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Jiwei Network reported that a few days ago, SilTerra, a Malaysian semiconductor wafer foundry, announced that it will invest RM645 million (about 150 million US dollars) to expand production to increase its annual production capacity by 20%, and it is expected that the new capacity will be deployed in early 2023.
Since the new shareholders completed the acquisition of SilTerra in July last year, the company has successively introduced high-voltage BCD and silicon on insulator special process packages, and signed new large-scale long-term contracts with downstream customers such as Jichuang North and Yili Technology, and the overall production and operation appearance can be called a new look.
SilTerra, which started earlier than SMIC, also had a highlight moment of ranking among the world's top ten foundries, but in most of its business stages, the company has been plagued by the lack of management of state-owned shareholders and the thin ecology of local industries, and it is estimated that the loss of National Treasury Holdings in Malaysia on the project has accumulated to RM8 billion, claiming to be the country's second largest "white elephant project" after Malaysia Airlines.
Before the sale to a private consortium, SilTerra's annual revenue hovered around $100 million, and the audit firm issued an opinion pointing to the low yield of the company's 8-inch wafer production line and the large room for improvement in operating costs.
It is worth mentioning that according to its revenue level and the company's strange statement about the expansion of production - "from 8.3 million mask layer to 10 million layers", based on public information such as TSMC's monolithic 8-inch wafer requiring about 30 layers of mask preparation, Huahong 8-inch wafer single chip price of $400 as the basic estimate, SilTerra's actual output before the acquisition may only be about 20,000 pieces of 8-inch wafer per month, far lower than its design capacity of 46,000 pieces per month, the expansion investment of new shareholders. Instead of adding a new production line, maintain and renovate the existing 8-inch production line that has clearly aged.
The Malaysian government that has tried to sell SilTerra many times can be said to have pointed out at an ideal time, if it is not the current environment of continuous scarcity of wafer production capacity, SilTerra, which is difficult to return, is afraid that it will be difficult to find capable capital to take over, and it is difficult to escape bankruptcy liquidation and sell the fate of equipment.
SilTerra's resurrection is a microcosm of the current improvement of the survival status of the global second-tier fabs, in addition to the "leg" enterprises such as SilTerra, the expansion of the slightly stronger "waist" fab is more obvious, and The Eastern Hi-Tech has announced that on the basis of full load, it will continue to tap the potential to increase the production capacity of 9,000 8-inch wafers per month, and the new 8-inch or 12-inch production line is also brewing.
The X-FAB financial report also showed that its annual capital expenditure was nearly $200 million to renovate the existing plant and increase the capacity of the 8-inch production line.
Polarization
The subprime mortgage crisis has divided the semiconductor industry into two eras.
Before the 2008-2009 financial crisis, in the development of advanced processes such as 45nm at that time, enterprises in the United States, Europe, Japan and South Korea and China have taken active actions, forming a number of active technology alliances such as Crosses2 and NanoCMOS, and many second-tier fabs seem to be expected to continue to "follow" the strategy (fastfollow) through low-cost technology and products, maintaining the position of half to one generation after the first-line level, sharing the results of the former's technology investment.
At that time, SilTerra also invited Qiu Ciyun to sit down, and once proposed a medium-term plan to acquire an 8-inch production line and build a 12-inch 65-nanometer advanced process.
However, after the subprime mortgage crisis, many small and medium-sized fabs, which were still quite active before, were hit hard and were busy shrinking the front and adjusting their business to ensure survival as the first priority. Head fabs, especially in Asia, are bucking the trend and boldly investing in next-generation process production capacity. Such a contrast in capital expenditure, the "big bang" of superimposed personal mobile terminals, the so-called "Moore Second Law" that doubles investment in new fabs every four years, and the combined force of the three major factors, while reshaping the global pattern of the semiconductor industry, also cut this industry in one fell swoop, cutting out the two worlds of 12 inches and 8 inches.
In the 12-inch world, the sun and rain from capital and the market are generous, encouraging fabs to constantly challenge the limits of Moore's Law, and small players in the club often have access to the necessary resources to navigate their niche markets.
