On March 10, according to Taiwanese media Digitimes, citing IC Design Company, TSMC plans to increase the price of its 8-inch wafer foundry service by 10% to 20%, and the new price will take effect in the third quarter of 2022. As for the 12-inch mature and advanced process, it is still being evaluated.
Since the fourth quarter of 2020, there has been a continuous shortage of global wafer foundry capacity, coupled with the rise in upstream raw materials and transportation costs, followed by major foundries have raised their wafer foundry quotations. Due to the shortage of wafer production capacity of mature processes, this also makes the main mature process of UMC, Lijidian, world advanced and other wafer foundries in the past year to carry out several price increases, the cumulative average increase of up to 20%-30%.
As the world's leading wafer foundry, although TSMC has been more cautious about price increases, industry information shows that due to cost pressure and tight supply, TSMC also increased prices across the board in the fourth quarter of last year, of which advanced processes below 12nm increased by about 10%, and mature processes above 12nm rose by about 20%.
In the face of the shortage of production capacity, although many wafer foundries announced expansion last year, the new production capacity will not be gradually opened until the second half of this year at the earliest. From the current point of view, wafer foundry capacity is still in short supply.
After the price increase of TSMC in the fourth quarter of last year, industry news also shows that UMC, Liji Electric, world advanced and other wafer foundries have also negotiated with customers, and will increase prices again in the first quarter of this year, the increase is expected to be about 8%-10%, and some popular processes will rise by more than 10%. In the first half of this year, the production capacity has all been sold out, and the visibility of orders can be seen in the second half of the year.
Similarly, after the price increase of TSMC in the fourth quarter of last year, in order to ensure the supply of production capacity, apple, AMD, MediaTek, Broadcom, Nvidia, Qualcomm and Intel and other major customers have signed long contracts to plan production capacity in 2022.
According to a survey by the research institute Statista, TSMC's top three customers last year were Apple (25.4%), AMD (about 9.2%) and MediaTek (8.2%).
Among them, in addition to the continuous evolution of the A series chips required by Apple for the iPhone, due to the launch of a number of M series self-developed chips for Mac (the recently launched M1 Utral is also foundry by TSMC) and the replacement of Intel processors, coupled with Apple is promoting the comprehensive self-development of baseband chips and radio frequency (RF) chips (rumors that TSMC has won Apple's 5G related RF chip orders), Apple's capacity demand for TSMC's advanced processes continues to increase. According to estimates, TSMC's Apple-related revenue will still account for more than 25% this year.
In addition to the advanced process being snapped up by large customers such as Apple, TSMC's mature process production capacity is also continuously tight, especially based on the 8-inch wafer mature process production capacity.
At present, the process of many MCUs, power semiconductors, and power management chips is still stuck at 0.25um-0.13um, and the manufacturing cost is relatively low, while the wafer manufacturing production line that provides these processes is basically 8 inches. In addition, since most of the existing 8-inch production lines have been depreciated, this also makes these chips produced on the 8-inch production line, which is more cost-competitive than switching the process to the 12-inch production line. This has also led to an extreme shortage of 8-inch wafer foundry capacity, and design companies have not hesitated to scramble to place orders at a higher price in order to grab production capacity. The first shortage of automotive chips in the fourth quarter of 2020 is mainly because most of the automotive chips are produced on 8-inch wafers.
More critically, since the current 12-inch fab has long become the mainstream, the upstream semiconductor equipment manufacturers have actively shifted their product lines to 12-inch equipment many years ago, and many of the semiconductor equipment required for the 8-inch production line have been discontinued in recent years. If you want to build a new 8-inch fab, or expand the production of the original 8-inch fab, most of them can only wait for the equipment of the 8-inch production line eliminated by other large factories to enter the second-hand equipment market, which also makes the price of second-hand 8-inch equipment remain high for a long time. These factors have hindered the increase in 8-inch wafer capacity.
Although some chip designers and IDMs have a tendency to shift some of the mature process chips originally manufactured on 8-inch wafers to 12-inch wafers, the current mature process based on 12-inch wafers is also very scarce.
In February this year, the world's advanced chairman strategy pointed out that from the trend point of view, many people believe that the lack of production capacity of 8-inch fabs will lead to some products moving into 12-inch fabs, but the 12-inch fab itself is also quite fully loaded, and the downgrading of production of products originally based on 8 inches is not in line with the original plan. Moreover, at present, the 8-inch production line equipment is becoming more and more expensive, and many manufacturers have stopped production, and the 8-inch production capacity is also in short supply. In addition, the shipment of automotive chips on the 8-inch production capacity is growing, especially the semiconductor content of electric vehicles is much higher at present, and it is estimated that there is still strong support for 8-inch factories in the medium and long term, and there is no worry about the impact of a small number of 8-inch products turning into 12 inches.
For TSMC, although it announced the expansion of a 28nm mature process at its Nanjing plant last year and a 28/22nm fab in Kumamoto, Japan, this year, these are 12-inch fabs. TSMC has not expanded its 8-inch wafer capacity for many years, and currently has only 6 8-inch fabs (Singapore SSMC, which holds a small stake, is not counted). In this context, for the strong demand for 8-inch wafers from customers, TSMC can only cope with price increases.
Editor: Xin ZhiXun - Langke Sword