will continue to invest in its manufacturing sector, reaching 10% of its annual revenue. TI's explanation is that it sees more growth prospects and therefore needs more production capacity. TI aims to achieve a consistent annual revenue growth rate of 7% over the next decade or so, and a growth rate of 4% between 2010 and 2020.
Texas Instruments will expand the number of plants to about four, mostly at Sherman, and the company plans to complete the construction of the first two plants this year, with the first plant expected to go live in 2025. Construction of the third and fourth plants will begin between 2026 and 2030. Texas Instruments said it will have eight facilities to produce 300mm wafer technology when it completes its Sherman, Richardson and Lehigh manufacturing plants in Utah and another in Malaysia.
Earlier last year, Texas Instruments also acquired Micron Technology's 12-inch wafer fabrication plant in Lehi, Utah, for $900 million. The plant was originally planned by Micron Technology to produce 3D Xpoint memory chips, and due to Micron's exit from the 3D Xpoint business, Texas Instruments plans to retrofit it to manufacture analog and embedded chips for 65nm and 45nm processes.
ADI expanded production to hire hundreds of people
ADI's revenue grew more than 30 percent last year to $7.3 billion. So, like many other chipmakers, ADI is ramping up production to meet huge demand. ADI has its own facilities in Ireland, Massachusetts, Camas, Washington, and the Tektronix campus near Beaverton. Now, ADI is hiring for the expansion of its plant.
The Oregon plant, which ADI acquired from Maxim in 2020, is also its largest. In December last year, ADI completed a major expansion, adding engineering laboratories, failure analysis laboratories, and engineering test platforms. ADI said it plans to increase Washington County's 700 employees by nearly 40 percent over the next two years. Hiring has already begun and will continue through 2024, he said, and ADI will add positions for operators, maintenance technicians and engineers in the later recruitment phase.
The Camas facility was the result of ADI's 2016 acquisition of Linear Technology, where ADI employs approximately 350 people and expects to add 50 more as production increases. The company is hiring operators, technicians and engineers.
Skyworks power WiFi
Skyworks has had significant success with filters, with very strong revenue growth from integrated devices with built-in BAW filters. Now, Skyworks is seeing the role of filters in WiFi systems. A key to Skyworks' Broad Markets strategy is to raise the bar for overall WiFi performance. In this regard, Skyworks has its own Gallium Arsenide technology, TC-SAW (Thermally Compensated Surface Acoustic Wave Filter), Standard SAW, Body Acoustic, Assembly and Testing. In addition, Skyewokrs is making the necessary investments in Mexicali for its back-end operations, supporting advanced packaging and testing.
Infineon's new power semiconductor plant is opened
Infineon began planning to build a 300 mm thin wafer power semiconductor plant in Villach, Austria, with an investment of approximately 1.6 billion euros, in 2018, and officially opened the plant on September 17, 2021. This is Infineon's second 300mm fab for power semiconductors. The first wafers have been shipped. The first phase of the expansion aims to meet the needs of the automotive industry, data centers, and renewable energy generation such as solar and wind energy. According to the Financial Times, Infineon recently said that it will spend another 2.4 billion euros to expand its business to meet demand, and will gradually increase production capacity in 4-5 years. The new Villach plant will be integrated with the 300mm production plant in Dresden, featuring synergy and resiliency across both locations to enable virtual production.
STmicroelectronics doubled its investment
At its fourth-quarter 2021 earnings report, ST said it currently has a backlog of order visibility of about 18 months, well above ST's current and planned 2022 production capacity. And this year's automotive chip production capacity has been sold out. ST's capital expenditure plans this year will reach approximately $3.4 billion to $3.6 billion, nearly doubling the $1.8 billion investment in 2021, primarily to further increase capacity, including the construction of the first line at the Agrate 12-inch fab in Italy.
