From process technology to customer competition, TSMC and Samsung’s new round of battle

As Moore's Law gradually reaches its limit, after entering more advanced processes, the technology, equipment, and capital barriers of advanced processes are extremely high. The limitations of advanced processes are high cost, high cost, and high manufacturing cost. The investment has brought positive feedback effects, forcing UMC and Global Foundry to abandon advanced technology investment. Today, only advanced Intel, TSMC and Samsung are among the advanced process players. High R&D costs have prompted companies to increase their investment to meet market demand. According to IC Insights, Samsung and TSMC's spending in the fourth quarter will hit a record high.

The chart above shows the capital expenditure trends of Samsung and TSMC in the fourth quarter of 2019. As shown in the chart, the two companies had relatively low expenditures at the beginning of the year, and then raised their spending to a more moderate level in the second quarter. In addition, the two companies announced in the third quarter conference call that they plan to raise spending in the fourth quarter to a record level.

Behind the amazing investment of TSMC
As early as 2019 Q2's law conference, TSMC announced that the amount of capital expenditure this year will be higher than the original order of 10 billion to 11 billion US dollars. In October, the president of TSMC, Wei Zhejia, president of TSMC, said that it decided to expand capital expenditure this year, which is estimated to be 14-15 billion US dollars. Compared with previous expectations, the increase is close to 40%. 40% of the year, this is a rare increase in the history of Taiwan.

What are the logic behind this shocking investment?

1. Expensive EUV equipment

According to the Wall Street Journal, companies such as TSMC, Intel and Samsung are competing to produce smaller, faster processors. But the latest manufacturing processes require new production tools, which are also driving the development of physics. These include systems that use EUV technology to make chip circuits that are much narrower than when using more common sources.

But EUV equipment is expensive, especially if it is necessary to equip the entire semiconductor manufacturing plant with EUV equipment. ASML is the chip maker's largest supplier of EUV lithography tools, with only seven EUV systems sold in the third quarter, generating 473 million euros ($827 million) in revenue. The cost per machine is about $118 million. Such systems also require other types of equipment for process control and testing. All in all, the cost of building a new cutting-edge chip manufacturing facility is now billions of dollars.

So it's no surprise that chip makers are opening wallets. TSMC plans to build a 3nm plant in the Science Park in southern Taiwan by the end of this year. This year, it will fully acquire EUV equipment exclusively produced by ASML in the Netherlands.

2. Fully loaded customer orders, 7nm capacity is tight

It is reported that TSMC's 7nm capacity will be fully charged in the fourth quarter, and the first half of next year will also be in short supply. Industry analysts, including Apple A13 processor, Huawei HiS chip and 5G base station chip and AMD GPU are concentrated in the second half of the year, resulting in TSMC 7nm capacity tight, delivery time is also a certain lengthening, TSMC extended 7nm product delivery The time of shipment is bound to have an adverse impact on many companies that rely on TSMC.

Some time ago, AMD announced via email that the Ryzen 9 3950X processor, which was scheduled to be launched at the end of September, was extended to November. Although AMD did not disclose the reason for the new product being "late", the 3950X uses TSMC 7nm production. The industry believes that it should work with TSMC. 7nm full load, supply is in short supply.

Due to the tight production capacity of TSMC, NVIDIA also selected Samsung and TSMC's 7nm EUV as its next-generation graphics core process, which allowed them to reduce the impact of delays in TSMC delivery time to a certain extent.

Although smartphones entered the off-season in the first half of next year, 7nm capacity is still in short supply. Because of the strong demand including 5G mobile phone chips, artificial intelligence and high-performance computing (AI/HPC) processors, network processors, graphics chips, central processing units, etc., and all adopt 7nm process delivery.

According to the Taiwan Electronics Times media report, Huawei's Hisilicon Semiconductor has the highest proportion of orders for TSMC semiconductors. Thanks to strong 7nm orders from Apple, Qualcomm, AMD, Bitcoin and Huawei Hisilicon, TSMC is also adopting a more aggressive strategy.

3. Chasing advanced technology

Recently, at the 33rd anniversary celebration of TSMC, Chairman and Co-CEO Liu Deyin said that the most advanced 2nm process has been included in the pilot program, and next year will mass produce 5nm process. He also stressed that TSMC's 7nm process has been operating in the Taichung Wafer 15 plant for nearly two years, writing a global record from trial production to mass production, and creating a global initiative that produces more than one million wafers.

Not only that, TSMC's next-generation 5nm process is also favored. With the gradual ringing of 5G commercial bells, TSMC's 5G customers have strong demand for 5nm process, and TSMC has therefore decided to accelerate the construction of 5nm capacity.

