The semiconductor industry is gradually coming out of this trough. As the market recovers, major chip manufacturers have begun to prepare for the next upward cycle and promote production expansion.
At the same time, the reconstruction of the global semiconductor industry chain is underway. With generous subsidies from governments of various countries, major chip manufacturers have begun a new round of factory construction and expanded their layout to seize the market.
This article takes stock of the recent production expansion and plant construction plans of major manufacturers, and summarizes where these production expansions are mainly concentrated and for which needs.
01 Storage manufacturers restore production capacity
Driven by the slow recovery of demand and the rebound in prices, the latest quarterly financial reports of the three major storage manufacturers have brought good news.
Among them, on April 5, Samsung Electronics announced profit guidance that showed that first-quarter revenue rose to approximately 71 trillion won, a year-on-year increase of 11%; operating profit was approximately 6.6 trillion won, a year-on-year increase of 931%. Samsung Electronics The highest operating profit since the third quarter of 2022.
Micron ended five consecutive quarters of losses. Micron's second quarter financial report as of February 29, 2024 shows that thanks to the simultaneous increase in demand and prices for DRAM and NAND Flash, revenue for the quarter was US$5.82 billion, a year-on-year increase of 58% and a month-on-month increase of 23%; net profit was 7.93 billion, turning losses into profits.
SK Hynix took the lead in achieving performance recovery earlier in the fourth quarter of 2023. The financial report shows that SK Hynix's revenue in the fourth quarter of 2023 increased by 47.4% year-on-year to 11.3 trillion won, exceeding analysts' highest expectations; operating profit was 346 billion won, ending the continuous decline since the fourth quarter of 2022. Operating losses.
As performance recovers, original storage manufacturers are gradually restoring production capacity. In addition, driven by the AI wave, HBM is actively promoting production expansion.
Samsung Electronics
According to reports, the wafer output of Samsung Electronics' NAND Flash production lines in Pyeongtaek, South Korea and Xi'an, China, will increase by about 30% in the first quarter of this year compared with the previous quarter. However, Samsung remains cautious about further production increases, hoping to avoid affecting the price increase of NAND Flash.
In terms of DRAM, according to a report by market research organization Omdia, Samsung Electronics has increased its average monthly DRAM wafer investment in the second quarter of this year to 600,000 pieces, a month-on-month increase of 13%; it is expected that DRAM wafer investment will increase in the second half of the year. Increased to 660,000 pieces, DRAM production returned to pre-cut levels.
HBM's production expansion exceeds expectations. Samsung Electronics executives said at the "Memcon 2024" global semiconductor conference that Samsung's HBM chip production this year is expected to increase 2.9 times compared with last year, higher than the 2.4 times predicted at the beginning of the year.
SK hynix
SK Hynix's DRAM wafer production volume is also gradually recovering. Omdia said that SK Hynix will increase its average monthly DRAM wafer input from 390,000 in the first quarter to 410,000 in the second quarter; the company's DRAM wafer input is expected to increase to 450,000 in the second half of the year piece.
Driven by the AI wave, demand for high-performance memory has soared. As a leader in HBM technology, SK Hynix is also increasing investment in high-performance memory. On April 4, SK Hynix announced that it plans to invest US$3.87 billion to build an advanced memory packaging production base in West Lafayette, Indiana, USA. The base is expected to begin mass production of a new generation of HBM and other AI-friendly memories in the second half of 2028. product.
Kioxia/Western Digital
According to research by TrendForce, Kioxia/Western Digital took the lead in restoring capacity utilization to nearly 90% since March this year. This move is expected to drive the annual growth rate of NAND Flash industry supply bits to 10.9% in 2024.
The semiconductor industry is a typical cyclical industry, experiencing relatively large ups and downs about every 3 to 5 years. Many industry associations and market analysis institutions believe that the global semiconductor market will see a cyclical recovery in 2024.
Among them, SIA predicts that global semiconductor industry sales will grow by 13.1% in 2024. Market agency IDC predicts that the semiconductor market will return to a growth trend in 2024, with an annual growth rate of more than 20% and a market size of US$630.2 billion, among which the storage market will have the strongest growth.
