I have always loved saying this: Without semiconductors, we are dead!
Chips have literally been the heart of everything today that runs on electronics. That’s nearly 2/3rds of the world, or more! How could the global semiconductor industry continue to remain neglected by intelligent people, especially in the western world, for so long, is, by itself, a huge surprise!
I still remember the ‘wicked’ smirk on a gentleman’s face — to whom I mentioned about the growth of TSMC, back in Hong Kong, 2000! I recall several talks with China executives looking to sell their products in India, in 2006-2007, when at Global Sources!! I remember one of the very early ISA (IESA’s original name) events in 2008, where a speaker talked about chip and system design in India. I know several of ISA’s former leaders have dropped out of the ecosystem. USA and Europe are now struggling to catch up with Asia. Can India afford to remain behind in this race for semiconductors?
The past two-three years have been ravaged by the pandemic. It led to the rude awakening of USA and Europe – to the might of semiconductors! It led to growing awareness of lack of semiconductors everywhere, except Asia, which was, and is the leader. We had the iconic picture of US President, Joe Biden, holding up a chip, proclaiming: We want chips! Biden signed the Chips and Science Act in Aug. 2022, writing into law the $280 billion package that includes $52 billion in funding to boost US domestic semiconductor manufacturing.
Ms. Ursula von der Leyen, European Commission President, in her State of the Union address in Feb. 2021, focused on semiconductors. She said: “There is no digital without chips! And, while we speak, whole production lines are already working at reduced speed — despite growing demand — because of a shortage of semiconductors.”
Dr. Walden C. ‘Wally’ Rhines is President and CEO of Cornami, Inc., a fabless semiconductor company focused on fully homomorphic encryption (FHE). Earlier, he was the President and CEO of Mentor Graphics, now Siemens EDA. Dr. Rhines was also recipient of Dr. Morris Chang Award for Exemplary Leadership in 2021. The EDA industry also recognized Dr. Walden C. Rhines of Mentor Graphics with the Phil Kaufman Award 2015 for distinguished contributions to electronic design automation (EDA) by the EDA Consortium (EDAC) and the IEEE Council on EDA (CEDA).
Dr. Wally Rhines is credited to be the founder of artificial intelligence (AI) back in 1986. According to him, AI is not a new technology. Here is the cover of High Technology magazine in July 1986. Dr. Wally Rhines is the person on the left, and George Heilmeier, former head of DARPA, is on the right. “We tried hard in the 1980s, but the infrastructure had not developed to a level where AI would provide profitable opportunities,” he added.
Dr. Rhines talked about how chips had become fashionable again in global mind’s eye. He said: “A new awareness of the importance of semiconductor technology was stimulated by the aggressive investments of the Chinese government over the last decade. Governments in the USA, Europe, and Japan, have increasingly examined their dependence on leading-edge semiconductors, both, for military defense, and to support the overall economy and future economic growth.
“During the pandemic, complex worldwide supply chains created many kinds of shortages for a wide variety of products. The semiconductor shortages created significant problems, especially for the automotive industry. As public awareness of the shortages increased, knowledge of dependence of semiconductor industry upon Asian countries, particularly Taiwan, became a concern because of the perceived vulnerability of Taiwan to takeover by China.”
Time to bury chipageddon!
During the pandemic, we also saw folks coining the term chipageddon! What’s that? It came from those who were, and are fearful of a global shortage of microprocessors (MPUs), that was affecting supplies of everything. It probably came from the western world, as they were lagging behind. If you are unaware, semiconductors have been around since 1960s or so! There is absolutely no fear of them ever going out of demand! Therefore, bury this word!
Dr. Wally Rhines also talked about chipageddon. He said: “Covid-19 had caused disruption for the semiconductor industry because of a rapid shift in demand for different products. Without the need to commute to work, it was expected that demand for automobile purchases would decline precipitously. So, automotive electronic suppliers cancelled a large share of their orders.
He continued: “At the same time, demand for PCs, video games, and computer servers soared as people were increasingly forced to work (and play) in their homes. The semiconductor supply chain quickly reacted to these changes in demand. When it became apparent that industries like automobiles had over-reacted, it was very difficult to reclaim the capacity they had cancelled. Even when they could recover it, there is a multi-month-lead time to restart production of specific parts.”
Chinese American Semiconductors Professionals Association (CASPA) has been in existence since 1991, in Silicon Valley, USA, and elsewhere. Dr. Allen Liu, Head of Publication, CASPA, said: “As the technology advances, more devices are added per consumer goods (e.g., eight cameras on a Tesla, and four cameras on an iPhone), and higher chip performance required — e.g., computing power for AI and big data, and resolution for camera sensors, etc. Chips did not just become fashionable! They are now an essential part of our civilization, and they will only keep growing.
