The shortage of chips hung over the whole of 2020, and the shortage continued this year. In this case, including wafer foundry, packaging and other semiconductor manufacturing business ushered in a bumper harvest.

Overall, according to the latest TrendForce survey, global wafer foundry income is expected to grow by 23.8% in 2020 compared with the same period last year, the highest in a decade. In the wafer capacity greatly increased at the same time, a number of downstream closed test capacity has also appeared a full load or even a tight situation.

In this case, in order to seize the future 5G, artificial intelligence and other markets, the competition of semiconductor manufacturing has also spread all over the world.

China and Taiwan take the lead

Taiwan is the leader of semiconductor manufacturing industry. In wafer foundry, Taiwan Semiconductor Manufacturing Co Ltd leads the world by virtue of advanced technology, while United Microelectronics Corp and the world advanced occupy the mature process foundry market. In the closed testing business, Sunlight and Moonlight is not only the leader in the global closed testing field, but also the representative of the closed testing field in Taiwan.

As one of the representatives of global semiconductor manufacturing, from the performance of semiconductor manufacturers in Taiwan in 2020, their achievements may be able to show us more clearly the changes in the field of semiconductor manufacturing.

According to the financial results released by Taiwan Semiconductor Manufacturing Co Ltd, in the fourth quarter of 2020, Taiwan Semiconductor Manufacturing Co Ltd's fourth-quarter revenue reached US $12.68 billion, an increase of 4.4% from the previous month and 22% from the same period last year. The gross profit margin was as high as 54%, exceeding the upper limit of 51.5-53.5% that exceeded the forecast. In terms of annual results, Taiwan Semiconductor Manufacturing Co Ltd's revenue in 2020 reached US $45.51 billion, an increase of 31.4% over the same period last year, a gross profit margin of 53.1%, an increase of 7.1% over the same period last year, and a ROE of 29.8%, an increase of 8.9% over the same period last year.

Taiwan Semiconductor Manufacturing Co Ltd also gave his forecast for the first quarter of 2021 at his earnings meeting-- the first quarter of 2021 is estimated at NT $27.95 to US $1, with quarterly revenue of US $127 to US $13 billion (equivalent to NT $354.965 billion to NT $363.35 billion), a quarterly increase of 0.16%, a gross profit margin of 50.5% and a profit rate of 39.5%. According to this estimate, revenue and profit in the first quarter will have a chance to compete with new highs.

At the same time, Taiwan Semiconductor Manufacturing Co Ltd also said that the company's capital expenditure this year will reach $25-28 billion, much higher than the $22 billion originally expected by foreign investors, equivalent to an annual increase of 45-62 per cent. Taiwan Semiconductor Manufacturing Co Ltd CFO Huang Renzhao said that in response to the development of advanced and special process technologies and the growth of customer demand, capital expenditure will be increased this year, including the capital expenditure of the new plant in Arizona. 80 per cent of this will be used for advanced processes such as 3nm, 5nm and 7nm, 10 per cent for mass production demand for advanced packaging technology, and 10 per cent for special processes.

If we say that the growth of Taiwan Semiconductor Manufacturing Co Ltd is driven by advanced technology, then the growth of United Microelectronics Corp represents the spring of mature technology.

According to United Microelectronics Corp's financial report, United Microelectronics Corp's total revenue in 2020 reached NT $176.821 billion, an increase of 19.3% over the same period last year, while in US dollar terms, it grew by 26%. The net profit belonging to the parent company was NT $29.189 billion, an increase of 200.7% over the same period last year; operating profit increased significantly to NT $22.01 billion.

United Microelectronics Corp CEO Wang Shi said that the increase in business interests in 2020 reflects the high capacity utilization and product mix optimization of United Microelectronics Corp's 8-inch and 12-inch plants. In particular, the enhanced 12-inch wafer portfolio has led to a substantial growth in the business of the 28-nanometer process, coupled with the successful integration of the 12-inch business of USJC in Japan.

United Microelectronics Corp is equally optimistic about the future of foundry, so United Microelectronics Corp also raised his capital expenditure to $1.5 billion from $1 billion last year, equivalent to a 50 per cent increase. Wang Shi, general manager of United Microelectronics Corp, pointed out that there will be strong demand for advanced processes, with 15 per cent of the supply of 8 "wafers and 85 per cent of the 12-inch wafers to expand the production capacity of the 28nm process. Wang Shi said that the 28nm process will grow by 20% in 2021 and is expected to reach 593,000 pieces this year, with part of the production capacity coming from the conversion of the 40nm process.

In the field of closed testing, revenue from Sun and Moon also reached a new high in 2020. According to related reports, Sunlight's revenue in 2020 was NT $476.98 billion, or about US $17.038 billion, and net profit was NT $27.59 billion, or about US $986 million, both reaching record highs.

Looking to the future, Sun and Moon Investment Control CEO Wu Tianyu pointed out that at present, semiconductor supply chain capacity is fully loaded, including wiring, Flip Chip packaging and other closed test capacity are tight, and continue to receive new demand, is expected to be in short supply until at least the second quarter, the industry economy this year from cautious optimism to optimism.