Therefore, the current move by storage manufacturers to increase production can be understood as preparation for the upcoming upward cycle. In addition to memory, news of production expansion is also coming in other semiconductor segments. For example, Renesas Electronics recently officially restarted a factory near Mount Fuji that had been dormant for more than nine years to meet the growing demand for power semiconductors used in electric vehicles and data centers. The factory is expected to double Renesas Electronics' power semiconductor output starting next year. Ichiban.
02 Major chip manufacturers are building factories crazily in the United States
In addition to industry recovery, another powerful driver of this wave of production expansion/factory construction is government subsidies. Affected by geopolitics, the "anti-globalization" of the semiconductor industry has intensified.
Localized production has become an important direction for the semiconductor policies of various governments. At present, the United States, Japan, Europe, India and other countries and regions are releasing preferential policies to attract investment from chip giants.
Among them, driven by the US$52.7 billion in subsidies under the US Chip Act, major chip manufacturers have expanded their presence in the United States.
GLOBALFOUNDRIES
On February 19, the U.S. Department of Commerce announced that it will provide approximately US$1.5 billion in funding to support GF's new state-of-the-art facilities, significant capacity expansion, and factory modernization to enhance U.S. semiconductor production at current generation and mature nodes. aspects of competitiveness.
GF will use the $1.5 billion to support three semiconductor projects, namely: a new state-of-the-art 12-inch wafer fab in Malta, New York, which is expected to produce high-value technologies not currently available in the United States; expansion in Malta, New York Existing manufacturing facility: Revitalizing an existing manufacturing facility in Burlington, Vermont, to become the first in the United States capable of mass-producing next-generation GaN silicon chips used in electric vehicles, power grids and smartphones.
According to a press release from the U.S. Department of Commerce on March 20, the $8.5 billion in financial subsidies Intel received will be used to support the construction of multiple semiconductor projects in four states in the United States. In addition, Intel expects to invest more than $100 billion in these four states over the next five years.
A series of plant construction or renovation plans include: building two new cutting-edge logic fabs in Chandler, Arizona and modernizing an existing fab to significantly increase cutting-edge logic production; Transformation of two factories into advanced packaging plants; construction of two leading logic factories in New Albany, Ohio, etc.
TSMC
The U.S. Department of Commerce announced on April 8 that US$6.6 billion in financial subsidies will be used to support the construction of three wafer fabs by TSMC in Arizona, one of which is a new factory. TSMC's investment in Arizona will increase to $65 billion.
Among the three factories, the first wafer factory is expected to start using 4nm FinFET process production in the first half of 2025; the second wafer factory will also use 2nm process technology in addition to the previously announced 3nm technology. The planned third wafer fab to be built will produce chips with 2nm or more advanced process technology according to customer needs. The three factories will meet product demand in areas such as 5G/6G smartphones, autonomous vehicles, and artificial intelligence data center servers.
Samsung Electronics
According to a statement released by the U.S. Department of Commerce on April 15, US$6.4 billion in funding will be used to expand Samsung's chip production in Texas.
On this basis, Samsung will also invest more than US$40 billion to expand its existing factory in Austin, Texas, and expand FD-SOI (fully depleted silicon on insulator) process production capacity. In addition, Samsung will build a comprehensive advanced manufacturing ecosystem in Tyler, Texas, including the construction of two 4nm and 2nm wafer foundries, an R&D base, and a 3D HBM memory and 2.5D packaging facility. Advanced packaging factory.
The U.S. Department of Commerce stated that thanks to investments from Samsung Electronics, TSMC Arizona and others, the United States is expected to produce about 20% of the world's cutting-edge chips by 2030.
Data show that the United States’ share of global semiconductor manufacturing capacity fell from 37% in 1990 to 12% in 2020. Therefore, since the introduction of the "Chip Act" in 2022, the United States has been actively promoting the return of advanced chip manufacturing to the United States.
Judging from the direction of the US$52.7 billion subsidy, the United States hopes to strengthen chip production capabilities in two aspects. On the one hand, it is advanced logic chips, high-bandwidth memory chips and corresponding advanced packaging processes used in the field of artificial intelligence; on the other hand, it is mature Wafer foundry capabilities, which mainly support chip production for the automotive and defense industries.
However, it should be noted that the above-mentioned chip manufacturers signed a non-binding preliminary memorandum of terms (PMT) with the U.S. Department of Commerce. Final terms may differ from those of PMT.
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