TSMC reveals plans for further expansion, progress on 3nm process, evolving car tech, amid solid Q1 results

[TruckElectric]

TSMC reveals plans for further expansion, progress on 3nm process, evolving car tech, amid solid Q1 results

Meanwhile Intel reportedly eyes off buying Global Foundry

Taiwan Semiconductor Manufacturing Co Ltd (TSMC) has posted typically robust results, and revealed how it hopes to cope with the twin challenges of COVID-19 and simmering geopolitical tensions.

The company on Thursday announced Q2 2021 revenue of NT$372.15 billion (US$13.3B) and net income of NT$134.36 billion (US$4.8B). Revenue rose 28 per cent year-over-year in US dollars. Gross profit margin for Q3 was forecast at between 49.5 per cent and 51.5 per cent, on expected revenue between $14.6 billion and $14.9 billion.

The company also revealed that the first batch of staff from the USA have visited Taiwan to train on the five-nanometre tech TSMC will build in its forthcoming Arizona facilities. Production won't commence until early 2024.

But execs warned that, when they are working, the new fabs won't be as cheap to operate as facilities in Taiwan – so customers can expect higher prices. Depending on demand, execs said they will weigh further expansion beyond Taiwan, and in Arizona.


Due diligence on a new wafer fab in Japan is already being mulled by TSMC – a project that's outside the scope of previously announced investments. Expansion in China is also planned, with facilities in the city of Nanjing ramping up production of 28-nanometre products that TSMC execs said will be the sweet spot for memory technologies.

Intel to buy GlobalFoundries? While TSMC ponders expanding its manufacturing capacity with new builds, The Wall Street Journaltoday reported that Intel is exploring the purchase of GlobalFoundries for around $30 billion.

Buying GlobalFoundries would fit with Intel CEO Pat Gelsinger's strategy to become a major player in the chipmaker-for-hire business. It would be less help for Intel's product development efforts, as GlobalFoundries' current plants don't work with cutting-edge chippery or produce the CPUs and other high-margin products from which Intel makes most of its cash.

GlobalFoundries has, however, signalled that it's working on five-nanometre and three-nanometre tech, which lend themselves to the kind of kit Intel makes. However GlobalFoundries shifted to those sizes only after failing to develop ten- and seven-nanometre processes.

GlobalFoundries is not alone in having trouble at that scale. Intel's own ten-nanometre efforts were delayed by years, and its seven-nanometre product has slipped from late 2021 to sometime in 2022.

CEO C.C. Wei added that TSMC expects 28nm tech will become standard for carmakers in two to three years, and the company is working to wean automotive manufacturers off the 55nm and 40nm products they currently favour.

Execs also foreshadowed production of three-nanometre silicon in 2022 and suggested its debut will propel high-performance computing to become TSMC's single largest segment.

On the company's earnings call, company chair Mark Liu fielded a question about what TSMC customers think of the potential for war between China and Taiwan.

He responded: "Everybody wants to have a peaceful Taiwan Strait… it is to every country's benefit. But also because of the semiconductor supply chain in Taiwan, no one wants to disrupt it.

"I don't think that any disability in Taiwan Strait is any country's wish to make it happen. So I'm optimistic on that."

Phew. ®


SOURCE: TheRegister


HPC AT THE HEART OF TSMC’S GROWTH
Just as in so many other areas of the world economy where real growth is being driven by those who can afford the bleeding edge, chipmakers are seeing the greatest opportunity at the top end of the market.

While the lower end of the semiconductor industry has its own challenges, the server farm builders are supporting fresh growth for Taiwan Semiconductor Manufacturing Company (TSMC).

The “HPC” designation in the headline likely caught the eye of those in the supercomputing world but for TSMC , high performance computing (HPC) includes all high-end server processors, from CPUs to GPUs, no matter what the end use cases.

The semiconductor manufacturer says their second quarter revenue, which increased 2.9% was supported by the high-end server chips business and to a slightly lesser extent, automotive-related demand. HPC increased 12% to account for 39% of TSMC revenue while other historically important areas like IoT and smartphone were down (2% and 8% respectively).

Smartphone decreased 3% quarter-over-quarter to account for 42% of our second quarter revenue. HPC increased 12% to account for 39%. IoT decreased 2% to account for 8%. Automotive increased 12% to account for 4%. And DCE decreased 12% to account for 4%.
Wells Fargo analysts put together a chart showing the growth of the HPC segment for TSMC since 2018, which highlights the value of the 5nm addition to TSMC’s lineup.