He noted: “The high demand during mid-pandemic caused supply chain issues, not only for chips, but for nearly everything else. As the world started to open up — e.g., China lifted travel bans and quarantines on Jan. 8, 2023, the supply chain issue is progressing to the next phase. We should start to see a relief towards the end of the year.”
Taiwan and Korea dominate
South Korea and Taiwan took on the role played earlier by Japan in Asia’s chip making. Dr. Morris Chang is the legend in semiconductors for creating TSMC. Now, Dr. Mark Liu is leading TSMC very efficiently and effectively. We also have the Dr. Morris Chang Exemplary Leadership Award since 1999, given away by the Global Semiconductor Association (GSA). As mentioned, Dr. Wally Rhines had received this award in 2021.
Asian firms, largely from Taiwan and South Korea, have been outperforming the American firms and others by offering higher-quality chips at less cost via flow of smart ideas. Superior performance has now created the reality that Asia dominates in chips.
Taiwan-based TrendForce’s research has reported that plans for more than 20 new wafer fabs have been initiated. Regarding geographical distribution of these new fabs, Taiwan will have five, US will have five, China will have six, and Europe will have four fabs each. Another four fabs will be located among South Korea, Japan, and Singapore. Governments worldwide are much more aware of the importance of local semiconductor manufacturing due to recent geopolitical events. Semiconductor chips have gradually emerged as a strategic resource.
Today, Taiwan’s TSMC and South Korea’s Samsung reportedly control nearly 70 percent of the global semiconductor market. Taiwan dominates the foundry market, or outsourcing of semiconductor manufacturing. Its contract manufacturers accounted for over 60 percent of the total global foundry revenue last year, as per data by TrendForce, 90 percent of which was pocketed by TSMC.
Besides TSMC’s first fab in Arizona, USA, scheduled to begin production of N4 process in 2024, TSMC has also started construction of a second fab, scheduled to begin production of 3nm process in 2026. The overall investment for these two fabs will be approximately $40 billion. TSMC’s Arizona fab will initially make 4nm and 5nm chips from 2024, to cater for demand for advanced chips. It will upgrade to TSMC’s cutting-edge 3nm by 2026.
Raghu Panicker, Co-Founder and EVP, Applied Intelligence Semiconductors Pvt Ltd, said: “South Korea and Taiwan are power houses today, built around Samsung and TSMC, which has helped ecosystems to grow in their respective countries. China was, and is, mainly government-controlled with huge funding, which, sometimes, is not good for innovations. USA, which let the foundry advantage go away, is currently recouping back, to invest back in foundries.”
Dr. Rhines noted: “Worldwide leadership in advanced logic processes in Taiwan, and dominance of the semiconductor memory industry in Korea, are positions that have evolved over the last 35 years. The basic capability and growth momentum are so strong that these positions are not likely to change in the foreseeable future. The infrastructure to support wafer manufacturing, test and assembly, consists of hundreds of companies and depends upon the economies of scale.
He reiterated: “If you ever visit major sites of TSMC in Taiwan or Samsung in Korea, you will come away with an appreciation for the scale of investment that is required to be the lowest cost, and the most efficient producer. It is more than capital investment that sustains this lead. The thousands of engineers who have been trained, and now have years of experience, cannot be easily replaced.”
Dr. Allen Liu, CASPA, said: “TSMC and Samsung are still the dominant leaders in semiconductors. Although their global market shares have shifted during the past year, they are still, and expected to continue their leadership positions. They might experience a tough year during 2023, but we expect them to excel strongly as early as next year.”
Let me remind everyone that Dr. Nicky Lu, CEO and Founder, Etron, and Managing Board Director, Taiwan Semiconductor Industry Association (TSIA), had said that TSMC’s outlook for 3.5/2.5/1.8nm production is for 2022/2024/2026, at the heterogeneous integration symposium. Who can catch up?
Next, Samsung plans to invest about $200 billion in the USA over the next 20 years. It is a large-scale plan that envisions building 11 new semiconductor production lines in Texas. In memory, Samsung had share of 39 percent, followed by SK Hynix and Kioxia, with each having 23 percent and 20 percent respectively, in the smartphone NAND market. Samsung led with 52 percent, followed by SK Hynix with 25 percent and Micron with 22 percent in smartphone DRAM market.
DRAM market size was valued at $105.4 billion in 2021, and is projected to reach $206.5 billion by 2030, growing at a CAGR of 8.77 percent from 2023 to 2030. NAND flash memory market was valued at $66.52 billion in 2021, and is expected to reach $94.24 billion by 2027, growing at a CAGR of 5.33 percent from 2022 to 2027.
