The Israeli government will not object to Intel's plan to purchase Israel-based Tower Semiconductor for US$5.4 billion, as this is an expansion of Intel's investment in Israel. If we consider issues such as car connectivity and information security, Israel may be the next major semiconductor hub, in addition to Taiwan. What the Americans are looking for is a stable supply chain. They do not necessarily want to beat TSMC, but they want to have a stable and reliable production system beyond TSMC.
Because ABF substrates are in great demand, Kinsus is investing in expanding its ABF substrate production capacity. Foundries have been raising their prices steadily, but that trend might come to an end soon because customers are not so willing to accept further price hikes. Jaguar Land Rover is partnering with Nvidia to make cars so smart that they can drive themselves.
Western Digital is raising the price of NAND flash products. Tesla will soon deliver electric vehicles with the new 4680 lithium battery. Numerous tech firms all around the world are anticipated to intensify their efforts to develop augmented reality (AR), virtual reality (VR), and extended reality (XR).
The wafer foundry business is a highly concentrated industry in terms of revenue, with the top-10 players accounting for 98.4% and the top-5 for nearly 90% of global contribution ratio. It is apparent that in this capital-intensive, technology-intensive sector where tight relationships with clients are important, one could not dominate the market without multiple competitive edges.
Many companies have tried and failed to make microchips in India. Undeterred, Vedanta seeks a partnership with Foxconn to make chips in India. In Taiwan, Compal and Inventec are failing to ship their products on time because they cannot source components on time. Supply chain disruptions are plaguing just about everyone, including power management IC makers, who are struggling to manage their inventories while serving their customers.
Semiconductors are hitting a big time. The revenue of publicly listed semiconductor companies in Taiwan reached US$166.9 billion in 2021, with a remarkable growth rate of 33.1%. Nicky Lu, chairman of Etron, has said he sees "multi trillions" in the semiconductor industry. We are witnessing a new era approaching, when the density of transistors per square millimeter will exceed one trillion and the semiconductor market size is expected to surpass US$1 trillion dollars. TSMC has disclosed that the capital expenditure in 2022 will exceed US$40 billion dollars. We can also estimate in which year, the accumulated capital expenditure of the semiconductor industry will go over US $1 trillion in the 2020s, under the active expansion momentum of the leading foundries.
Taiwan's firms are abuzz with activity. OLED vendors are competing fiercely to get access to the production capacity they need to deliver their screens to smartphone manufacturers. Winbond's Kaohsiung factory is gearing up to deliver wafers to eager customers. Numerous firms are trying to participate in the overwhelming trend toward electric vehicles.
Taiwan's semiconductor manufacturers face grave challenges, but have only intensified their efforts to produce and deliver chips. Loosening labor restrictions are motivating Taiwanese companies to hire foreign workers. Time will tell whether this infusion of talent will effectively boost industrial production of semiconductors. Although chip foundries have big plans for expansion of their facilities, the chaos in international transportation and business caused by fear of the COVID-19 virus has delayed the best-laid plans of business leaders. Foxconn has stirred hope by saying that the chip shortage is already improving and will continue to improve, despite some tough challenges.
Taiwanese manufacturers celebrated strong sales but were not resting on their laurels. Rather than becoming complacent with its current success, TSMC is courting future business. Memory chipmakers are already raking in profits in the first quarter of this year. New requirements set by the 3rd Generation Partnership Project have stimulated manufacturers to prepare for smart products that fly everywhere from earth's orbit to the skies above smart cities.
Many people are still unfamiliar with the NTN (non-terrestrial network), including myself. I recently learnt something from a briefing by an analyst from DIGITIMES Research about the business model and technical specifications of NTN: Now I'm aware that it refers to capturing network services in inaccessible areas like oceans, deserts and mountains.
Competition between leading semiconductor players TSMC, Intel and Samsung has been in the news quite often lately. To my knowledge, TSMC dominates business opportunities in 7nm and 5nm, with more than 90% of the share in these market segment. Now everyone is observing whether major foundry fabs can overcome technical challenges of 3nm node. Basically, 3nm is a transitional technology, while 2nm for commercial operation can be a tough nut to crack in the next stage after 2025, when the global semiconductor market size may amount to US$800-900 billion. If TSMC's market share remains unchanged, how much will they invest? How many employees will be needed? What about issues of power consumption? There are many challenges to be addressed. Should we listen to the advice of government think tanks, or speculation from US consultancies or the media outlets, or the industry reports from semiconductor associations?
Apple's suppliers were kept busy during the Lunar New New holiday reportedly making new MacBook Pro set for launch next month. MediaTek and Realtek are keen to gain market shares in the Wi-Fi chip market, seeking more support from their foundry partners. Intel has announced a US$1 billion fund to build a foundry ecosystem and collaborate with RISC-V IC design houses.
GlobalWafers has unveiled a US$3.6 billion capacity expansion plan after its proposed acquisition of Siltronic fell through. MediaTek has also completed a three-year growth plan, looking to achieve significant sales increases in nultiple product lines. In India's EV market, Korean carmakers stand a better of chance of succes than their Japanese counterparts, an IHS Markit research director told DIGITIMES in a recent interview.
In the 1990s, Intel, the peerless CPU market leader, even produced motherboards, challenging Taiwan's motherboard makers. Was Intel really interested in making motherboards? Certainly not. It was Intel's intention to use its self-made motherboards to motivate Taiwan makers to upgrade their skill level. It's very similar to TSMC's strategic purpose of developing technology of IC packaging and testing. Intel purchased PCBs from Taiwan to assemble motherboards in Puerto Rico that offered cheap labor with strategic purpose of selling advanced microprocessors to Taiwan makers and seeking vertical integration for the maturing market at the same time. Intel was eyeing a winner-take-all plan. But Intel's plan never succeeded, or the notebook and mobile phone supply chain would not have thrived, and it would have even wreaked havoc on the IC design industry.
Market cap satistics collected by DIGITIMES of the top-100 firms in Asia highlights Taiwanese semiconductor firms' irreplaceable role in the global IT ecosystem. The DIGITIMES Market Cap 100 survey also shows the dominance of Chinese car and battery makers' dominance in the Asian market. But US-China trade tensions are prompting some tech companies to move their production, particularly for servers and automotive electronics, to Mexico.