Will Taiwan Semiconductor Manufacturing Corporation's expansion be a big one, will it repeat the 28-nanometer expansion in 2010? In this regard, Wei Zhejia explained at the meeting: "TSMC has done a very careful analysis this time, and the technical threshold of EUV is extremely high. I am confident that I will not repeat the same mistakes, so that the 5 nanometer capacity will be expanded in the future. Into the burden."

Accelerating the construction of 5nm capacity will not only help ensure the leading position of TSMC technology, but also show that the demand for 5G is high, and the operating growth will be promising next year. According to IC Insights, most of TSMC's current investments will be used to increase the capacity of 7nm and 5nm technologies.

On October 31, TSMC Chairman Liu Deyin said at the conclusion of the Taiwan Semiconductor Industry Association (TSIA) annual forum that TSMC is expected to expand 8,000 R&D personnel to invest in the next 20 or 30 years of basic research in technology, materials research and semiconductor industry. TSMC said it is going to build a new R&D center in Hsinchu, and the next 3nm will be carried out at this R&D center.

TSMC's current 3nm R&D is in line with progress, and 2nm is also beginning to be included in the pilot program. Wei Zhejia, president of TSMC, said that TSMC's process advancement has continued to advance every two years and has not seen any signs of change. Liu Deyin, chairman of TSMC, said that as long as it helps customers, TSMC will do it, but it will not necessarily follow Moore's Law.

At the same time, Samsung is also investing in fabs, striving to chase TSMC on 5nm and 3nm GAA.

Samsung's attack, can you catch up?
Make TSMC jealous

On October 7, TSMC issued a press release announcing its first introduction of the 7nm potent process N7+, which is the first to introduce extreme ultraviolet (EUV) lithography. In just a few months, the yield has been quite close to the first generation N7, and the N7 has been in mass production for more than a year. Zhang Xiaoqiang, deputy general manager of TSMC's business development, pointed out in the press release that the success of EUV lithography technology can not only implement the customer's leading design, but also provide excellent proof of mass production with excellent manufacturing capabilities. .

In the industry's view, this manuscript full of hard-and-skilled technical terms is an unobtrusive "showing text". Foreign-funded analysts pointed out that in the past, such manufacturing information, TSMC is usually secretive, and only shared with customers. This time, it is an unusually large-scale press release, and the demonstration to the rival Samsung is very strong.

According to data released by IC Insights, by the end of 2018, Samsung's market share increased from 6% last year to 14% this year, up 133.3% year-on-year, becoming the second largest wafer foundry after TSMC. It is this speed of development that may be the root of TSMC's voltage.

On the other hand, TSMC has been positioned as a foundry since its inception, and Samsung’s business has only officially started in 2005, but it is mainly for high-end SoCs, and its market share is not high. In this way, in less than 20 years, Samsung has surpassed Gexin and UMC with its foundry technology, and is firmly in the position of the second largest foundry of foundry. Its strength cannot be underestimated.

Samsung has indeed been divided into a piece of foundry in recent years. In addition to the above mentioned NVIDIA chose Samsung, Qualcomm is also known. It is reported that Qualcomm Xiaolong 865 chip will be manufactured using Samsung 7nm Extreme Ultraviolet (EUV) technology. However, although Samsung has opened up on 7nm, it is still a big gap with TSMC.

In terms of market share, 2019Q3 TSMC's revenue was 3.459 billion US dollars, up 13% year-on-year. The global market share increased by 1.3 percentage points from the previous quarter to 50.5%. Samsung Electronics’ market share increased by only 0.5 percentage points to 18.5%. This means that the gap between the two will widen.

Process comparison
The competition between TSMC and Samsung is getting hotter. Whether it is technical or media promotion, the two sides will not give each other. Who can really win? There are three major observations: the 7nm EUV for mass production this year, the 5G parity war next year, and the 3nm "Gate-All-Around" (GAA) technology.

According to the previous report on the semiconductor encyclopedia's work on TSMC and Samsung's process comparison, it can be seen from the following figure that although the Samsung 7LPP uses EUV and has the smallest M2P (36nm), the 7LPP has low transistor density. 7FF of TSMC. TSMC uses a smaller number of tracks (Tracks) to make the 7FF transistor density slightly higher than the 7LPP, and the 7FFP uses SDB to achieve a higher density. TSMC's 7FF upgrade to 7FFP with EUV reduced the number of masks, plus the SDB transistor density increased by 18%.

In the 5nm process, both Samsung and TSMC have begun to receive 5nm risk mass production orders, and they are also preparing for mass production next year. As can be seen from the figure below, the transistor density of the TSMC at the 5nm node will be 1.37 times that of Samsung, but the relative wafer cost is slightly lower than Samsung!

