Input 2021.01.30 06:00
TSMC’s review of semiconductor price hike… Booming confidence
TSMC·Samsung Electronics, aggressive investment in foundries this year
Middle-sized apostles also enjoy the’fallout effect’… “Factory 100% full operation”
Taiwan TSMC and Samsung Electronics, which are the world leaders in foundries, are trying to catch market demand by predicting aggressive investments in order expansion, and mid-sized companies such as DB Hitech and SK Hynix System IC are also screaming happy by raising their plant utilization rate to 100%.
According to recent foreign media reports, TSMC, the No. 1 global foundry, is considering raising the price of automotive semiconductors by up to 15%. It is aimed at increasing sales as well as controlling demand through price hikes as consumers flock to the supply shortage of automotive semiconductors (shortage). Currently, TSMC’s automotive semiconductor sales are estimated at 10%.
The symbolism that TSMC is the No. 1 foundry is so great that the industry is predicting that latecomers who make semiconductors for automobiles will also raise prices at the same time. There could be a chain price hike. Automakers who cannot make cars without semiconductors have no choice but to look at the price hike with their eyes open. It is known that a 10% increase in automotive semiconductor prices increases the production cost of automobiles by about 0.18% and decreases operating profit by 1%.
TSMC is considering a price hike because of its confidence that the market boom will continue. In particular, the demand for semiconductors, which has recently increased across the industry, has exploded after the new coronavirus infection (Corona 19) pandemic (infectious disease pandemic), resulting in a supply shortage. In addition, the importance of foundries that professionally produce semiconductors is growing as semiconductors develop into industrial-specific types respectively. No matter how good a semiconductor design company can design, it is useless if it fails to make it, and in the end, the ransom of the foundry with advanced production technology will increase.
TSMC and Samsung Electronics, the No. 1 and 2 foundries, have planned to increase investment side by side. In particular, the two companies are competing in microprocessing less than 10 nanometers (nm·1 nanometer is 1 billionth of a meter), and orders for 5 nano processes that can be produced are already full.
In the case of TSMC, it will spend 31 trillion won this year for facility investment based on its record-breaking performance last year. Samsung Electronics, which is focusing on the development of the 3-nano process, is also known to invest 11 trillion won (estimated) into the foundry field. Choi Yun-ho, president of Samsung Electronics’ management support office (Chief Financial Officer, CFO) recently said, “We will release the accumulated cash through aggressive investments and mergers and acquisitions (M&A).” The industry predicts that there will be massive investments in semiconductors.
Foreign media reported that Samsung Electronics will expand foundries in Austin, Texas, USA. However, Samsung Electronics said, “The details related to the factory expansion have not been decided yet.”
As the foundry market is growing, mid-sized companies are also enjoying a boom. DB HiTek, the 10th largest foundry in the world, mainly produces 200 mm (8 inch) wafers (semiconductor disks). Compared to TSMC and Samsung Electronics’ 300 mm (12 inch) wafers, the absolute semiconductor production volume is small, but the production cost is low. So it is suitable for small quantity production of many kinds.
The most promising candidate for expansion is Eumseong, North Chungcheong Province, but DB HiTek expressed its position that “there is no decision regarding the expansion of the factory so far.” The industry expects to increase semiconductor prices instead of expanding factories that require trillions of won investment.
DB HiTek is expected to record good results last year with sales of 1.3 trillion won and operating profit of 300 billion won. This is the first time that sales exceeded 1 trillion won. At the same time, it is analyzed that it is enjoying a boom as a foundry shortage at the same time that it has benefited from the US’s Taiwan SMIC sanction.
SK Hynix System IC, a foundry subsidiary of SK Hynix, is also producing 200 mm (8 inch) wafers at a plant in Wuxi, Jiangsu Province, China. The equipment from the M8 plant in Cheongju, Chungcheongbuk-do is recently being moved to the Wuxi plant. SK hynix System IC plans to attract more than 1,000 Chinese semiconductor design companies and secure mid- to long-term competitiveness.