SEMICONDUCTOR INDUSTRY UPDATE
April 2017
McIlvaine Company
TABLE OF
CONTENTS
China's
Tsinghua Unigroup Invests in Memory Chip Fab
Intel
Corporation Completes Fab 42
GlobalFoundries Plan for Chip Plant in China
Micron to
Establish its Site for DRAM in Taiwan
To attract engineering talent, it is also spending billions
of dollars to develop an IC International City, which will have bilingual
schools and special housing for foreign workers. The company didn't give any
timeline for chip production.
After failing to
buy influence and insight from American memory chip makers, Tsinghua Unigroup,
the national champion for China’s aggressive push into semiconductors, said that
it would build a manufacturing plant for its own technology.
The move is the latest and most expensive twist in a
government-supported plan to replace over $200 billion in semiconductor imports
with Chinese-made chips. China is current limited in its ability to supply
memory chips for its vast electronics industry, which is brimming with
inexpensive smartphones and other low-end devices.
In an announcement, Tsinghua divulged plans to build a $30
billion memory chip factory in Nanjing, China. To start, the company will invest
$10 billion to construct the factory and produce its first 100,000 chips. The
company didn’t mention any production timeline for the plant.
A state-controlled firm, Tsinghua is viewed as the public
face of China’s strategy to become a semiconductor superpower. The company spun
out of Tsinghua University, whose alumni include current President Xi Jinping
and other top government leaders. It also once employed Hu Haifeng, the son of
the former president Hu Jintao, as its ambassador to the Chinese Communist
Party.
Tsinghua became the country’s largest chip maker after it
bought Spreadtrum Communications and RDA Microelectronics, two of China’s
largest mobile chip firms, in 2013. Tsinghua’s chairman Zhao Weiguo has pledged
to invest $47 billion to become the world’s third largest chipmaker by 2020.
The new factory will dovetail with other memory chip
projects connected to Tsinghua. The Chinese chip foundry XMC is using government
funding to build a $24 billion memory chip factory in Wuhan. XMC is owned by a
holding company, Yangtze River Storage Technology, which itself is controlled by
Tsinghua.
Headed by a former executive at Semiconductor Manufacturing
International Corporation, XMC has previously worked with Spansion to produce
several types of flash memory. Spansion merged with Cypress Semiconductor in
2015.
The Nanjing factory will produce NAND chips, which are
vital for everything from storing photographs in smartphones to playing videos
on laptops. It will also make 3D NAND chips with layers of memory stacked in
three dimensions to improve storage capacity.
Tsinghua also said it would install tools for making
dynamic-random access memory, or DRAM, which can access data faster than NAND
but loses it when the power is turned off. DRAM is mostly used as main memory in
smartphones to set top boxes to servers.
Tsinghua will start construction after several failed
attempts to buy American chip insight. In 2015, it placed a $23 billion bid for
Micron Technology, who rejected the offer because it was unlikely to be approved
on national security grounds. Most analysts warned that such a large deal would
be blocked.
For a similar reason, a subsidiary of Tsinghua’s holding
company last year pulled out of a $3.78 billion deal to acquire 15% of Western
Digital, one of the biggest makers of hard disk drives and now the owner of NAND
technology through its acquisition of SanDisk.
The panel that reviews such deals is known as the the
Committee on Foreign Investment in the United States, or Cfius. Over the last
two years, it has increasingly blocked Chinese technology deals and is
protective of advanced chips that can be used in defense systems and
supercomputers for things like gene sequencing and designing nuclear weapons.
And earlier this month, a White House panel of
semiconductor experts advised lawmakers to strengthen controls on China’s access
to chip technology. In a report, the panel said that Beijing harmed American
innovation by advising domestic manufacturers to only use Chinese chips and
forcing foreign chipmakers to exchange technology for market access.
The White House report also repeated accusations that China
distorted the chip market by artificially reducing the price of computer chips,
using the same tactics it had to subsidize the markets for aluminum and solar
panels. The country has saved around $150 billion to spend on acquisitions and
manufacturing projects.
Memory chips could be especially vulnerable to China’s
intervention. Because memory chips are largely interchangeable, their prices –
and the fortunes of companies like Micron and SK Hynix – shift based on supply
and demand. In that way, the memory chip industry is not unlike markets for
cheese and steel.
As regulators have struck down deals for memory technology,
Chinese companies have worked to lure international talent. In one of the most
significant industry coups, Tsinghua hired Charles Kau, the former chief
executive of Taiwan’s Inotera Memories, as its global executive vice president
in 2015.
To attract chip engineers, Tsinghua said that it would
invest around $4.35 billion to develop what it called an "IC International City"
in Nanjing. The industrial area will include bilingual schools and housing for
foreign workers and their families, in an example of the special rights that
Beijing gives to chip makers.
