Semiconductor foundry, Intel will super Samsung?

Affected by the shortage of global chip supply last year, the industry's attention to semiconductor foundry has increased again. Recently, Intel has made frequent moves to strengthen the foundry business. Intel CEO Pat Kissinger said that the current semiconductor foundry market is about $100 billion and is expected to continue to grow rapidly until 2030. At present, the global semiconductor foundry head enterprises are mainly TSMC and Samsung, and with the strong intervention of Intel, the competition will become more intense.

Intel's three arrows are fired in a row to strengthen the foundry business

According to a recent report from IC Insights, global semiconductor capex reached a record $152 billion in 2021, with the company accounting for 35% of capital expenditures in the company, making it the largest portion of capital expenditure in major products/categories. This shows that the importance of foundry in the entire semiconductor industry has further increased, while attracting more and more key investment from enterprises.

Recently, Intel has fired three arrows in a row to strengthen the foundry business. On February 15, Intel Corporation announced the acquisition of High Tower Semiconductor, an Israeli foundry, for a total of approximately $5.4 billion. After the transaction is completed, Tower Semiconductor will be integrated into Intel's Foundry Services Division (IFS). Also on Feb. 15, Bob Brennan, vice president of customer solutions engineering at Intel's Foundry Services Division, said intel would open up x86 soft and hard licenses to chip developers. Bob Brennan explained that users will be able to build chips using licensed Xeon cores and match them to AI accelerators based on RISC-V or Arm IP. X86 authorized third-party design and development business has not yet a precedent, the specific operation, how to charge, there is no clear information, but this move will further promote the development of Intel's foundry business, x86 authorized user products will be manufactured in Intel factories.

At Intel's 2022 Investor Conference on Feb. 18, Intel also announced that the Foundry Services Division is assembling a dedicated automotive team to provide automakers with an open central computing architecture, an automotive-grade foundry platform, and help automotive chipmakers transition to advanced process and packaging technologies.

The continuous release of the above measures shows that Intel's attitude in the field of foundry is serious, and the determination to develop the foundry business is great.

In recent years, Intel has been very active in investing in expansion. In January, in Ohio, Intel launched a $20 billion new plant to build two advanced-process fabs. Intel is also interested in developing Ohio into Intel's largest production base, with a total investment of up to $100 billion in the future, and there will be 8 factories after all of them are completed. With such a huge plant construction plan, it is obvious that the production capacity cannot be completely used by itself, and it is difficult to efficiently share the huge cost of developing advanced processes with limited product variety and scale of the IDM model. Whether the next 6 fabs can be built depends on the development of the foundry business.

As Kissinger pointed out at the investor conference when he responded to why Intel is entering the foundry business: "IDM makes IFS better, ANDS makes IDM better." "Intel provides billions of dollars in R&D funding and strong manufacturing capabilities for the foundry space, while IFS helps Intel build richer IP and better PDK and EDA tools.

The three giants develop foundry, each with its own challenges

TSMC and Samsung Electronics are also making efforts in the field of semiconductor foundry. In 2022, TSMC's capital expenditure will reach $40 billion to $44 billion, an increase of about $10 billion over last year. According to DIGITIMES Research statistics, in the global foundry market in 2021, TSMC's market share will reach 59.5%, and it will almost completely dominate the 7nm/5nm segment. Samsung Electronics is also actively developing the foundry business of logic chips. In 2021, Samsung's foundry business revenue was $6.29 billion, an annual increase of 23.6%.

Although the three major manufacturers have shown their determination to develop semiconductor foundries, the challenges cannot be ignored. Semiconductor expert Mo Dakang pointed out that there are many challenges for Intel to develop foundry, such as lack of foundry experience, how to balance the traditional high-margin IDM business with low-margin foundry business, and how to face the strong customer stickiness of automotive chip manufacturing. "One of the biggest difficulties is how to give customers the confidence to hand over orders to Intel as IDM. This is the most serious question for Intel. Mo Dakang said.

