Recent industry developments suggest significant shifts in the wafer foundry market. World Advanced, a leading wafer foundry company, has publicly announced its official entry into 12-inch wafer foundry services and has embarked on a technological strategy transformation for the next 30 years, including the incorporation of silicon carbide (SiC) in its development plans. Additionally, India has initiated its first 12-inch wafer fab, with the Indian government approving five semiconductor factory projects valued at approximately $18 billion. Moreover, the world's first 2nm wafer fab, constructed by TSMC, is set to be completed by the end of this month. Industry insiders indicate that AI-related demand will unleash even greater potential in the future, further boosting TSMC's profits.

World Advanced: Entering 12-inch Wafer Foundry, Aims for NT$100 Billion in Annual Revenue in Five Years

On November 2nd, World Advanced's Chairman and Strategy Chief, Fang Lue, stated that the company officially entered the 12-inch wafer foundry market and is building a new fab this year. The company and external stakeholders are confident in the plan, hoping that full production at the new fab in five years will increase annual revenue from NT$50 billion to NT$100 billion. Fang emphasized that the company announced a collaboration with NXP to invest $7.8 billion in building a 12-inch wafer fab, with TSMC providing all necessary critical technologies and resources.

Public information shows that on June 5th, World Advanced and NXP Semiconductors jointly announced plans to establish a manufacturing joint venture, VisionPower Semiconductor Manufacturing Company (VSMC), in Singapore to build a 12-inch wafer fab. In terms of investment, the fab's total investment amounts to $7.8 billion, with World Advanced contributing $2.4 billion for a 60% stake, and NXP Semiconductors contributing $1.6 billion for a 40% stake. The fab will be operated by World Advanced. Additionally, both parties have committed to investing a total of $1.9 billion in long-term capacity guarantees and usage fees, with the remaining funds (including loans) to be provided by other entities.

The fab will utilize technologies ranging from 130nm to 40nm to produce mixed-signal, power management, and analog products for automotive, industrial, consumer electronics, and mobile terminal markets. The technology licensing and transfer are expected to come from TSMC. VSMC will begin construction of the first fab in the second half of 2024, following regulatory approvals, with mass production expected to start in 2027. By 2029, the fab's monthly production capacity is projected to reach 55,000 12-inch wafers, creating about 1,500 jobs in Singapore. After successful mass production at the first fab, the partners will consider building a second fab.

World Advanced, founded by Morris Chang in 2004, transitioned from DRAM to wafer foundry services and has been profitable since. The company currently owns five 8-inch wafer fabs, located in Taiwan and Singapore, with three 8-inch fabs in Hsinchu and one in Taoyuan. In 2023, the average monthly production capacity was about 279,000 8-inch wafers.

In recent years, World Advanced has initiated a technological strategy transformation for the next 30 years, becoming a key supplier in wafer foundry services for CMOS, BCD (Bipolar-CMOS-DMOS), power management, and discrete components.

In September, World Advanced announced a strategic cooperation agreement with Hamlet to jointly promote the research and development and manufacturing of compound semiconductor SiC eight-inch wafers. World Advanced invested NT$2.48 billion in Hamlet's private placement of common shares to promote competitive product manufacturing services and establish a long-term strategic partnership. This indicates that third-generation compound semiconductors have also been included in World Advanced's development plans.

India's First 12-inch Wafer Fab Initiated

On November 1st, wafer foundry giant Powerchip announced the official launch of its plan to build India's first 12-inch wafer fab in collaboration with Tata Group. Powerchip has received the first payment for Fab IP from Tata Group, and the new fab construction plan will be actively advanced. At the same time, the high-capacity interposer, which has passed customer verification, will also begin mass production and delivery.

Public information shows that on September 27th, Powerchip and Tata Electronics, a subsidiary of Tata Group, signed a final cooperation agreement in New Delhi. Powerchip will provide technology licensing (not investment) to assist Tata Electronics in building India's first 12-inch wafer fab in Dholera, Gujarat. According to the agreement, the total investment for this 12-inch wafer fab will reach $11 billion, with a monthly production capacity of 50,000 wafers, planned to be completed and mass-produced by 2026, potentially creating over 20,000 high-tech jobs locally.

