Chinese semiconductor industry

hvpc said:

This is not even the right way to compare their business' competitiveness. Yes on the surface it sure look like YMTC is more advanced. Typically, better memory density = better cost function. But this is not the case here.

Memory chips are commodities and very cost sensitive. The desire to towards lower cost/performance is what drives the transition from one node to the next (more cost effective) node.

Going to the next node where bit density is higher will provide lower cost function per bit (byte) of memory. