In the past month or so, several major wafer foundry manufacturers, represented by Taiwan Semiconductor Manufacturing Co Ltd, United Microelectronics Corp and Semiconductor Manufacturing International Corporation, have released their results for the second quarter of 2020, with gratifying results and a "rise". Beautiful revenue data have once again pushed the global wafer industry to the forefront of the industry. Among these financial statements, some of them show the same situation in different manufacturers.

The production capacity of Taiwan Semiconductor Manufacturing Co Ltd's 8-inch production line is so tight that the company has raised its offer for 8-inch wafer foundry by 10% and 20%.
United Microelectronics Corp's performance has also reached its peak in recent years, especially its 8-inch wafer foundry business, which is completely fully loaded. To a large extent, this has contributed to a sharp rise in the company's share price, which has recently reached more than 10-year highs and rose by the daily limit on the same day as Taiwan Semiconductor Manufacturing Co Ltd, which is very rare.

In addition, Semiconductor Manufacturing International Corporation's 8-inch production capacity is also fully loaded, and in order to ease the contradiction between supply and demand, the company plans to add 30, 000 pieces of 8-inch monthly production capacity by the end of this year.

Thus, the demand for 8-inch wafer capacity is once again at an all-time high, and the last global 8-inch capacity crunch occurred in 2018.

The wave of 2018

The chips produced by 8-inch wafers mainly include power devices and power management chips, display driver chips, MCU, RF switches and MEMS sensors, as well as CIS (CMOS image sensors).

The same ferocious wave in 2018 caught the industry off guard, and when the 12-inch project was in full swing, people suddenly found that the "backward" 8-inch wafer production capacity was not enough. The reasons for the lack of production capacity at that time are also various, and many factors have continued up to now, which have not been fundamentally solved.

First of all, the most important factor is the supply and demand of application demand.Although there are many kinds of chips made from 8-inch wafers, the demand for the corresponding types of chips will increase suddenly during that period due to the emergence of a popular style application in different periods and stages. thus affecting the production capacity of 8-inch wafers to a great extent.

In 2018, power devices and power management chips rose rapidly, which largely contributed to the 8-inch wafer heat of that year.Automotive and industrial applications are the main driving forces for the growth of power devices. At that time, the growth rate of industrial applications and automotive electronics was the fastest in the global semiconductor market, while the increment of industrial applications and automotive electronics mainly came from power semiconductors.

According to IC insights, sales of power discrete devices increased by 10.4% in 2017 compared with the same period last year. Benefiting from automotive and industrial application drivers, the market for power discrete devices was expected to maintain a growth rate of about 5 per cent over the next three years.

Power discrete devices account for about 16% of 8-inch wafer applications. Due to the shortage of 8-inch wafer equipment (which has been an unsolved problem at that time and now in 2020), the global 8-inch wafer capacity growth rate is only 1% 2%, which is lower than the growth rate of power semiconductors and power discrete devices.

As a result, the demand for power semiconductors in automotive electronics and industrial applications exceeded the supply, which led to an increase in the price of power semiconductors, while the demand for 8-inch wafers was greater than the supply, which largely led to the price increase of 8-inch wafers at that time.

Among all the power devices, IGBT has the most potential for growth.IHS estimates that the global IGBT market will grow at an annual compound growth rate of 8% during the 2016-2021 period, with automotive and industrial applications as the main driving forces, while the global MOSFET market will grow at an annual compound growth rate of 3% during the 2016-2021 period, with industrial applications as the main driving force.

In addition to the supply and demand of applications, the insufficient production capacity of 8-inch silicon wafers is also a reason.Based on 2017, the price of 8-inch wafers continues to climb in 2018. Upstream wafer capacity is difficult to meet the fast-growing demand downstream. For example, wafer giant SUMCO reported in the first quarter of 2018 that wafer ex-factory price growth is expected to reach 20%, and 2018 Q4 price is 40% higher than that of 2016 Q4.

In addition, the insufficient supply of 8-inch wafer equipment is also an important reason, which fundamentally affects the production capacity of 8-inch wafer factories.