It remains to be seen whether Tsinghua can significantly
dent the memory chip market, but it will have many reminders of its competition.
Foreign companies are also expanding their chip factories in China. South
Korea’s SK Hynix is making a $800 million upgrade to its DRAM fab in Wuxi. Intel
is converting its processor factory in Dalian over to memory chips, which could
cost up to $5.5 billion over the next three to five years.
QuantumClean and ChemTrace unveiled the world's most
advanced semiconductor chamber parts cleaning, coating and analytical facility
in Tainan, Taiwan. This plant is the company's 18th global facility, the second
in Taiwan. Quantum Global Technologies' facilities, in 13 semiconductor
manufacturing regions around the world, clean over 1 million semiconductor
process chamber parts annually — no other cleaner can claim to match these
impressive statistics.
"This plant is 'Smart, Lean, Clean and Green™’,
a first of its kind in its industry. The opening of this advanced facility is
yet another milestone in QuantumClean and ChemTrace's evolution and a
demonstration of our continuous innovation, growth and value generation for our
customers", states Scott Nicholas President and CEO, Quantum Global
Technologies, LLC.
"Lean modular layouts provide unprecedented segregation,
capacity and throughput measured in hours not days. High-purity cleaning
technologies yield Atomically Clean Surfaces™ exceeding requirements
for sub-10nm fab processes. The facility is engineered to significantly reduce
water, chemical and energy usage and waste discharges", explains Dave Zuck COO
and CTO, Quantum Global Technologies, LLC. 17 years ago, QuantumClean had a goal
to become the number one outsourced chamber parts cleaning company to the
semiconductor industry, not only in the US, but worldwide. We accomplished
the goal by: continuously
innovating to help solve customers' process chamber challenges producing the
cleanest chamber parts, as proven through analytical verification being the
first to offer a Certificate of Analysis with cleaned parts taking uncertainty
out of customers' part cleaning process and allowing customers to focus on their
core, profit-making objectives bringing a differentiated service that provides
greater value to our customers than our competition
The Tainan site offers customers the full spectrum of part
cleaning and recoating capability for all fab processes, and is Taiwan's only
cleaning and coating service provider with an embedded microcontamination
laboratory — ChemTrace — with 23 years of expertise in validating part
cleanliness.
ChemTrace is an industry-leading semiconductor laboratory
that provides clients with critical insight into their microcontamination
issues. "Continued expansion of ChemTrace's global footprint with the recent
opening of the state-of-the-art laboratory in Tainan allows regional
semiconductor industry customers direct access to our advanced laboratories for
rapid turnaround and expert analysis", explains Surjany Russell, ChemTrace's
Director of Sales.
"We welcome industry visitors to the QuantumClean and
ChemTrace facility at No. 7 Gongye 3rd Road, Annan District, Tainan, Taiwan to
see the differentiated value that this plant brings to current and future
customers", concludes Mr. Nicholas
Intel plans to complete Fab 42, a semiconductor factory in
Chandler, Arizona, with an investment of more than $7 billion over the next
three to four years. At its peak, the factory will employ about 3,000 process
engineers, equipment technicians, and facilities-support engineers and
technicians. Fab 42 will produce 7 nanometer chips and is "expected to be the
most advanced semiconductor factory in the world".
The announcement was made alongside President Donald Trump
at the White House. Cameras even captured Intel CEO Brian Krzanich offering the
President a gift and explaining how regulatory US tax policies have
"disadvantaged" his business in the past. But, as New York Times technology
reporter Farhad Manjoo and others on Twitter were quick to point out, Intel's
investment in Fab 42 wasn't the result of new federal subsidies or credits.
In fact, the factory, which was originally announced back
in 2011 and largely completed by 2014 was put on hold not because of regulatory
burden, but because of declining PC sales. In the interim Intel shifted
manufacturing focus to existing facilities and waited for the market to recover.
Now it appears Intel is ready to move forward with its original plans of hiring
roughly 3,000 new workers. But by using the oval office as a backdrop, it's
clearly hoping to curry favor with the new president.
Intel isn't alone in using the president as a way to
generate media interest in an existing business deal. In December, Trump gave
Sprint a signal boost when he congratulated the company on its decision to bring
5,000 jobs to the United States. Despite Trump's attempts to take credit for the
deal, it was in fact put together months before he was elected.
Intel also is not the only tech company making moves in
Arizona. Most recently, Uber moved its fleet of custom, self-driving Volvo XC90
SUVs to the state after a tiff with the California Department of Motor Vehicles.
Respected website Semiconductor Engineering recently
published some details about microprocessor giant Intel's next-generation
7-nanometer chip-manufacturing technology.
Citing sources familiar with Intel's plans, the report says
that the company intends to equip its Fab 42 manufacturing plant with equipment
used to manufacture 7-nanometer chips in the second quarter of 2019, with
production shipments beginning "a year later."
