In early 2020, the semiconductor supply chain was gearing up for a growth year after pushing through 2019’s 12% year-over-year decline in chip sales. According to the Semiconductor Industry Association, this was due to global trade unrest and cyclical pricing.1 Then COVID-19 hit, forcing temporary shutdowns while we figured out the safest next move. The entire semiconductor supply chain teetered on the edge of a continued slump, until several interesting things happened.
First, the long-anticipated digital transformation launched with a vengeance as the world adjusted to living life online. This created hot demand for advanced node technologies from 10nm and below needed for 5G, AI, advanced memory and high-performance server applications. Then, the automotive industry recovered more quickly than anticipated, resulting in a shortage of both advanced node and legacy node chips used in power devices for advanced driver assist systems, and electric and autonomous vehicles. Lastly, the U.S. government ramped its Chips for America program to promote onshoring and to stay ahead of China’s rapid expansion.
How the Semiconductor Supply Chain Is Handling the Chip Shortage
As demand for chips exploded, all the top-tier semiconductor manufacturing companies initiated short-term investments to increase capacity. Additionally, SEMI reports that globally, 38 new 300mm fabs will come online between now and 2024.2 These long-term capacity expansions in the U.S., Europe and Asia will help to better globalize semiconductor manufacturing.
For example, as part of its IDM 2.0 initiative, Intel announced it will invest $27B in R&D and $33B on CapEx in the U.S., and $17B in R&D and on CapEx in Ireland and Israel.3 TSMC plans to invest $100B over the next three years to expand capacity globally and support development of 7, 5, and 3nm nodes, as well as advanced packaging3, and a gigafab in Arizona is part of that investment.5 Samsung has also been fielding offers from Arizona, New York and Texas, as the company searches for the right location for a new $17B fab to expand production of advanced logic devices in the U.S.6 GlobalFoundries intends to effectively double its annual expansion investment from $700M to $1.4B, expanding its fabs in Malta, New York and Dresden, Germany.7 And memory giant SK Hynix will invest $106B in a fab cluster in North Korea.8
Suffice it to say that all this capacity expansion means we’re about to experience a rapid demand for advanced processing tools that will keep top-tier original equipment manufacturers (OEMS) and smaller OEMS in the semiconductor supply chain busy. Much of the expansion will focus on supporting advanced technology at 10nm and below. Many equipment companies will be competing for that business. For suppliers that were in the right place at the right time, that growth will be automatic. But there will also be additional growth possibilities for companies that weren’t already on the preferred supplier list.
The Continuing 200mm Equipment Shortage
The availability of 200mm process equipment is another important link in the semiconductor supply chain that is being impacted by the chip shortage. As demand for legacy node chips to supply the analog and power device markets increases, 200mm fabs are struggling to add capacity to meet these growing demands.
The reason for this is because 10 years ago, the 200mm tool market dried up due to lack of demand, as manufacturers focused on increasing volumes of advanced node technology built on 300mm lines. As a result, OEMS ceased to innovate or manufacture 200mm tools, shifting R&D focus to 300mm and 450mm tool development.
As the pendulum began to swing back with new applications for legacy devices driven in part by the internet of things, 200mm went through a renaissance. By 2017, the semiconductor supply chain began experiencing a shortage of 200mm equipment that continues today. While many top-tier IDMS and foundries retained their 200mm tools, 200mm fabs that are now experiencing greater demand for their products are struggling to add capacity, as the secondary market is maxed out and few OEMs supply 200mm tools.
Reasons for Adding Capacity and Novel Ways to Achieve It
While legacy node device growth will continue, we expect it will be flat. However, advanced technology node devices will experience faster growth not just because of increased demand, but because of the additional process steps required to fabricate them.
The number of tools required to manufacture advanced node devices is not just about increasing wafer capacity. These chips require many additional process steps that use new and different tools. As the number of steps increase, so does the number of tools required to process wafers in high volumes.
Lastly, adding capacity doesn’t necessarily mean adding more tool lines. This issue can also be addressed by investing in tools that are designed to increase device yields.
Poised to Support a Semiconductor Supercycle
As the semiconductor supply chain positions itself to support this growth spurt, spending as fast as it can to grow capability and capacity, all indicators point to the industry entering a supercycle with sustained growth for years to come. As such, OEMS must be ready to support continued fab expansion to support both legacy and advanced technology development.
At ACM Research, we are well-positioned to handle current and future capacity demands. Our tools are also proven effective at improving yields by gently and effectively removing particles. We are continually innovating and expanding on our core competencies to provide both 200mm and 300mm advanced wafer processing solutions. Learn more about our growing portfolio of process solutions for IC manufacturing and wafer-level packaging.
References:
- SIA, Worldwide Semiconductor Sales Decrease 12 Percent to $412 Billion in 2019, Feb. 3, 2020
- 300MM Fab Spending to Boom through 2023 with Two Record Highs, SEMI Reports, Nov. 3, 2020
- 3. Intel CEO Pat Gelsinger sets the course for a new era of innovation and technology leadership. https://www.intel.com/content/www/us/en/events/engineering-the-future.html
- TSMC to spend US$100 billion on expansion over next 3 years, April 2, 2021, Focus Taiwan, https://focustaiwan.tw/sci-tech/202104020009
- D. Manners, TSMC said to be planning $35bn Arizona Gigafab, March 15, 2021, Electronics Weekly
- J. Lee, Samsung considers four sites in U.S. for $17 billion chip plant: documents. March 3, 2021, Reuters
- A. Shilov, GlobalFoundries to Invest $1.4B in Expansion, Potential Earlier IPO, March 4, 2021, Anandtech
- A. Shilov, SK Hynix to Build $106B Fab Cluster; 800,000 Wafer Starts a Month, April 2, 2021, Anandtech