The sudden rise of Korean operators

The competition for semiconductor manufacturing did not start last year, but it has attracted a lot of attention because of the chip shortage last year. At present, the biggest challenge for the Chinese Taiwan camp is the South Korean semiconductor manufacturer represented by Samsung.

As we all know, in 2019, the South Korean government promulgated the "Vision and Strategy of the system Chip Industry" for the semiconductor industry, which shows that South Korea will invest 1 trillion won in R & D in the next 10 years and train 17000 professionals. strive to capture the global foundry market in 2030.

In the wafer foundry business, Samsung is the representative of South Korea in the development of this field. They will always surpass TSTV as the goal of their wafer foundry business development. They are also one of the few manufacturers who are still committed to below 3/5nm.

According to Samsung's news in the third quarter of last year, Samsung foundry recorded its most financially successful quarter in history and began shipping mobile SoC made using its 5LPE (5 nm, early low power consumption). Samsung said its contract manufacturing division set a new quarterly high sales record due to increased shipments of mobile chip systems (SoC) and high performance computing (HPC) chips.

According to its third-quarter report, looking ahead to the fourth quarter, Samsung aims to further expand shipments of SoC and HPC chips for mobile phones aimed at major customers, hoping to set another revenue record for a single quarter. Samsung predicts that by 2021, the growth rate of foundry in wafers will be far ahead of the industry. Samsung plans to move towards multiple applications of HPC, consumer and Internet products, while attracting more major customers to place orders.

While Samsung is attacking advanced technology on a large scale, South Korean manufacturer SK Hynix renamed the foundry department of MagnaChip Semiconductor it acquired last year to "Key Foundry" in order to seize the foundry market, which they aim at is the mature process market. According to relevant media reports, SK Hynix through OEM, make full use of its production line, can reduce its operating costs, is a way to increase revenue and reduce expenditure.

In the field of closed testing, advanced packaging may be a focus of their development of semiconductor manufacturing. As we all know, at present, many wafer factories regard advanced packaging as one of the key points of their development. Samsung, as one of the representatives of advanced technology, has also invested a lot in advanced packaging. In 2020, Samsung launched its 3D packaging technology brand X-Cube, claiming that 7nm chips can be directly piled with SRAM memory, in an attempt to get closer to Taiwan Semiconductor Manufacturing Co Ltd in advanced packaging.

Recently, it has been reported that Samsung is also likely to win back Apple Inc's order by virtue of its development in advanced technology and advanced packaging, which may be an encouragement to their semiconductor manufacturing business.

The opportunity of Chinese mainland

In the context of changes in the global semiconductor industry, Chinese mainland's semiconductor manufacturers are also playing a new role. The development of wafer contract manufacturers represented by Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, and closed test manufacturers represented by Changdian Technology, Tong Fu Wei and Tianshui Huatian have attracted the attention of the market.

According to the Hong Kong stock announcement, Semiconductor Manufacturing International Corporation's income in the fourth quarter of 2020 was 981 million US dollars, up 16.9 per cent from the same period last year and about 100m US dollars less than the previous quarter. Combined with Semiconductor Manufacturing International Corporation's previous quarterly report, the company's annual revenue was about $3.906 billion, an increase of about 25.4% over the same period last year.

In terms of investment plans, the capital expenditure planned by Semiconductor Manufacturing International Corporation in 2021 is about US $4.3 billion, most of which is used for production expansion of mature processes, and a small portion is spent on advanced technologies, civil engineering of new joint venture projects in Beijing and others. In terms of production capacity construction, Semiconductor Manufacturing International Corporation plans to expand 10, 000 pieces of mature 12-inch production line and no less than 45000 pieces of mature 8-inch production line this year. In addition, Semiconductor Manufacturing International Corporation will consider strengthening the development and deployment of the first-and second-generation FinFET multi-platform, and expanding the reliability and competitiveness of the platform.

However, Semiconductor Manufacturing International Corporation, as the only wafer foundry in Chinese mainland that can carry out 14nm, its development has been vigilant by the United States, and a series of crackdowns against Semiconductor Manufacturing International Corporation have followed, so its future growth will still be affected by the external environment.

Looking forward to the full-year development in 2021, Semiconductor Manufacturing International Corporation said that due to being included in the entity list by the US government, the company was restricted in purchasing US-related products or technologies, which brought uncertain risks to the company's full-year performance forecast. Based on this, Semiconductor Manufacturing International Corporation's annual income target is medium to high single-digit growth, with an income target of about US $2.1 billion for the first half of the year, and a gross profit margin target of 10% to 20 percent for the whole year.

A few days ago, Hua Hong Semiconductor also released its results for the last quarter of 2020. According to its results, Hua Hong Semiconductor's sales revenue reached another all-time high of US $280.1 million in the Q4 quarter of 2020, up 15.4% from the same period last year and 10.7% from the previous year.

Tang Junjun, president and executive director of Huahong Hongli, said that annual sales in 2020 reached a record high of US $961.3 million. Looking forward to 2021, the company will continue to expand its technology platform at the same time of rapid production expansion, such as industrial MCU, new generation super knot and so on.