The company’s 5nm and 3nm roadmaps are critical to even greater improvements. TSMC’s 5nm FinFET process, which came online in volume in mid-2020 is core to both HPC and smartphone business. The company also announced that its N4 (4nm) technology will provide further gains in density for 5nm but that will not be available until 2022.


In its earnings call, TSMC’s VP and CFO, Wendell Huang, said N5 is in volume production with yields well on track. “N5 demand continued to be strong, driven by smartphone and HPC applications and we expect N5 to contribute around 20% of our wafer revenue in 2021.”

Huang also points to the N3 roadmap, noting, “technology development is on track with good progress. We have developed a complete platform support for both HPC and smartphone applications of N3.” He adds that TSMC continues to see “a high level of customer engagements at N3 and expect more new tape-outs for N3 for the first year as compared with N5.”

Moving into third quarter 2021. We expect our business to be supported by strong demand for our industry-leading 5-nanometer and 7-nanometer technologies driven by all 4 growth platforms, which are smartphone, HPC, IoT and automotive-related applications.

Aaron Rakers and his team of equity analysts at Wells Fargo noted that the company expects its customers to exist the second half of 2021 with a “healthy level of inventory relative to historical seasonable patterns” but adds that the company “did not rule out a potential inventory correction as customers build inventory” over that span. TSMC expects to remain capacity constrained throughout the rest of the year and into 2022.



As a reminder, TSMC previously noted it expects its 3nm to see around 70% logic density gains and up to 15% performance improvement; up to 30% power improvement versus 5nm.

Rakers and team highlight TSMC comment that they will be raising wafer prices due to manufacturing cost increases, especially for leading-edge nodes in addition to investing in older nodes, especially given hikes in materials and commodity costs.

In the bigger picture, TSMC expects revenue in Q3 to be between $14.6 and $14.9 billion.

Rakers and team add that due to strong customer demand TSMC plans to expand in its northern, central, and southern science parks in Taiwan. “TSMC’s Arizona fab was noted as on track with equip move-in scheduled for 2H2022 (20k wspm; 5nm), noting it has not ruled out a potential 2nd phase over time. TSMC confirmed its 28nm capacity expansion in Nanjing, China (targeting 40k wspm by mid-2023), while the company is in the diligence process for a potential Japan fab.”

SOURCE: THENEXTPLATFORM


TSMC CEO: Auto Chip Supply to Normalize in Q3

Good news for automakers: TSMC CEO C.C. Wei expects automotive semiconductor supply to normalize later this summer.

“TSMC has actively taken steps throughout the first half of this year, and we will continue to do so in the second half to address the chip supply challenges for our automotive customers,” he said during the company’s second-quarter 2021 earnings call, according to a Seeking Alpha transcript.

High demand and limited semiconductor manufacturing capacity has hobbled automakers driving several, including General Motors, Ford, and Nissan, to cut production.

As it stands, it takes more than six months for microcontrollers (MCUs) to reach automotive original equipment manufacturers, Wei explained. TSMC aims to cut lead times dramatically over the next quarter by working with customers to reallocate wafer capacity to support the automotive industry.

“For the full year, we expect to increase output for MCUs by close to 60% over the 2020 level which also represents about a 30% increase over the 2018 pre-pandemic level,” he said. “By taking such actions, we expect the automotive component shortage from semiconductors to be greatly reduced for TSMC customers starting this quarter.”

Long term, Wei expects the demand for silicon in the automotive sector to grow rapidly over the next few years.

“Semiconductor content in automotive, as the trend towards safer, greener, and smarter vehicles … will continue to drive silicon content increase as well as the demand for advanced and specialty technology,” he said.

TSMC’s Revenues Surge
TSMC’s revenues surged to $13.29 billion during Q2, up 28% year over year and 2.7% quarter over quarter.
During the second quarter, TSMC realized a net income of $4.81 billion, up approximately 11.2% year over year when adjusted from New Taiwan dollars.

TSMC’s most advanced 5-nanometer manufacturing process accounted for roughly 18% of total wafer revenues during the quarter, while the company’s more mature 7-nanometer process, widely used by chipmakers like AMD, accounted for 31% of sales, the company said.

“Moving into third-quarter 2021, we expect our business to be supported by strong demand for our industry-leading 5-nanometer and 7-nanometer technologies driven by all four growth platforms, which are smartphone, HPC, IoT, and automotive-related applications,” TSMC CFO Wendell Huang said.
The company forecasts Q3 revenues of $14.6 billion to $14.9 billion.