Therefore, it is easy to see what could happen, should TSMC and Samsung were affected. Imagine, if all the semiconductors of this world shut down! Now, imagine all the colossal disaster it could bring. For instance, if TSMC alone were to shut down all operations, 50-60 percent of the world would be brought down to their feet with grinding halt! I may be wrong in my percentage estimation, but very clear in my assessment! My job is to show the mirror to the world. People can react as they choose!
Global semiconductor industry today
Malcolm Penn, Founder and CEO, Future Horizons, echoed a similar thought. If TSMC were to go off line, whether due to an act of God (Fukushima is sitting on top of an earthquake waiting to happen) or an act of political aggression (China / Hong Kong, or Russia / Crimea), or, a change in the business decision priorities (who gets what shipments when), the entire global economy would collapse overnight!
Incidentally, the global semiconductor industry is forecast to drop by -22 percent in 2023, with no change from May 2022, as per Malcolm Penn, at the IFS 2023 event. Penn added that don’t just lay the blame on memory! There is the tight correlation between with and without memory. We are seeing memory first to collapse, being a commodity, then micro, followed by logic, and finally, analog.
At SEMI ISS 2023, Martin van den Brink, President and CTO, ASML, said that in 1965, Gordon Moore had forecasted mobile computing and an ever-growing-components count. Today, Intel’s roadmap continues to drive Moore’s Law through transistor count. We will move from 100 billion transistors to 1 trillion transistors in 2030. It is about doubling every two years.
Litho density scaling also continues in the coming decade for logic. It is moving 2X every six years. System integration is the future for systems and technologies. There will be more transistors, more memory, system-level integration, and end-to-end optimization.
The pandemic also brought about a change in global thinking towards semiconductors. The USA and Europe have moved very fast since then. Let’s go over them, one by one.
US Chips & Science Act had a starting point of 12 percent global production share. Budget of $52.7 billion has been provided via federal funds. Now, $11 billion is meant for semiconductor R&D, $39 billion for semiconductor manufacturing, and $2 billion for so-called ‘legacy nodes.’ There are state and local incentives, and 25 percent investment tax credit. Crisis management is regulated via the Defense Production Act.
EU Chips Act had a starting point of 8 percent global production share. The target is to reach 20 percent. in 2030. The overall budget allocated is €43 billion. Of this, €13 billion is for R&D, design platforms, pilot lines, SME support, with re-allocation from existing programs. €30 billion is meant for manufacturing projects, with national budgets, and no central EU fund. The conditions are ‘first-of-a-kind in EU’, and must be innovative. Crisis management is part of EU Chips Act proposal.
Europe had also announced the Digital Strategy for 2030. €144.7 billion will be invested in digital transition technologies, such as quantum computers, quantum communication infrastructure), HPC, logic semiconductors, etc.
Regarding the US-China banter, Dr. Rhines noted: “Free market competition is good for everyone. But, the USA vs. Chinese competition is political competition, and that is not likely to improve the efficiency of the semiconductor industry. Concern about China is one of the few truly bipartisan issues in US politics, and there is very little opposition to policies that increase the US defences, against further challenges from China. It appears that China is equally driven to eliminate any dependencies on the USA. Right now, there is no end in sight.”
Dr. Allen Liu, CASPA, agreed: “Nobody can predict the end result of two superpowers competing fiercely with each other. When politics and global economy adds to the complexity of technological advancement, we are in the woods. Only if we keep our tools sharp, and continue to stride hard, we will survive and win the competition.”
So, why are semiconductor equipment and EDA supply primary to restrict China’s access to the advanced semiconductor technology? Dr. Roslyn Layton, Co-founder, China Tech Threat, said that among the 42 Wassenaar Arrangement nations, there is the increased concern about dual-use of semiconductor technologies. December 2019 update to the Arrangement was significant, and had included some 50 points on semiconductors and SMEs. Many semiconductor firms from Wassenaar nations were part of this conversation.
Now, let us focus on Asia for a while!
Japan and China
Chinese chip maker, SMIC, was said to have developed an advanced 7nm process, and is using it in shipping products. In China, ʻNational Integrated Circuit Industry Investment Fundʼ was established, and $50 billion was invested in semiconductor-related technology. In addition, local governments have fund over $50 billion for semiconductor industry (over $100 billion in total). As per a report from SEMI, China, the China IC industry revenue was on track to top $250 billion by 2025. China has been providing $150 billion for establishing domestic production facilities, etc.