The wave of 2020

After an industry-wide downturn in the first half of 2019, semiconductors began to pick up in the second half of 2019, while capacity utilization of 8-inch wafers also gradually improved. After 2020, despite the impact of the epidemic, it failed to stop the further increase in demand for 8-inch wafer chips, leading to another global strain on production capacity.

而The primary reason for this situation is still the soaring demand for chips used in related "popular style" applications.. The typical example of that wave in 2018 is power devices, whileThis wave of popular chips in 2020 is CIS, as well as ToF and TWS chips.These chips have been very popular in 2019, the market demand has increased greatly, and this development trend has continued until 2020.

The outbreak of CIS is mainly due to the emergence of multi-camera mobile phones.In 2019, as the production capacity of upstream wafers becomes more and more tight, the supply gap of CIS chips is also further increased. There have been two large-scale price increases in CIS of 5m and below, and most of the price increases are distributed in mainland China, among which the shortage of Gekewei is particularly obvious. in order to ease the pressure, Gekewei has to raise product prices twice in a short period of time, with an overall increase of nearly 40 per cent. In addition, Sibike, BYD and other CIS chip manufacturers also have price adjustment operations.

And the world's three major CIS manufacturers Sony Group Corp, Samsung and Beijing Howie (OmniVision) supply has been very tight, Sony Group Corp had to hand over part of the orders to Taiwan Semiconductor Manufacturing Co Ltd production, this situation has brought more business opportunities to the fab generation factory, Taiwan Semiconductor Manufacturing Co Ltd a considerable part of 8-inch foundry foundry production capacity have been given to Howwe, and in order to take orders Sony Group Corp, Taiwan Semiconductor Manufacturing Co Ltd is also increasing investment in building plants, procurement of equipment, specifically used to deal with Sony Group Corp's CIS orders. In addition, Semiconductor Manufacturing International Corporation and Huali Microelectronics have also gained a lot, especially orders from Howie.

Meanwhile,Mobile phones are beginning to come with the 3D sensing function ToF, and the demand for CIS will soar in the coming years.According to Yole's forecast data, the global market for 3D imaging and sensors will be 38% CAGR in 2016-2022, $1.83 billion in 2017, and more than $9 billion in 2022. Among them, consumer electronics is the fastest growing application market, with CAGR reaching 160% from 2016 to 2022. CIS is a necessary component of ToF. Therefore, the future mobile phone will not only continue to add cameras, but also need to have ToF, which is another source of demand for CIS. So that the future CIS market is infinitely optimistic.

In addition to CIS, the market demand for TWS chips is also very strong, at the same time, in the display panel, the popularity of AMOLED and TDDI, gave birth to the market demand for NOR Flash. In this way, TWS, AMOLED drivers, TDDI chips, and NOR Flash memory burst at the same time, all of which put great pressure on 8-inch wafer production.

In addition to the skyrocketing demand for popular application chipsThe supply of 8-inch wafers can not keep up with the application demand, and the lack of corresponding wafer processing equipment also affects the supply of 8-inch wafer production capacity in 2020.

In particular, the lack of semiconductor equipment, in recent years, this deficiency has always been an indelible pain in the production capacity of 8-inch wafers.

As most 8-inch wafer foundry factories were built early, most of them have been running for more than 10 years, and some of the equipment is too old or difficult to repair. at the same time, due to the huge capital expenditure of the current 12-inch wafer foundry, some manufacturers have stopped the 8-inch wafer production line, which makes the relevant equipment suppliers lack the enthusiasm to develop and produce related equipment.

At present, 8-inch wafer production line equipment mainly comes from the second-hand market, mostly from memory manufacturers upgrading from 8-inch to 12-inch, such as Samsung and Hynix, while the market resources for old equipment are limited and have shown a trend of gradually drying up, of which etching machines, lithography machines and measuring equipment are the most popular.