Foundry’s Ramp Production, Plot New Fabs
In the wake of the global semiconductor shortage, foundry operators including TSMC, Intel, SamsungElectronics, and GlobalFoundries have bolstered production and announced new facilities.
TSMC alone plans to spend $100 billion over the next three years to expand its semiconductor fabrication capacity.

“We are entering a period of higher growth as the multi-year megatrends of 5G and [high-performance computing] are expected to fuel strong demand for our semiconductor technologies in the next several years. In addition, the COVID-19 pandemic also accelerates digitalization in every aspect,” the company said in a statement from April.

In early 2020, the company announced plans to build a $12 billion foundry in Arizona, which would produce roughly 20,000 wafers per month when it opens in 2024.

Meanwhile, Intel, one of the few major chipmakers still manufacturing its own chips, opened its foundry operations for contract manufacturing this spring, following former VMware CEO Pat Gelsinger’s return to the company as CEO. As part of the Intel Foundry Services launch, the chipmaker announced a $20 billion plan to construct two chip fabs in Arizona.

A few months later, the Intel announced a $3.5 billion modernization project to upgrade its Rio Rancho, New Mexico facility. Intel is also in talks with European leaders regarding funding for a third foundry project in the region.

SOURCE: SDX CENTRAL


TSMC Has Good News For Automakers As Chip Shortage Could Go Away This Quarter

TSMC has expanded its facility in Nanjing, China for automakers. This comes after it pledged a whopping $100 billion to increase production

TSMC or Taiwan Semiconductor is the world's largest chipset foundry based in Taiwan which has been operating at peak capacity for over a year which has been at the root of the global semiconductor shortage. It has yielded a crippling blow particularly for the automotive industry but now it has now revealed that it expects the global chipset shortage to abate by the end of the quarter. TSMC as per a Wall Street Journal report has ramped up the production of auto chips and is on track to increase the output of micro-controllers used in automobiles by about 60 per cent in comparison to 2020. The WSJ report cited CC Wei, the CEO of TSMC who revealed the information in the chip manufacturers Q2 earnings call.

As for the broader semiconductor shortage, things are still pretty grim as the shortage could persist till the end of 2022. The dearth of semiconductors for home appliances, gadgets, PCs, smartphones, video game consoles has caused a shortage for automakers who traditionally use chips based on older manufacturing techniques and don't need aggressive miniaturisation and power-saving technologies that tech gadgets need.

In the fourth quarter, sales for TSMC's auto chips jumped 27% from the previous quarter
A pandemic induced increase in demand, coupled by shutting down of facilities during initial lockdowns and a transitionary phase for the entire tech industry where the likes of TSMC, Intel, Samsung and Global Foundries are upgrading their facilities to newer manufacturing processes has created the perfect storm for the global semiconductor shortage which have particularly harmed the auto industry.

But TSMC's Wei pledges that this shortfall for the auto industry could be offset in the next few months. It also comes at a time when global automakers have pushed TSMC to give it higher priority over its other clients. For TSMC trough, consumer electronics companies, particularly, the likes of Apple, Nvidia, Qualcomm and AMD are its most important customers. The influence of these tech giants has forced automakers to put more pressure on the world's largest manufacturer of chips to free up more capacity for their needs.

TSMC revealed that in Q2 its revenue for auto chips increased by 12 per cent, but it was a drop in the ocean in the scheme of things as it accounted for 4 per cent of its revenue. Revenue from smartphone chips fell by 3 per cent though it still commands a major chunk of the pie at 42 per cent. TSMC is betting that as automakers transition more to electric powertrains, revenue from the auto sector will climb as will profits as these vehicles need computational capabilities for optimisation of the battery, running new kinds of infotainment experiences that are inspired by gadgets like the iPhone and iPad and self-driving paradigms.

Self-driving chips like Nvidia's AGR ORIN SoC are manufacturer by TSMC
TSMC has expanded its facility in Nanjing, China particularly for automakers. This comes after it pledged a whopping $100 billion to increase production for semiconductors as the need for consumer electronics increased dramatically because of the work-from-home phenomenon. It is also building a $12 billion fab in Arizona for more expansion in the US, where it has major clients like Apple, Tesla, Nvidia, AMD and Qualcomm.