However, two of China’s biggest chipmakers, Yangtze Memory Technologies (YMTC) and Shanghai Micro Electronics Equipment, are among 36 Chinese companies banned from importing components from USA as part of new US export rules in Dec. 2022. SMIC, CXMT, etc., are also included. YMTC and PXW Semiconductor were added to the Entity List as they are in Huawei’s semiconductor supply chain ecosystem.
China is reportedly allowing US officials to make export control checks on a number of its technology companies, which otherwise faced being added to the banned ‘entity list’ alongside Hikvision and Huawei, etc.
Next, IBM is partnering with Rapidus to make the world’s most advanced chips in Japan before 2030. Eight Japanese companies, including Toyota, Sony, NTT, SoftBank, Kioxia, Denso, NEC, and MUFG Bank, joined forces and invested in a new company called Rapidus. Japan may also manufacture 2nm chips with help from IBM.
Let’s look at Japan a bit more closely. Step one is the advanced semiconductor production capacity. There is JASM, a JV of TSMC, Sony, and Denso from June 2022. There are plans to provide $3.5 billion subsidies, and plan to construct a new fab for logic semiconductors (12-28 nm). In July 2022, Kioxia and Western Digital provided up to approximately $700 million subsides, and plan to invest in advanced 3D NAND flash memory. In September 2022, Micron planned to provide up to $320 million in subsidies, besides investing in advanced DRAM.
Step two in Japan is addressing beyond 2nm next-generation semiconductors. There is technology change from FinFet to GAA. Challenges include development of use cases utilizing next-generation semiconductors, establish the knowledge of next-generation semiconductor development and manufacturing, and education of human resources. Japan’s next-generation X-nics semiconductor creation base includes Japan NSTC, consisting of AIST, Riken, Nedo, NIMS, Kek, Tokyo University, Tokyo Tech, Tohoku University, and Tsukuba University, etc., who will develop future human resources to supply next-generation semiconductors and create the use case.
Agile-X〜Democratization Base for Innovative Semiconductor Technology (Tokyo University) will develop innovative human resources through advanced fusion of hardware and software. Integrated Green-niX (Tokyo Tech, Hiroshima University, etc.) will develop the recurrent human resources for working through trial production lines for experiencing all processes. The Center for Spintronics Integrated Systems (Tohoku University) will develop human resources who can overlook the entire technology value chain.
Rest of Asia
Vietnam has become a centre of the semiconductor industry as Samsung announced its plan to produce semiconductors from July 2023 with an investment of $920 million. Vietnam is also home to Intel’s largest assembly and testing factory with an investment of $1.5 billion. Recently, as per Le Minh Khai, Vietnam Deputy PM, the US-based Semiconductor Industry Association (SIA) should call on US businesses to expand their investments in Vietnam.
Vietnam’s FPT Semiconductor released first ICs that were designed in Vietnam and manufactured in South Korea, in August 2022. In 2023, FPT Semiconductor plans to supply 25 million chips globally in seven types to meet diverse needs.
Intel invested $475 million in its largest chip assembly and testing site in Ho Chi Minh City. Samsung announced $3.3 billion investments to scale-up production of semiconductor components at Thai Nguyen factory by July 2023.
In 2021, approximately 29.45 billion semiconductors were produced in Malaysia. Silicon and gallium arsenide are examples of semiconductors commonly used in electronic circuits and solar cells. The Malaysia Semiconductor Industry Association (MSIA) projected the semiconductor industry to grow by 8-10 percent in 2022, followed by a weaker 2023, due to the weaknesses in smartphone and PC manufacturing industries. Malaysia contributes about 80 percent of global back-end semiconductor output. Its chip exports have remained stable during the pandemic.
Singapore has four wafer fab parks that produce advanced chips that power today’s sophisticated electronics and machines. Singapore accounts for 11 percent of the global semiconductor market, and 5 percent of wafer capacity. About 20 percent of semiconductor equipment is manufactured in Singapore. Semiconductors have grown at 10.6 percent CAGR over the past decade.
Semiconductor companies are located in Pasir Ris, Tampines, North Coast, and Woodlands, in Singapore. Singapore is home to 14 world-class global semiconductor firms, including 9 out of world’s top 15 semiconductor companies. Singapore’s Ministry of Trade and Industry said that semiconductors represent its largest manufacturing segment, contributing 7 percent of GDP last year. GlobalFoundries also announced $4 billion expansion plan in Singapore, to begin in 2023.