As Moore's Law gradually reaches the physical limit, 3nm is considered to be the last generation of silicon-based semiconductor processes, because the 1nm node will experience severe interference. To solve this problem, Samsung announced the use of GAA surround-gate transistor technology at the 3nm node to create MBCFETs (Multi-Bridge-Channel FETs) using nanochip devices, which can significantly enhance transistors. Performance, mainly replacing FinFET transistor technology.

Today, when Moore's Law is slowing down, is it an opportunity for Samsung to chase. 3nm is the focus of Samsung's bet, because this node industry will give up FinFET transistors to turn GAA transistors, Samsung is the first to announce the 3nm GAA process. In the latest 5G technology forum, Samsung pointed out that its 3 nm process will complete the research and development phase next year.

However, TSMC does not want Samsung to take the lead in the foundry process. SEMICON Taiwan 2019 TSMC has revealed its ability to reach the 1nm process, and is expected to invest $6.5 billion in 2nm process technology, and will start in 2024. Produce 2nm products and regain the right to speak on foundry process technology.

Huawei's alliance with TSMC
According to Taiwan's DigiTImes, as a fabless manufacturer, Huawei's subsidiary, Hais, has the largest share of TSMC's micro-machining process orders. In recent years, TSMC has become an index of “Huawei concept stocks”. Huawei Hisilicon is TSMC's second-largest customer after Apple, accounting for 8% of TSMC's revenue last year, and 11% in the first and second quarters of this year. .

Among TSMC’s sales in the third quarter of this year, Chinese companies accounted for 20%, up 5% over the same period, mainly due to its strong ally Huawei. At present, only Samsung Electronics and TSMC have introduced micromachining processes below 7 nanometers. Huawei Haisi gave all of its orders to TSMC. Some analysts said that TSMC will also reciprocate, giving priority to Hays' orders. Therefore, it is unlikely that Hess will switch to Samsung.

With the deepening of cooperation between Huawei HiSilicon and TSMC, it is difficult for Samsung to achieve the ambition of 2030. In addition to Huawei, TSMC also harvested customers such as Apple, AMD and Qualcomm.

狠砸20 billion US dollars in semiconductors
In the main business of Samsung this quarter, the revenue of IT mobile communication and panel divisions all exceeded the same period of last year, and the performance of the consumer electronics division was basically the same as last year. The most profitable semiconductor sector alone has a operating profit of 3.05 trillion won (approximately 18.847 billion yuan), a sharp drop of 77.66% year-on-year. This is not a small impact on Samsung. In the face of continued performance decline, Samsung has made some reforms, including cutting storage chip capacity and investment, and accelerating the transition to logic chip foundry.

Although Samsung’s revenue in the third quarter of this year was not satisfactory, it still spent $20 billion in the semiconductor field this year. Samsung's investment this year reached 29 trillion won (about 24.8 billion US dollars), roughly the same as last year, including the semiconductor sector invested a total of 23.3 trillion won (about 20 billion US dollars). Some time ago, Samsung also ordered 15 advanced EUV equipment from ASML, worth 3 trillion won, about 18.1 billion yuan, and delivered in three years.

According to businessKorea's previous reports, Samsung Electronics is also committed to ensuring the safety of micromachining technology based on the latest changes in the semiconductor market. Samsung plans to mass produce 3 nanometer products in 2021, one year ahead of TSMC. However, compared with TSMC, the company did not act quickly. TSMC announced a large-scale equipment investment plan for the 3nm process and started construction of a new plant.

At present, due to Japan's export restrictions on semiconductor production materials such as photoresists, Samsung's uncertainty is still increasing. An industry insider said that Samsung has completed 3nm technology research and development, and is hiring a number of related equipment technicians in the extreme ultraviolet process.

Unlike TSMC’s plans to announce a 2nm process, Samsung Electronics has yet to disclose specific plans for the 2nm process.

Can emerging technologies support the process to continue to evolve?
According to Moore's Law, integrated circuits continue to evolve to more subtle sizes, and advanced processes are the most advanced nodes in integrated circuit manufacturing. In history, Intel was once the dominant player in advanced processes. Since 2015, Taiwanese founders and Samsung have been catching up with Intel.

In order to continue Moore's Law, multi-level new technologies are all brilliant. The first is the lithography process: two technical paths for extreme ultraviolet lithography (EUV) and self-aligned quadruple patterning (193i SAQP); the second is material: a small amount of key metal layer using cobalt (Co). All three manufacturers use a small amount of metallic cobalt in the key metal layer lining; the third is structural design: It is expected that the speed of chip area reduction will slow down after 2024, turning to vertical transistor or three-dimensional structure development.

In a recent conference call, Intel CEO Bob Swan mentioned that Intel will return to TIck-Tock for two years. He said that Intel’s 10nm product era has

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