Compared with wafer foundry, Chinese mainland's closed testing business is a relatively perfect part of development. Changdian Technology, Tianshui Huatian and Tongfu Weidian are all in the top 10 in the field of closed testing.

Specifically, Changdian Technology expects the full-year net profit in 2020 to be about 1.23 billion yuan, an increase of 1287.27% over the same period last year. The net profit after deducting non-profit is 920 million yuan, an increase of 1.71 billion yuan over a loss of 790 million yuan in the same period last year. Tianshui Huatian's profit for the whole year of 2020 was 650 million-750 million, an increase of 126.64% 161.51% over the same period last year. According to the 2020 results forecast issued by Tong Fu Weidian, the net profit attributed to shareholders of listed companies during the reporting period was 320 million-420 million, an increase of 1571.77% Murray 2094.20% over the same period last year.

In the field of closed testing, these traditional closed test manufacturers not only face the situation of full capacity, but also face the challenge of developing advanced packaging in wafer generation factories. Therefore, for them, the expansion of production and the development of advanced packaging has become one of the means for them to consolidate in this market.

According to public information, Changdian Technology has put forward a fund-raising plan of 5 billion yuan, which will be invested in the annual production of 3.6 billion high-density integrated circuits and system-level packaging modules, and 10 billion high-density hybrid integrated circuits and module packaging projects for communications. Tongfu Micropower plans to raise no more than 4 billion yuan to invest in the second phase of integrated circuit packaging and testing, the construction of intelligent packaging and testing centers for vehicle products, high-performance CPU and other integrated circuit packaging and testing projects. Tianshui Huatian also announced in January this year that the company plans to raise no more than 5.1 billion yuan for integrated circuit multi-chip package expansion project, high-density system-level integrated circuit package test expansion project, TSV and FC integrated circuit closed test industrialization project, storage and radio frequency integrated circuit closed test industrialization project.

The ambitions of countries such as Europe, America and Japan

As the earliest region to develop the semiconductor industry, Europe and the United States and other countries have outsourced part of their semiconductor manufacturing business to third parties because of vertical division of labor. However, at a time when the global semiconductor industry is about to change, semiconductor manufacturing is becoming more and more important to the development of the semiconductor industry, which has caused Europe and the United States to pay more attention to semiconductor manufacturing.

As a result, the United States extended an olive branch to Taiwan Semiconductor Manufacturing Co Ltd. Taiwan Semiconductor Manufacturing Co Ltd was invited and plans to set up a 12-inch fab in Phoenix, Arizona, USA, and is expected to start producing 5nm process products in the first half of 2024. In order to compete with Taiwan Semiconductor Manufacturing Co Ltd, Samsung also plans to invest and build factories in the United States. Their arrival may enhance the chip manufacturing capacity of the United States.

Last year, 17 European countries jointly signed a joint statement on the European processor and Semiconductor Science and Technology Program, and according to relevant media disclosures, the signing member states agreed to work together to strengthen the value chain of electronics and embedded systems in Europe. This will include strengthening the special work of processors and semiconductor ecosystems and expanding industrial influence throughout the supply chain to address key technological, security and social challenges. Agree to consolidate and establish a position in Europe's proven areas of expertise, and to build advanced European chip design capabilities, usually to build factories with advanced node manufacturing capabilities for data processing and links.

In addition, it has been reported that Japan is also inviting Taiwan Semiconductor Manufacturing Co Ltd to build a factory in its own country to strengthen its local semiconductor manufacturing capacity. According to recent industry sources, at the strong invitation of the Japanese government, Taiwan Semiconductor Manufacturing Co Ltd will set up a joint venture with Japan's Ministry of economy, Trade and Industry, and the two sides will set up an advanced closed testing plant in Tokyo with a 50-50 cooperation structure.

Judging from their actions, under the pressure of high R & D costs, striving for semiconductor manufacturing leaders to build factories at home has become a choice for these established semiconductor powers.

Conclusion

The semiconductor manufacturing industry is in the process of change. as far as the semiconductor manufacturing industry itself is concerned, wafer foundry and closed testing are infiltrating each other, which is another kind of change facing the semiconductor manufacturing industry. In this change, wafer generation factories and closed test manufacturers will also face a new future.

From the perspective of the external environment, the market demand for semiconductors has promoted the rapid growth of the semiconductor manufacturing industry, especially in the case of insufficient production capacity. Chip designers began to reverse support the investment of semiconductor manufacturers in order to get more production capacity (for example, MediaTek invested 1.62 billion yuan to buy equipment for contract factories). This also shows that the strength of chip designers can promote the growth of local wafer generation factories. on the other hand, the rookie semiconductor region with many chip designers may be able to bring development opportunities to the wafer generation factories in the region.

From the market environment, in the future 5G, artificial intelligence and automotive demand for chips, with the outbreak of these markets, the carnival of semiconductor manufacturers can last for a long time.

But among them, the impact of countries around the world to establish a local industrial chain on the semiconductor manufacturing industry is also a focus of attention. This will not only affect the carnival of individual semiconductor manufacturers, but also affect the new pattern of global semiconductors in the future.