Hong Kong is small, but home to semiconductors and components makers, such as Rantle East Electronic, A-China Semiconductor, ON Semiconductor Hong Kong, Hynix Semiconductor Hong Kong, Canaan Semiconductor, Enhance Semiconductor, RCL Semiconductors, Gulf Semiconductor, and Kynix Semiconductor, etc. In electronic components, there are Man Yue Technology, Zojirushi, Possehl Electronics, Halo Microelectronics, Kinetic Technologies, CEC International Holdings, Kronborg Technology, Dongnan Electronics, etc.
You should spend some time visiting Hong Kong for Hong Kong Electronics Show and Global Sources’ China Sourcing Fair. Yours truly was part of the inaugural edition of China Sourcing Fair at AsiaWorld Expo, Hong Kong, back in 2005. Today, Consumer Technology and Innovation Show (CTIS), in China, and Global Sources Hong Kong Show, are among the many shows that it does across Asia. The world-famous Taitronics show is held at Taipei Nangang Exhibition Center, Taiwan. CommunicAsia is now part of Asia Tech x Singapore — the region’s flagship tech festival.
Might of Russia and China in rare earth metals
In Russia, neon is used in DUV lasers. Approximately 15 percent of crude supply is also impacted by Russia. Kr and Xe are used in memory etch. Approximately 10 percent of crude supply is impacted by Russia. Helium accounts for 15-20 percent of expected supply from Russia. Metalorganics are used in advanced semiconductor devices. Some production in Russia. Also, there are shipping assets.
In China, there are rare earths. Ceria carbonate comes from China, and used in all advanced devices. For Si and Si chemicals, polysilicon, and mostly raw materials used to make key deposition products come from China. F2 chemicals, such as fluorspar derivatives are used for key etch products. Rare gases (Ne, Kr, Xe) – means that we may be too dependent on China sources.
This is a dilemma for India to ponder! India is said to be a rich source for rare earths. However, it still imports those. That needs to change! Confederation of Indian Industry (CII) submitted to the Indian government, suggesting steps to encourage private players to mine such minerals. It called to set up an ‘India Rare Earths Mission’, and make their exploration a critical component of the Deep Ocean Mission plan of the Indian government.
India currently lags in the establishment of semiconductor wafer fabrication units due to a weak ecosystem, and shortage of resources, as compared to China and Vietnam. We are all hoping that the situation improves in the coming years.
Raghu Panicker, Applied Intelligence Semiconductors, said that India has always been a design powerhouse for the last 40 years. He said: “Leading the way was Semiconductor Lab (a government fab), which had design centres in Bangalore, Pune, Lucknow, Bhubaneshwar, etc. Later, Texas Instruments (TI) set up in India, and the VLSI design revolution started. Around the same time in late 1990s, India had two early product companies — Arcus (acquired by Cypress), and Armedia Labs (acquired by Broadcom).
“Later in 2000s, India went the services way. This move has been mixed. Next, there was a surge in IP companies, like Cosmic, etc. A few other companies took bold step to do products like Saankhya Labs, Steredian (acquired by Renesas), and Signalchip.”
Today, where does all of the above leave India with? The answer lies with the India Semiconductor Mission (ISM), with huge funding earmarked by the government. This should propel many fabless semiconductor product companies, like AISemiCon. Panicker added, “What India needs today is a good product expertise, large number of SoC architects, competent chip leads, and obviously, deep pockets to do a semiconductor chip.”
India has an advantage of designing chips. However, weak R&D focus, prohibitive costs of acquiring IP, and limited start-up capital have inhibited the potential of local design houses.
So far, India has taken baby steps in semiconductors. There are several plans to start manufacturing 28nm chips sometime in 2023-2024. Be aware: many chip lines are ahead! Start counting: 28nm, 22nm, 20nm, 16nm, 14nm, 12nm, 10nm, 7nm, 6nm, 5nm, 4nm, 3nm, 2nm, and 3.5/2.5/1.8nm, respectively. If I have missed any node, please pardon me, as I am just a student of semiconductors.
A lesson for India is clear: subsidies and low-cost labour cannot develop the local semiconductor industry — to serve domestic market, and global dominance. It needs to look at what Taiwan and South Korea have been doing all these years. India also needs to take lessons from Malaysia and Vietnam.
Can India gain chip supremacy? India always had aspirations, as well as potential in terms of talent and ecosystem. What was needed was a strong push for the government policy to incentivize the semiconductor sector (similar to other manufacturing), and build this as the next industry revolution — connect from IP building, to chip design, and manufacturing/packaging/test, to take to consumers within India and globally.
The India Semiconductor Mission is said to be a good overall platform to build this provided — IP is secured, start-up ecosystem is incentivized, manufacturing is supported with strong support of land/air/water, and products companies are supported for Make in India products.