Another Samsung, which comes from IDM, which currently also provides foundry services, has a similar problem. Zhu Jing, deputy secretary-general of the Beijing Semiconductor Industry Association, believes that due to the identity of IDM, Samsung's understanding and investment in customer service are not in place, although it has paid tuition fees for so many years, but it has not yet seen the hope of narrowing the gap with TSMC. From Samsung, it can be seen that the transition from IDM to wafer foundry is not easy.

TSMC is also facing more and more challenges in the process of building factories overseas. A few days ago, it was reported that the progress of TSMC's construction of semiconductor factories in the United States was delayed by half a year after the original plan. TSMC originally planned to start moving production facilities to the new plant in September 2022, but this plan will be postponed until February or March 2023. In contrast, TSMC's factory in Taiwan or TSMC's Nanjing plant has a much smoother construction progress.

As TSMC becomes more and more powerful, it develops only in a corner of Taiwan, and there are many disadvantages, such as frequent earthquakes in Taiwan, lack of water and electricity, and the supply of talents has also reached a bottleneck period. Not to mention, Taiwan is not a semiconductor market with high demand. As TSMC's strength continues to grow, expanding its production bases to other regions is a step to be taken sooner or later. However, in the process of overseas expansion, it is necessary to carry out a lot of coordination with the region where it is located, and many problems will be encountered to be solved. Sheng Linghai, vice president of research at Gartner, said: "In the future, TSMC's factory in Germany will face similar challenges, first of all, it is difficult to imagine, how can the eu's large subsidies be given to TSMC?" ”

The pattern of the semiconductor foundry head camp is still relatively stable

Among the many challenges, the competition for the 2nm/3nm process may become the first major challenge faced by the three major semiconductor manufacturers in the future. Driven by 5G, cloud computing, and big data-related applications, the market demand for high-performance, low-power chips will continue to grow in the next few years, and it will be more necessary to support advanced processes. 2nm/3nm may become a "winner" of the three major semiconductor manufacturers in the field of foundry.

According to the plan, Samsung Electronics will start producing the first batch of 3nm chips in the first half of 2022, and the second generation of 3nm chips is expected to start production in 2023 and launch a 2nm process in 2025. TSMC's plan is to mass-produce the 3nm process in the second half of 2022, and the 2nm process will achieve mass production in 2025. In Intel's technology roadmap, the Intel 4, equivalent to 7nm, is expected to come into production in the second half of 2022. The Intel 3 will have more features and an approximately 18 percent improvement in performance per watt, with production expected in the second half of 2023. The Intel 20A, which kicks off the Amy era with two technologies, RibbonFET and PowerVia, will deliver approximately 15% performance improvements per watt and will be operational in the first half of 2024. The Intel 18A will achieve an approximately 10% improvement in performance per watt and is expected to come into production in the second half of 2024. It can be seen that the three parties are very tight in advanced technology.

In view of the future development, Mo Dakang believes that with intel's strong intervention, the head camp in the foundry field may present a new pattern of TSMC ranking first, Intel ranking second, and Samsung third. TSMC's advantages in the field of foundry are very obvious, and it is difficult for anyone to shake in the short term. Although Samsung currently ranks second in the foundry market, Samsung is also the world's largest supplier of memory chips, which requires Samsung to maintain a large amount of capital expenditure in the storage field to maintain its leading position, and it is difficult to have greater strength to invest in logic chip foundry. Intel has a strong strength in logic chip manufacturing, and its annual R&D investment ranks first among global semiconductor manufacturers. At the same time, Intel also has a strength not weaker than TSMC in packaging technology, although it is temporarily lagging behind in the front-end process. Therefore, once Intel is determined to enter the foundry market, the development potential cannot be ignored. "Apple has previously worked closely with Intel on baseband chips. Once the 2nm/3nm process is developed, the future Intel foundry also has the strength to compete for Apple orders. Mo Dakang stressed.

DigitIMES Research recently released a research report that the industrial order and division of labor model of the wafer foundry industry will maintain a fairly stable pattern from 2022 to 2025.