[Peace&Chips] Foundry Industry Awaits Spring... 2nm Competition Heats Up

Foundry Market Size to Decrease by 6.5% This Year
Fierce 2nm Competition Amid Semiconductor Slump
Intel Chasing TSMC and Samsung, Adopts High-NA Technology

Editor's NoteSemiconductors, known as the rice of modern industry. Although it's a term we hear every day, it's hard to explain when asked. Peace & Chips will make the complex concepts and overall industry trends of semiconductors easy to digest. Just place your spoon on it.

"In the first half of 2023, there were fewer consumers looking to buy electronic products. Demand in the related market did not increase significantly. Attempts to adjust product inventory are expected to continue in the second half of the year."

Recently, market research firm IDC stated this in a report forecasting the global foundry (semiconductor contract manufacturing) market for this year. While demand is strong in some areas such as artificial intelligence (AI) and high-performance computing (HPC), orders from customers for electronic products with high inventory levels have decreased, leading to a decline in foundry industry performance. They also predicted that the market size could shrink by 6.5% compared to last year.

In fact, the foundry industry has been reporting news reflecting the difficult market conditions. Market research firms Gartner and TrendForce forecast the foundry market size to decrease by 6.2% and 4.0%, respectively, this year. For Taiwan's TSMC, which holds a majority market share, it is expected that their revenue will drop by about 10% compared to last year. This could mark the first negative growth since 2011.

Although the foundry market is frozen by the semiconductor winter, competition among companies is heating up. Especially notable are industry moves preparing for the arrival of the 2-nanometer (nm; 1 nm = one billionth of a meter) era in 2025. Even if the current situation is unfavorable, companies are strengthening their competitiveness to secure future opportunities when the market recovers.

In the foundry industry, Samsung Electronics, the second largest player alongside TSMC, has already started mass production of the 3 nm process, and soon, US-based Intel and Japan's Rapidus will join the race in advanced process technology. Intel has announced plans to introduce a 20-angstrom (A; 1 A = one-tenth of a nm) process, equivalent to 2 nm, as early as the first half of 2024. Rapidus plans to showcase prototypes in 2025 and begin full-scale 2 nm process mass production from 2027.

The market is paying close attention to how influential these latecomers will be. Intel has announced that its 20A process will feature next-generation transistor technology called Gate-All-Around (GAA) and PowerVia technology, which supplies power from the back of the semiconductor chip to enhance performance.

Intel plans to primarily mass-produce its products using the 20A process to improve its technological level and then start accepting external customer orders for the 18A (approximately 1.8 nm) process in the second half of 2024. To introduce the next-generation extreme ultraviolet (EUV) lithography equipment 'High-NA' at the 18A process, Intel is actively conducting behind-the-scenes work with Dutch equipment manufacturer ASML.

Samsung Electronics also plans to adopt the back-side power supply technology, known as PowerVia by Intel, in its 2 nm process to be introduced in 2025. Unlike TSMC and Intel, which will adopt GAA technology starting from the 2 nm process, Samsung has already implemented it in the 3 nm process, improving yield (the ratio of good products). With market recovery expected from next year, it will be interesting to see who will seize the advantage in the upcoming 2 nm era.

This article is from [Peace & Chips], published weekly by Asia Economy. Click subscribe to receive articles for free.

☞Subscribe