Government and India’s moves
India had announced the first semiconductor policy in 2007-08, followed by a revised policy in 2010-11. In between, Karnataka semiconductor policy was announced. However, there were no takers! The electronics policy announced in 2012 looked at setting up manufacturing clusters. There was a proposal for setting up two semiconductor wafer manufacturing fabs.
Back in 2007, when the SIPS program was announced, there were great expectations! The Indian semiconductor policy, announced back in 2007, had supposedly expired on March 31, 2010! The Indian industry recommended extending the Indian semiconductor policy up to March 2015!
There were six government initiatives in the 2012 plan: development of wafer fabs, Modified Special Incentive Package Scheme (M-SIPS), development of manufacturing clusters, Preferential Market Access Policy, Electronics Development Fund and developing National Electronics Mission.
In December 2021, the Government of India launched the India Semiconductor Mission with an incentive outlay of Rs 76,000 crore or $10 billion to attract investments in semiconductors. Three things here! One, isn’t that a small amount, compared to USA and Europe? Two, how many fabs can this support? Three, where is the money for R&D spend?
Nevertheless, there have been some takers. ISMC proposes to establish 65nm analog semiconductor fab for $3 billion. ISMC is a proposal by Abu Dhabi-based Next Orbit Ventures. Vedanta-Foxconn has submitted $7.4 billion proposal for setting up 28nm fab.
IGSS Ventures has applied for semiconductor fabs. IGSS Ventures is a Singapore-based technology firm that enables the development and commercialization of disruptive hybrid semiconductor technologies that go beyond Moore’s Law. An MoU between IGSS Ventures and Guidance Tamil Nadu was signed. Vedanta and Elest have submitted applications for display fabs. These are around TFT-LCD and AMOLED. More on display fabs a bit later!
Four companies — SPEL Semiconductor Ltd, HCL, Syrma Technology, and Valenkani Electronics, have applied for incentives under the scheme for semiconductor packaging. Ruttonsha International Rectifier Ltd has registered under this scheme for compound semiconductors. Three companies, Terminus Circuits, Trispace Technologies and Curie Microelectronics, have submitted applications under design-linked incentive scheme.
There were reports that Indian companies were looking to begin producing semiconductors in India within the coming years. There are possibilities of partnering with chip manufacturers, and launching an upstream chip fabrication platform. Another company stated they will begin production in about two years!
India also needs to develop have R&D capability for semiconductors. It needs to invest in advanced packaging technologies, along with materials and compound semiconductors. Maybe, we also need to know more about where the global materials and compound semiconductors segments are at this point of time.
In materials supply, Taiwan’s GlobalWafers Co. has $5 billion wafer plant in Texas. EMD has plans for $1 billion in capacity additions in USA through 2025. FFEM announced $350 million of capacity additions in Arizona and Rhode Island, part of approximately $1 billion global investment. Soulbrain and Dongjin also plan to build electronic materials supply capacity in Texas. Chemtrade announced a JV with Kanto Group for construction of a high-purity sulphuric acid plant in the US.
SK Materials and Showa Denko are planning JV for ESG manufacture in North America. Entegris has plans to add manufacturing capacity in Colorado Springs, USA. Applied Materials announced plans to invest in innovation capability and manufacturing in Silicon Valley. Applied Materials also has plans expand manufacturing, R&D, and support operations in Singapore over the next 8 years.
There are technology challenges, such as EUV pattern transfer, metrology gaps, 3D structure challenges, line-of-sight etch deposition and cleaning challenges, logic transistor architectures, buried power rails, backside power delivery, and vertical DRAM stacking.
Novel materials and processes are under consideration, including high NA EUV, such as patterning materials and pellicles. There is need for selective dry or wet etch, and subsequent cleans, GAA transistors, 3D NAND, vertical DRAM, metals for interconnect and power, atomic layer etch, and area selective deposition.
Don’t forget compound semiconductors
Compound semiconductors (CS), namely SiC, GaN, GaAs and InP, have made a remarkable entry over the past decades. In dynamic power electronic industry, wide band gap materials silicon carbide (SiC) and gallium nitride (GaN) have each penetrated mass markets, such as automotive and consumer, respectively. Industrial, energy, and communications markets are also poised to provide an extra momentum to grow.
On the optoelectronic side, ramp-up of VCSELs or vertical-cavity surface emitting lasers in consumer electronics and mobile segments started a new wave of technology development and investments. Manufacturers have now adapted to 6-inch GaAs wafers, to address greater demands on cost and capacity. Indium phosphide (InP) is on the rise with imminent market entry in consumer, targeting 3D sensing for mobile phones, and health monitoring for wearables.