This is particularly prominent in the Chinese market, where second-hand equipment is very strong and has formed an industrial chain. in recent years, many wafer factories have tried their best to introduce 8-inch wafer processing equipment through various channels. Qingdao Xinen, which is more representative, has introduced a large number of second-hand equipment from Japan, and invited top equipment experts from Japan to repair and guide the use. Good results have been achieved.

However, in the past few years, especially after the launch of the integrated circuit "big fund" in 2014, a large number of fab projects have been launched, most of which are 12-inch projects. However, judging from the current situation, there are not many projects that are really put into production and achieve mass production.

Statistics from core research show that at present, there are only eight domestic 12-inch production lines that really enter mass production (Xinxin is a long-term subsidiary, and long-term survival is one)-- four contract factories: SMIC, Huahong, Xinxin and Yuesin; two storage plants: Changsheng and Changxin; three Taiwan-funded enterprises: Taiwan Semiconductor Manufacturing Co Ltd (Nanjing), United Microelectronics Corp (Xiamen), Jinghe (Hefei).

Among them, there are only 5 main enterprises in the 12-inch mass production mainland, and there are only 9 mass production lines at present. There are only 4 contract manufacturing enterprises (Xinxin and Yuexin both have only one factory with a production capacity of less than 30,000 pieces). It should be noted that since 2006, the local 12-inch wafer foundry has newly entered the main body, and only Yue Xin has achieved mass production.

Like this,Since a lot of energy and resources have been invested in the 12-inch fab, the investment in the 8-inch fab will certainly be weakened.Moreover, due to various reasons, many 12-inch units fail to achieve mass production, which is bound to objectively increase the market's dependence on the 8-inch production line.

In addition, another factor is that the traditional IDM is reducing the size of the 8-inch production line, devoting more resources and energy to the construction and improvement of the 12-inch production line. This is mainly because the market competition is becoming more and more fierce, and for IDM, the input-output ratio of 8-inch production lines appears to be getting lower and lower, and the enthusiasm for large-scale operation of these production lines is no longer high. in addition to retaining some of the necessary 8-inch production lines, established analog chip giants such as TI and ADI can outsource more and more 8-inch wafer processing tasks to fabs, while they mainly focus on 12-inch production lines. In this way, it objectively reduces the 8-inch wafer production line and adds fire to the booming business of the fab foundry.

Not only in recent years, but also in terms of historical development, the number of 8-inch wafer foundries has been declining. According to statistics, from 2008 to 2016, 37 8-inch fabs were closed, while 15 factories were converted from 8 inches to 12 inches. According to SEMI, the growth rate of global 8-inch fab capacity is extremely low, growing by only about 7 per cent from 2015 to 2017.

In addition, part of the 6-inch production line was closed and the production capacity was changed to 8-inch line. Between 2010 and 2016, about 25 6-inch wafer factories were closed, resulting in a corresponding capacity reduction of about 453k wpm (equivalent to 8 inches). After the reduction in the production capacity of the 6-inch line, the products of the original line (such as discrete devices, power devices, MEMS, analog chips) will be switched to the 8-inch wafer production line. This adds to the burden of 8 inches of production capacity.

The future wave.

The 8-inch wafers mentioned above are mainly traditional Si (silicon) materials and processes. With the needs of applications and the progress of technology, the demand for the third generation compound semiconductors represented by SiC and GaN is increasing, among which GaN has Si-based and SiC-based. At present, the market share of Si-based GaN is significantly higher than that of SiC-based, while the polishing wafer of Si-based GaN is basically the traditional wafer, which has more room for development in the future.

At present, the third generation of compound semiconductor wafers are mainly 6 inches (there are also 4 inches). However, with the continuous maturity of technology and the growth of market demand, the third-generation compound semiconductors will also face a trend similar to the current 8-inch wafer line decrease and 12-inch increase, except that compound semiconductors will change from 6-inch wafers to 8-inch wafers, mainly because of the consideration of input-output ratio after more and more mass production in the future. At present, relevant European institutions and companies are conducting research in this area, and it is very likely that both GaN and SiC will be based on 8-inch wafers in the future. Once that day comes, it will certainly add another fire to the 8-inch wafer market.