In July 2021, STmicroelectronics announced that its plant in Norrköping, Sweden, will manufacture the first 200mm (8-inch) silicon carbide (SiC) wafers that will be used to produce prototypes of next-generation power electronic chips. According to STMicroelectronics, 200mm wafers increase capacity compared to 150mm wafers, nearly doubling the area available for manufacturing integrated circuits, and qualified chip production is 1.8-1.9 times that of 150mm wafers.
The NXP sealing plant was put into operation
In September 2021, the first phase of the NXP Semiconductors (Tianjin) Integrated Circuit Testing Center was completed and put into operation, which mainly conducts packaging and testing. The packaging and testing company was acquired by NXP from Freescale in 2015, and after years of development, its packaging and testing plant production capacity is close to saturation, and there is not enough production space to further introduce new production equipment, form the production capacity scale of the factory, and undertake the production of new products in the future.
In addition, in the middle of last year, according to foreign media reports, the chip foundry company UMC announced that it would join hands with a number of customers around the world to expand the production capacity of the 12A plant, and the participating customers would pay the deposit in advance at the agreed price to ensure the long-term production capacity after the expansion. Among them, NXP has reached a 6-year chip foundry agreement with UMC.
ON Semiconductor's new strategy
Last year, ON Changed Names and Established the Company's New Strategy: Smart Power and Smart Sense. The transformation from the traditional IDM model to the more flexible Fab-Liter model will adopt a more flexible manufacturing route and strategy, and will withdraw from the undersized fabs in the future, focus on 300mm wafer capacity, and will improve the flexibility of the general packaging back-end plant.
According to the financial report for Q2 2021, 6% of ON Semiconductor's revenue was used as a capital investment. ON Semiconductor said it will increase investment in the next two years, from 6% to 12%, mainly to expand the capacity of 300mm fabs, and then strengthen the SiC supply chain, including final products such as substrate bottoming, as well as packaging. On the fourth-quarter 2021 earnings call, ON semiconductor said it plans to more than quadruple the capacity of its substrate business by 2022 and intends to make significant investments to expand its equipment and module capacity. By 2022, ON Expects its Silicon Carbide Revenue to more than double year-over-year.
In addition, in August last year, ON Semiconductor announced the acquisition of SiC producer GT Advanced Technologies for $415 million in cash and plans to invest in expanding GTAT's research and development efforts to advance 150mm and 200mm SiC crystal growth technologies.
Microchip upgrades plant for $40 million
In January 2022, Microchip announced plans to spend $40 million to retrofit its Colorado Springs semiconductor plant with new technologies, which will add 50 to 75 employees over the next six months, and it will purchase and install new equipment for the plant, shifting from 6-inch wafers to 8-inch wafer production, which will nearly double the number of chips it can produce. The company plans to continue hiring more than 50-75 people over the next six months and another phase of expansion over the next two to five years.
Renesas increases production capacity of automotive MCUs by 50%
Renesas is the world's leading automotive semiconductor leader, with a 20% share of the world's automotive MCUs. On September 29, 2021, Renesas Electronics announced at an operating briefing that it plans to increase its production capacity of in-vehicle MCUs by more than 50% by 2023 (compared to 2021), and will increase the amount of equipment investment, which is expected to exceed 80 billion yen by 2021 and about 60 billion yen by 2022, and the company's current equipment investment amount is about 20 billion yen.
Toshiba invested 570 billion yen
On February 8, 2022, Toshiba held a briefing on possible business strategies after the spin-off of the two companies. The meeting pointed out that in order to cope with the shortage of global semiconductor supply and the expansion of storage demand, Toshiba will invest 570 billion yen in capital investment and research and development within five years to promote the expansion of production capacity and the construction of a stable procurement network.
In terms of production capacity, approximately JPY 260 billion will be invested from 2021 to 2025. Major investments include the expansion of 200mm lines for power semiconductors, the construction of a new 300mm line in Ishikawa Prefecture, Japan, announced on February 4, 2022, the promotion of the operation of existing buildings, and the development plan for 200mm lines for compound semiconductors. In addition, Toshiba plans to increase the production of nearline hard drives at its base in the Philippines, establish a hard disk drive base in China, and expand the manufacturing space for semiconductor manufacturing equipment at its Yokohama plant.