CS are present everywhere! They are in RF, power, photonics, display and lighting, from components to applications. There is strong diversity of technology platforms and substrates. Applications range from photonics such as EELs and VCSELs to LED lighting and display, RF, and power.
Or, EUV lithography
Extreme ultraviolet lithography (EUV) systems are used to pattern finest details on most advanced microchips. EUV lithography can pack more transistors onto a single chip, and can be mass produced affordably. EUV has more processing brainpower, use less energy and have higher performance. This is enabling smart cars, phones and homes, augmented reality, voice recognition solutions, etc.
Currently, ASML cannot ship its advanced EUV to China because it cannot obtain an export license from the Dutch government. ASML competitors include MKS Instruments, Lam Research, Ultratech, Cadence Design Systems and ASM International.
And, EDA too
Now, let’s circle EDA or electronic design automation. EDA has the goal of assisting in the definition, planning, design, implementation, verification, and subsequent manufacturing of semiconductor devices, or chips. Dr. Wally Rhines said EDA is one of the strongest businesses in the world right now. Although there was a modest slowing of revenue growth to 8.9 percent in the third quarter of 2022, the growth rate over the last year has been over 16 percent.
A major contributor to this strong growth in EDA has been the emergence of IC design by systems companies. Dr. Wally Rhines clarified: “These companies, like Apple, Google, Facebook, Amazon, Alibaba, etc., have grown from only 1 percent of EDA revenue 15 years ago, to 22 percent or more of EDA revenue today. As this increased revenue required very little incremental expense for EDA industry, profits of the EDA industry have increased substantially, while R&D as a percent of revenue, has now grown to nearly 40 percent for the major EDA companies.”
That also leads to a query whether EDA is short of needs for latest nodes? Dr. Rhines stated: “Every node brings new design challenges. Each time that a new manufacturing node becomes available, the EDA industry comes up with the innovations required to support it. There has never been a time when designers could not take advantage of new manufacturing capabilities because of a lack of EDA tools to help them. So, there’s every reason to expect this trend to continue.
Dr. Rhines continued: “We do, however, have some new challenges in packaging, with chiplets, 2.5D and 3D, that must be supported with simulation, as well as layout. It is here, that the challenge becomes great because the system simulation of multi-die heterogeneous systems requires many developments and innovation. That’s good for EDA, because it leads to new products that provide new sources of revenue. It may be a reason why EDA tools for PCB design have grown so rapidly recently, at over 15 percent during the most recent quarter.”
Of displays and display fabs
Now, we will take a look at the status of displays and display fabs. Remember, India is also in the process of setting up display fabs! Sri Peruvemba, Display Industry Expert, is the CEO of Marketer International Inc., and Associate Editor, Information Display Magazine. He was earlier the Chief Marketing Officer for E-Ink.
Talking about the status of the display industry globally, Peruvemba remarked that the global display industry is estimated at $160 billion, give or take. 2021 was a great year for the display industry with increasing demand and margins, but this was short lived. We expect an overall industrywide decline this year as inventory piled up, while demand softened.
He said: “There are pockets of the industry that will grow, but the anticipated economic doom and gloom scenarios presented by experts everywhere will cause retail buyers to pause. The industry is dominated by LCD (liquid crystal display) with OLED (organic light emitting diode) gaining market share, with miniLED assisting the LCD industry to stay competitive, and microLED poised to beat all of them. Apart from these, there is also the older LED display technology predominantly found in outdoor signs, the e-Paper technology, and a few others.
“LCDs are the predominant screen technology of our time, accounting for 74 percent of the display market globally, and worth some $120 billion in 2021, with 90 percent of TVs, most laptops and feature phones, and most tablets using these screens. Offering superior color and sharper contrast than LCD, OLED screens account for 25 percent of the global screen market and were worth some $40 billion in 2021, used in most smartphones and high-end TVs.
“MicroLED aims to perform better than LCD and OLED, and take over the market. It has the low power of LCD, the color and contrast of OLED. While it is still an emerging technology, it holds a lot of promise. Billions of dollars have been invested in recent years to develop this technology.”
While consumers are global, most displays are manufactured in China, Taiwan, Korea, and Japan. Two to three decades ago, displays were still being manufactured in North America and Europe. But, that aspect of the industry vanished from these geographies in favour of Asia. In the past decade, we have seen the significant shift in display manufacturing from Japan, Taiwan, China, and Korea, particularly with LCDs. OLEDs are predominantly made in Korea.
LCD manufacturing is well understood, and dozens of companies make them. You could build a fab for perhaps as low as $100 million to supply displays for laptops or monitors or a myriad of other applications. An OLED fab will set you back $1 billion to $4 billion, depending on the capacity, and if you are making small displays for phones vs. large displays for TV.