It has also added Intel as a client which has been struggling with the manufacturing of its own chips. Intel is also in the mix to acquire Global Foundries as it opens up its manufacturing business to third parties. Global Foundries was previously AMD's manufacturing unit which it spun off as a separate company and went fab-less as a chip design giant.


SOURCE: carandbike

 

[TruckElectric]

Automotive Sector Update: Recovery underway, stirred but undeterred
https://think.ing.com/author/oleksiy-soroka-cfa/

https://think.ing.com/author/rico-luman/
Global car sales showed a recovery in the first half of this year against a weak backdrop last year. We are reiterating our expectations of 7 to 9% growth in light vehicle sales in 2021. We believe that the continued headwinds from the chip supply shortages may slow and should not deter the recovery while electrified vehicle sales continue to expand
In this article

• Sales growing, underpinned by consumer demand
• Semiconductor shortages persist…
• …but won't derail the sector's recovery
• Continued momentum for electric cars in 2021 and 2022
• Mainstream car buyers look at PHEVs as an intermediate step
• Manufacturers ramp up commitment to electrification
• EVs require more chips but manufacturers still seem to prioritise them

Sales growing, underpinned by consumer demand
With the first half of 2021 already behind us, we are providing an update for our passenger car sector outlook for the full year. In our Automotive Sector Outlook, published in January, we outlined expectations for global passenger car sales growth of 7% to 9% in 2021. At the mid-point of the year, we are inclined to maintain this range, in spite of the continued supply chain headwinds experienced by car manufacturers. While some statistics for the first six months are still being finalised, we believe that things are progressing broadly as we expected with the recovery in sales, underpinned by solid consumer demand in major geographies.

Specifically, according to the European Automobile Manufacturers’ Association (ACEA), in January-June 2021, EU demand for new passenger cars increased by 25.2% year-on-year (YoY) to reach 5.4mn units in total. Given that last year’s comparative base was significantly impacted by the emergence of the Covid-19 virus, EU car registrations this year showed a sharp year-on-year drop in January-February, followed by an even more optically pronounced recovery during March-May. This was followed by a solid rate of growth of 10.4% YoY in June, against a much higher prior-year comparative base. However, the ACEA notes that the first half registration numbers were still well below the 2019 pre-Covid levels, by as much as 1.5mn units (or 21.7%) for the comparable period.

S&P reiterated a positive outlook for global light vehicle sales in 2021, upgrading its forecasts for the year to 8-10%.

In terms of the global picture, we note that earlier in May, S&P also reiterated a positive outlook for global light vehicle sales in 2021, upgrading its forecasts for the year to 8-10%, from 7-9% previously, while also cutting the 2022 sales growth forecast to 3-5% from 7-9% previously. In absolute terms, S&P now expects global auto sales to amount to 83-85 million units this year, relative to 77mn in 2020. Across major geographies, in FY 2021, using a mid-point of the estimated range, the rating agency expects sales of 26.2mn vehicles in China (+6.9% YoY), 18.0mn units in Europe (+9.8% YoY), 16.6mn in the United States (+14.5% YoY) and 23.4mn in the Rest of the World (+6.8% YoY).

Global Light Vehicle Sales Forecast
S&P Global Ratings

While we are encouraged by robust consumer demand fuelled by improved economic prospects, new vehicle inventories have not been replenished so far this year due to production volumes being held back somewhat by the well-publicised shortage of semiconductors for the use of passenger car manufacturers. These low inventories also resulted in the rapid rise in second-hand car prices.

Semiconductor shortages persist…
While we continue to believe that our base case scenario for the recovery of global passenger car sales this year should remain intact, we note that sourcing issues with the supply of semiconductors are proving to be a more lasting phenomenon than we, and industry participants, perhaps expected at the start of the year.

As we have crossed the half-year mark, we feel that the visibility on the matter is still rather limited with new commentaries appearing almost daily and frequent updates provided on the sales and production impact. What can be noted is that the semiconductor shortages have already left a mark on the first half 2021 car manufacturer production and sales volumes and, also, the logistical issues are not likely to disappear completely in the short term as supply is still having trouble keeping up with demand.

…but won't derail the sector's recovery
At this point, we believe that the broad industry guidance is that shortages will continue to occur to some extent for the rest of this year and potentially into and even through 2022. In conjunction with its recent earnings, TSMC, the largest global chip manufacturer, commented that it expected supply tightness to last into 2022, but the company aims to increase its output of auto microchip units (MCU’s) by close to 60% YoY this year, relieving some of the supply pressures starting this quarter.