In terms of building a stable procurement network, Toshiba stressed that 80% of semiconductor materials have signed long-term contracts, and the proportion of multi-party procurement has increased to more than 70%.
By 2025, R&D expenses are planned to be about 310 billion yen. We will increase R&D mainly in the three major businesses of semiconductors, HDDs and semiconductor manufacturing equipment.
In the semiconductor segment, Toshiba's entire semiconductor business aims to increase sales from 320 billion yen in 2021 to 370 billion yen in 2025. Toshiba plans to focus on power semiconductors for automotive and industrial applications, and in terms of focusing on power MOSFETs, Toshiba plans to move from fourth to third in global share by 2025.
Among them, the R&D of power semiconductors alone plans to invest 100 billion yen over five years to expand the lineup of silicon power semiconductors, develop efficient packages, and accelerate the development of SiC and GaN products. The company's current main silicon power MOSFETs are the 8th generation, the 9th generation on resistance is reduced by 15%, the 10th generation is 30% lower than the 8th generation, the 11th generation is being developed, which is 40% lower than the 8th generation on resistance, and the number of silicon power MOSFET products will be doubled by 2023. The company's automotive silicon IGBT is currently mass-producing products with a withstand voltage of 750V and 1.2kV, and in order to improve the characteristics of the inverter, mass production of new products with integrated diodes and IGBTs will begin in 2022. The second generation of diode integration products will be produced on the 300mm line, with mass production starting in 2026.
At the same time, Toshiba plans to mass-produce SiC MOSFET products for car chargers in 2024. In the development of GaN devices, Toshiba plans to start offering products that combine GaN and silicon power MOSFETs in 2023. Compared to silicon devices, the product is said to reduce losses by half. It is reported that Toshiba's second-generation product, which only uses GaN to achieve high-speed switching, and the power supply unit volume is about 60% smaller than that of silicon, is under development.
Another business that has stepped up R&D is nearline HDDs, developing new HDD models, where demand for data center/cloud service providers is expanding and is expected to grow at a CAGR of 22% from 2021 to 2030. Toshiba plans to complete a 30T byte machine in 2023, with the goal of recording capacity of more than 35TB in the future.
Then in the layout of semiconductor manufacturing equipment, Toshiba will focus on electron beam mask lithography equipment and epitaxial growth equipment. It is reported that Toshiba's NuFlare Technology has a 100% market share as an electron beam mask lithography system with advanced nodes below 20 nanometers in a single-beam machine. The multi-beam machine "MBM-2000" will be delivered to customers in 2021 and plans to capture a 50% market share by 2023. In addition, Toshiba is developing a new electronic source to obtain higher current and higher brightness to support 2nm, hoping to start shipping by the end of 2023 to meet the development roadmap of customers.
In terms of epitaxial growth equipment, Toshiba expects market growth to be driven by the rapid growth of xEV, SiC used in next-generation communication standards, GaN power semiconductors, and an increase in diameter to 200 mm wafers. The company's SiC and GaN epitaxial growth equipment is a unique method that allows gas to flow vertically downward evenly to the high-speed rotating wafer in the reactor, with low defect density, high uniformity and a high-speed film-forming surface on the film.
Write at the end
There is no short-term solution to the current supply shortage, and the stable supply of wafer capacity is undoubtedly the next point of competition for analog chip manufacturers. But after the expansion, at some point in time, they will have too many products, and if the shortage or price increase cycle ends at some point, analog chip manufacturers should also be prepared for this.
*Disclaimer: This article is original by the author. The content of the article is the author's personal opinion, semiconductor industry observation reprint is only to convey a different point of view, does not mean that semiconductor industry observation endorses or supports the view, if there is any objection, welcome to contact semiconductor industry observation.
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