MicroLED fabs borrow from the semiconductor industry, and have the ability to re-use equipment from existing display fabs. They could be manufactured in fabs that resemble the LCD fabs in cost.
What should India do?
According to Peruvemba, in the recent past, there was a broad trend to manufacture displays domestically in countries where consumer demand is large, such as USA, EU, and India. There is evidenced interest from the private sector and the government. This is non-trivial for USA and EU, despite having OEMs that manufacture phones, laptops, and tablets, and, who also own a lot of IP, understand display technology, and have been funding billions of dollars into R&D over the years. This is mostly because the supply chain for components and subcomponents just does not exist in these geographies. There are concerted efforts to build a domestic industry in the US and EU.
He added: “For India, this is even harder. Unlike the software industry, there is very little electronics hardware produced domestically, there is virtually no IP, and no significant domestic OEMs that make electronic devices like TV, phones or laptops. Therefore, the growth curve will be steeper.
“The current global trends anticipate domestic production of displays in India. In the past few years, more than one serious player in India has had phone calls with me and the other industry, folks, but they could not find sufficient reasons to start manufacturing. There are some pockets of display-related assembly, but no panel manufacturing as yet. The effort was just too big for any one solitary enterprise without ample government backing.”
Peruvemba has some advice regarding what to do to establish domestic manufacturing base in India. First, establish joint ventures between India-based private enterprises (likely, they have little to no background in displays), and current leaders in display manufacturing based in the geographies mentioned above. India might need a dozen fabs to make a significant impact, as building one will not make a dent.
The JV partner in India provides capital, market access, manpower, land and other infrastructure, government relations and channel. The JV partner in East Asia provides technology/IP, training, initial supply of subcomponents, their entire supply chain relationships and possibly, some investment.
There are lots of sub-components that go into a display. The glass substrate alone is a massive undertaking, manufacturing the panel is the hardest, the semiconductors that drive the displays, the dozens of other films and materials and such make up for a large footprint for a single factory. These factories will dwarf the largest cricket stadium for sure.
Display fabs likely?
That leads to the query regarding the road ahead for display fabs. Peruvemba stated: “In the past few years, several players in India had exhausted all the free information that they could possibly get from the many global industry experts and display manufacturers, with promises that really went nowhere.
“With the display industry, like most other industries facing economic hardships in the days ahead, this might be as good a time as any to restart discussions to build displays. If they eventually do, one hopes they choose to build it in Bangalore.
“Humans are visual creatures. We will always have displays, and they might go from big, fat, bulky, devices to thin, light, low-power versions like we have seen over the decades. We will also see new technologies like 3D holographic displays replacing 2D, sticker electronics, advanced materials, and flexible devices. The future for displays is always likely to be bright.”
The road ahead for India is not easy! Is India looking at semiconductors, like it has done with IT? If yes, it needs to change that vision. Also, by the time India’s efforts in semiconductors become live, they probably would not be that significant. No amount of government support will make up for the lack of sheer genius and innovativeness that is required at the basic human level. We also need to prepare the future workforce.
Questions remains: Do students (in India) really spend time for developing projects, or simply copy or buy projects? What’s the future of Ph.D candidates in VLSI industry? Don’t believe when told that you can only join academics in case you are a Ph.D. You can probably switch over to R&D at various VLSI companies! Or, you can start on your own, by developing something noteworthy!!
Students also need to learn the difference between ‘VLSI’ and ‘embedded’! VLSI is not something you can learn and practise like .NET. Also, know the intricacies of below 22nm, 32nm, 45nm, and so on. Faculties need to assist students in taping out chips. They also need to ponder over facts: Are you prepared for the grind, and have strong foundations? Are you ready for an inch-wide and mile-deep job? Do you have strong ethics, integrity, respect for IP, etc.?
It will be prudent if India can focus on building better chips for the future! Same holds for displays and display fabs. Never mind that India has been a very slow starter, and is probably approaching all of this like it has done with IT. India can restart from scratch and rebuild for the future. Yes, it can be done! India may fall behind the world initially! Over time, India can catch up in semiconductors.
To become a semiconductor superpower, India will be going to need lot of geniuses. Overlook and ignore the strong and robust chip at your own peril! It has always been my dream, and perhaps, everyone else’s, to have semiconductor fabs functioning in India, and producing the latest chips. One hopes that day comes true, soon!
As a line from Bee Gees famous song, ‘You Win Again’ says: There’s no life on earth, no other could see me through! You win again, some never try, but if anybody can, we can!