Intel's Xeon D processors are manufactured in the company's
14-nanometer tech. Image source: Intel.
It also says that the company's 7-nanometer technology will
be based on the FinFET transistor structure, which Intel first commercialized in
early 2012 with its 22-nanometer manufacturing technology.
At Intel's Feb. 9 investor meeting, the company disclosed
that its high-performance server/data-center processors would be the first
products to utilize the chip company's latest technologies, beginning with its
7-nanometer technology.
This is in stark contrast to Intel's previous strategy,
under which the company would utilize its latest manufacturing technologies to
build personal computer chips first, moving its data-center chips to a given
technology later.
If Intel plans to begin shipping its first 7-nanometer
chips in the second or third quarter of 2020, then based on the company's public
statements, it should introduce its first 7-nanometer server processors in the
second half of 2020.
It's not clear when Intel's first 7-nanometer personal
computer processors will arrive, but the earliest chips would be in early 2021.
Intel's most potent competitor in the chip-manufacturing
world is Taiwan Semiconductor Manufacturing Company (NYSE: TSM). TSMC recently
disclosed that it would begin "risk production" of its 5-nanometer technology in
the first half of 2019, with mass production presumably happening in the first
half of 2020.
TSMC's 5-nanometer technology is likely to be similar in
terms of transistor density (that is, how many transistors a chip designer can
fit in a certain amount of area using the technology) to Intel's 7-nanometer
technology.
Intel recently told investors that it believes that it has
a "three-year lead" over its competitors with regard to the areal density of its
chip-manufacturing technology. Given Intel's reported 7-nanometer
chip-manufacturing plans -- and given what TSMC has said publicly about its
plans -- this claim seems tenuous.
If Intel hits the schedule that Semiconductor Engineering
published, then that would be good for the company's data-center chips, as the
newer manufacturing technology should help Intel build even more compelling
products.
The big risk is one of execution: Intel saw delays in its
14-nanometer technology, and it's seeing delays with its 10-nanometer
technology, so it's reasonable to expect that there is risk to the reported
7-nanometer schedule.
In order to shore up investor confidence in its
manufacturing technology, Intel should provide regular progress updates on the
development of upcoming manufacturing technologies on its quarterly earnings
call.
After Intel and Foxconn said they would build advanced
factories in America, it might have seemed as if the United States were gaining
high-end manufacturing momentum.
But the California-based chip maker GlobalFoundries
announced a $10 billion project in China, showing how the center of gravity
continues to shift across the Pacific.
The new advanced semiconductor factory, in the central
Chinese city of Chengdu, is only the most recent in an array of investments,
often by major multinationals, into China with the support of the Chinese
government. The projects have become markedly more sophisticated, making more
modern microchips, memory chips or flat-panel displays.
The reason for the shift is in part the Chinese government.
In 2013 Beijing announced a major initiative to expand the country’s ability to
produce microchips, which act as the brains of everything from guided missiles
to smartphones. Also driving the companies, according to analysts, are new
guidelines urging Chinese electronics makers to buy chips made in China.
Micron Technology, Inc., a developer of advanced
semiconductor systems, announced that on March 14 it successfully won the
auction for Cando Corporation assets, which will be utilized in establishing a
back-end site for Micron Taiwan. Micron has now completed the title acquisition
process for the new site.
The acquisition includes the cleanroom and tools that are
adjacent to Micron’s existing Taichung fab, bringing the company’s fabrication
and back-end together in one location. The new site will be focused on
establishing a centralized back-end operation.
“This marks a significant step in our plan to create a
center of excellence for leading-edge DRAM in Taiwan,” said Wayne Allan, VP,
Global Manufacturing. “Bringing fabrication and back end together, all in one
location, builds an efficient support structure for end-to-end manufacturing
with quicker cycle times that benefit our business and customers.”
The new back-end site is expected to begin production in
August, and the new integrated center of excellence is expected to bring greater
operational cost efficiency that will benefit Micron’s DRAM business on a global
scale. These cost efficiencies are part of the overall US$500 million of ongoing
operational enhancement opportunities cited at the company’s 2017 analyst
conference.
The strategic acquisition, with a winning bid of US$89.2
million, also highlights Micron’s goal to grow its presence in Taiwan – where it
is the largest foreign employer and investor – from its current
wafer manufacturing function to a broader center of expertise in the global
memory industry. The back-end site will further enhance the company’s strong
presence on the island, which already includes 300mm wafer fabrication
facilities in Taichung and Taoyuan, as well as sales and technical support
offices in Taipei.
The back-end operation will be led by site director Mike
Liang, who joined Micron in November 2016 with more than 35 years of experience
in the semiconductor industry. Having previously served in leadership roles at
Ti-Acer, KYEC and Amkor Taiwan, Liang brings significant expertise in both
front-end wafer fabrication and back-end assembly and test manufacturing.
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