We also note that the impact of the chip shortages is uneven across car manufacturers and each of them is striving to manage the situation in their own way and, importantly, prioritising the production of higher-margin models to minimise the impact on profitability, which given the aforementioned robust consumer demand should be less impacted than production volumes.

We may be on the cusp of semiconductor supply turning and things improving gradually.

Therefore, to recap, we may be on the cusp of semiconductor supply turning and things improving gradually. While the worst may be behind us, it is unlikely that things will return completely to normal during the remainder of this year. On balance, we still expect a noticeable impact on production and sales volumes for the full year. In the end, it may be that forecasts made at the beginning of the year (such as a net production loss of up to 3mn units, which S&P predicted in February, may be on the low side but not as significantly off the mark as might have appeared based on the worst moments of the second quarter).

We also note that the chip shortages were exacerbated in the first half of this year by some one-off factors, such as the fire at Renesas’ Naka facility in March (the facility returned to normal production by the end of June) and by the inclement weather in the southwest of the US earlier in February.

Continued momentum for electric cars in 2021 and 2022
At the start of 2021, a mere 1% of the global rolling car fleet had a power plug (10 million units). This, however, is changing rapidly on the front side in new sales. The pandemic turned out to be an accelerator for the development and sales of electric vehicles (EVs).

To support the car industry through the pandemic and simultaneously push a green recovery, EVs benefit from government support programmes and subsidies in various countries. BNEF expects the global share of EVs (full electric vehicles - FEV and plug-in hybrid electric vehicles - PHEV) in new sales to increase by 50%, from 4% to 6% in 2021, and rising further to 8% in 2022. Europe leads the world here, with EVs making up an expected 14% in new sales in 2021, followed by China (9%). Norway is at the forefront of the global shift, with EVs reaching a share of 82% in 1Q21.

Europe leads the EV-transition followed by China and the US

BNEF, ING Research *forecast
Mainstream car buyers look at PHEVs as an intermediate step
As the uptake of EVs reaches the car driving middle class, plug-in hybrids are providing an intermediate step for a large share of mainstream car buyers. These consumers prefer plug-in hybrids in order to stay flexible and also because there are more models to choose from. This is notably the case in Europe but globally PHEVs are also gaining traction. However, we believe this remains a temporary phenomenon. The share of PHEVs is expected to go down in a few years as FEVs continue to develop, prices reach parity and charging infrastructure is rolled out further.

European plug-hybrid car sales gain most traction in 2021

ACEA, ING Research *EU + UK + EFTA
Manufacturers ramp up commitment to electrification
The shift to electric vehicles has a fundamental impact on car manufacturers. With a battery pack instead of an internal combustion engine (ICE), EVs are less complicated to construct. But designing new models, further development of (battery) technology, and digitalisation require massive investment in R&D and new production facilities, and organisations need to adapt drastically. Since regulators have embraced the future phase-out of the ICE car as part of their plans for the energy transition, and the transition is now beyond doubt, car manufacturers have adopted it as a central part of their strategy.

The EU ‘Fit for 55’-plan to significantly raise the CO2-reduction targets for new cars to 60% in 2030 offers new guidance. And in the US, the Biden administration is also facilitating the uptake of EVs as part of his infrastructure bill. Car makers are now striving to show that they are acting ahead of the transition by raising EV targets for new sales. In the first half of 2021, several car groups made announcements, including General Motors (100% in 2035), VW (70% in 2030 in Europe), Volvo/Geely (100% in 2030) and Stellantis (70% in 2030 in Europe, including Opel: 100% in 2028 in Europe).

Alongside these targets, several car makers have also mentioned multi-billion investment programmes to develop their electric portfolios. While plug-in hybrids are usually just existing models that have been electrified, full electric vehicles require a complete make-over and a new product range, like VW is creating with its ID line up. Manufacturers are seeking to find opportunities to scale up EV-production volumes to create an attractive profitable base out of this as soon as possible.

EVs require more chips but manufacturers still seem to prioritise them
Increasing production levels also require more supplies. Ongoing semiconductor shortages are a real risk for raising production levels of EVs. EVs need more and advanced chips (as well as batteries) and European manufacturers, in particular, are still largely dependent on deliveries from other parts of the world (predominantly Asia). Although manufacturers seem to prioritise production of EVs over other car types to meet emission targets and keep up with competitors, longer lead times may still limit the rise in registration numbers of new EVs this year.

SOURCE: Think.ing