In the world of 8 inches or even lower process, commoditized (commoditize) standards, so that fabs can often only be passive recipients of market conditions, the downstream market is also uncertain, first-line manufacturers can not see, can not eat the residue cold, may overflow (overflow) to the second-tier manufacturers. Under such a market ecology, most of the second-tier fabs are in the low-margin operating state of "hunger and fullness", and single manufacturers such as SilTerra, which lack professional operation capabilities, even face long-term losses.
The "rely on the sky to eat" of the forced survival state, but also make the small manufacturers of business decisions more conservative, cautious about business expansion, in the unfavorable years, often voluntarily or forced to sell production lines to the advantages of the manufacturers. According to statistics, in 2009-2018, more than 100 6-inch and 8-inch fabs around the world closed, of which 70% were located in the United States and Japan.
The second-tier fabs that are still in operation, especially those that stay in the process of 200 mm (8 inches) and below, seem to have completely "confessed to lying flat", at present, the annual fab equipment expenditure has reached the level of 100 billion US dollars, and the 8-inch equipment expenditure scale is only about 4 billion US dollars, but it is a "fraction" and "head" of the market.
There is not much time left for second-tier manufacturers
The existence of the 8-inch fab has gradually changed after 2016.
At the beginning, the capacity utilization rate increased, and the demand from categories such as power management, display drivers and MCUs increased significantly, represented by Chinese mainland enterprises, and gradually began to build new factories and new lines. Next, as the production capacity reaches full load and continues after 2018, the market supply and demand pattern reverses, and the operating performance of the 8-inch fab generally improves, whether it is to update the existing production line to increase production capacity, or to increase the willingness to invest in new upstream equipment, according to the second-hand equipment dealer SurplusGlobal, in early 2018, there was a demand for 2,000 8-inch fab production tools, but there were only 500 units available for sale on the market at that time, and lithography machines were particularly scarce.
Many customers with urgent needs have to spend high prices to purchase equipment from the original factory, and even the phenomenon of 8-inch equipment price-to-12 inches, and the transformation of 12-inch machinery and implements to adapt to the 8-inch production line.
(The rise of the automotive and industrial markets brings new demand increments to 8-inch fab products)
The reason for this change, on the one hand, is the growth in demand for some product categories mentioned above, and the rapid growth of the automotive semiconductor market, which has further boosted the demand for 8-inch fab products; on the other hand, the favorable investment and financing environment after the promulgation of China's "National Integrated Circuit Industry Development Promotion Outline" has also spawned the impulse of mainland enterprises to actively develop fab production capacity.
Marked by the successful restructuring of SilTerra, the favorable environment that has lasted for more than 6 years since 2016 has allowed the second-tier manufacturers who have been "locked" in the 8-inch business to support themselves from the lying flat state, according to the global 200 mm (8-inch) fab outlook of the analyst agency SEMI, it is expected that 216 200 mm fabs will be put into operation in 2022, and the capacity and number of manufacturers have surpassed the peak of 2007 before the subprime mortgage crisis.
Considering that the bottleneck of equipment and material supply is difficult to alleviate, the supply of 8-inch wafers is in short supply and may continue for several years. While this rare boom cycle helps second-tier manufacturers get out of difficulties, how to further develop has also become a problem in front of manufacturers, and the time to answer this topic is not generous.
At present, in addition to expanding the scale of operation through epitaxial mergers and acquisitions or internal investment, many enterprises have begun to seek innovation in business models and product positioning.
Skywater, a start-up foundry in the United States, is an example of business model innovation, the company is very shrewd to catch up with the United States "independent controllable" semiconductor supply chain trend, circle a piece of overseas head enterprises are difficult to set foot in the self-reserved land, while creatively using electron beam lithography to achieve 45-inch wafer process technology, combined with the agile service tool chain of scientific research institutes and small and medium-sized chip design companies, forming a distinct differentiated competitiveness.
More companies like SilTerra have seen a shift from "more moore" to "more than moore" positioning, abandoning the illusion of chasing advanced processes in logic and storage products and turning to deep value in areas such as featured processes and compound semiconductor materials.
Overall, deeply hurt by the financial storm, once recognized as the mainstream business and technology trends, will be in the marginal market "fend for themselves" of the second-line fab, but more than a decade later in a fiery "chip storm", regained the space for upward development, second-tier manufacturers to survive and develop the efforts, may also be like the subprime mortgage crisis of the year, the current chip fever, shaping a milestone in the transformation of the industrial pattern. (Proofreader/Rakukawa)