The 12-inch wafer fab will mainly use Powerchip's mature process technologies to produce power management, panel driver chips, microcontrollers, high-speed logic chips, etc., targeting automotive, computing and data storage, wireless communication, and AI terminal application markets. The $11 billion investment will mainly come from Tata Group and the Indian government, with Powerchip providing process technology, fab construction, and production line operation experience (requiring Tata Group to pay Fab IP-related fees). After the fab is operational, Powerchip will gradually withdraw from the jointly established fab and may only exist in the form of shareholding in the future.

Powerchip also revealed that due to international tech giants actively building AI computing power, the company's customized high-capacity interposer has entered the stockpiling phase after passing customer verification and will begin mass production and shipment by the end of this year. Powerchip's Wafer on Wafer wafer stacking technology, which has been develop in recent years, has also been recognized by large partners and has begun mass production of four-layer DRAM wafer stacking products, which will be delivered to customers for production verification next year to meet downstream customers' future marketing plans for Edge AI applications.

It is reported that India has attracted the investment attention of international semiconductor manufacturers such as NXP, Micron, Lam Research, Powerchip, Tower Semiconductor, NVIDIA, AMD, and Applied Materials. Specifically in the chip manufacturing sector, the Indian government has approved five semiconductor factory construction projects valued at about $18 billion, mainly involving wafer foundries and packaging and testing factories.

The World's First 2nm Wafer Fab to be Completed by the End of This Month

According to the latest supply chain news, TSMC's first 2nm wafer fab located at Kaohsiung P1 factory is about to be completed, and TSMC plans to invite multiple partners, industry experts, and media to attend the machinery entry ceremony on November 26th, with the equipment installation work officially starting on December 1st.

TSMC stated that since the official announcement of the Kaohsiung wafer fab project in November 2021, it has been progressing smoothly according to plan. The fab, which started construction in 2022, is currently on track and has completed the necessary public infrastructure construction. TSMC emphasized that the construction and production of its Kaohsiung P1 factory is an important part of the company's global semiconductor industry layout, aiming to further consolidate its leading position in advanced process technology.

In terms of technology development, TSMC emphasized that the development of its 2nm process technology is progressing smoothly, with performance and yield on schedule, and even some performance is better than expected. The 2nm process is expected to enter mass production in 2025, with a mass production curve similar to that of the 3nm process.

Sources say that TSMC's 2nm manufacturing operations will be carried out at the Hsinchu Science Park (HSP) Baoshan F20 factory area and the Kaohsiung Nanzi F22 factory area. The Baoshan factory is expected to complete a small-scale trial production line (mini line) by the end of the year and will start production in the fourth quarter of 2025, with a monthly production capacity of about 30,000 wafers; the Kaohsiung F22 factory will start commercial production in the first quarter of 2026, with a monthly production capacity of 30,000 wafers.

TSMC Chairman and CEO Mark Liu has stated that the market demand for the 2nm process is unprecedentedly high. Currently, the planned capacity for the 2nm process has already exceeded that of the previous 3nm process, which fully demonstrates the market's strong demand for advanced process technology. Liu also revealed that TSMC has verified the blueprint of the 2nm product with customers and provided a process quote of more than $30,000.

According to TSMC's financial reports for the past three years, the revenue share of 7nm and below processes has been increasing, with advanced processes accounting for 76% and 69% in the second and third quarters of this year, while mature processes accounted for 24% and 31%, respectively. Along with the increasing share of advanced processes, the profit margin has also increased, with a net operating profit margin of 47.5% in the third quarter and 42.5% in the second quarter, which is rare among all chip foundries.

From the application side, this year's growth in TSMC's performance has been mainly driven by HPC high-performance computing, mobile phones, IoT, and automotive fields. Among them, the demand for 5nm, 3nm technology, and higher-performance processes in the smartphone and AI-related fields is strong. Industry insiders have indicated that AI-related demand will unleash even greater potential in the future, and TSMC's profits will continue to rise.