Advanced Nodes Boosting Foundry Revenues

Article By : George Leopold

Wafer demand is surging, driven by the ramp of 7- and 5-nm process nodes that are boosting foundry revenue on a per-wafer basis.

Who says Moore’s Law is dead?

Wafer demand is surging, driven by the ramp of 7- and 5-nm process nodes that are boosting foundry revenue on a per-wafer basis, reports IC Insights.

Those advanced nodes are increasingly being used for logic ICs along with advanced memory chips, including DRAM and flash memory components as data center customers migrate to all-flash storage.

“Many fabless IC companies are clamoring to have their leading-edge devices, including high-performance microprocessors, low-power application processors and other advanced logic devices fabricated using 7-nm and 5-nm process nodes,” the market tracker noted in an early March research note.

Despite steep development costs, smaller nodes are generating greater revenues on a per-wafer basis. The chief beneficiary is once more Taiwan Semiconductor Manufacturing Co. (TSMC), the only pure-play foundry running both 7- and 5-nm production lines last year. IC Insights expects TSMC and Samsung Electronics to enter volume production at the 3-nm node by 2022.

TSMC’s per-wafer revenues have been rising steadily since 2018, when it launched 7-nm production. The market tracker estimates TSMC’s foundry revenue jumped $104 on an annual basis to $1,634 per wafer in 2020.

Source: IC Insights

Meanwhile, GlobalFoundries and United Microelectronics Corp. (UMC) saw per-wafer revenues decline while China’s Semiconductor Manufacturing International Corp. (SMIC) registered a slight year-on-year increase in wafer revenues as it continued to ramp production.

IC process technology roadmaps reveal how the few remaining pure-play foundries are seeking to address different market segments. As TSMC and Samsung target bleeding-edge 3-nm process nodes for advanced memory and logic devices, GlobalFoundries and UMC are intent on addressing higher-volume nodes, including the former’s 22FDX based on fully-depleted silicon-on-insulator wafers.

Intel, hampered by previous manufacturing delays, appears to be settling in at the 10-nm node as its doubles down on it data center strategy while promoting CPU accelerators for machine learning and other AI workloads. In the meantime, it is expected to migrate some advanced processor designs to TSMC.

Source: IC Insights

Memory makers such as Samsung, Micron Technology, SK Hynix and Kioxia/WD continue to drive volume and per-wafer revenues via DRAM and flash memory.

Regardless of device type, “the IC industry has evolved to the point where only a very small group of companies can develop leading-edge process technologies and fabricate leading edge ICs,” IC Insight notes.

“Growing design and manufacturing challenges and costs have divided the integrated circuit world into the haves and have-nots,” it added.

TSMC leads the “haves,” with more than double the revenue per wafer than the combined totals of UMC and SMIC. The foundry leader is forecast to invest $27.5 billion this year on capital expansion, including construction of a new fab intended to address current chip supply shortfalls.

As it expands available capacity, IC Insights said it expects TSMC to begin “risk production” of 3-nm devices this year.

As they hustle to meet surging silicon demand, TSMC and other Taiwan-based foundries are confronted with another challenge: a drought that Taiwan President Tsai Ing-wen has called the worst in 56 years.

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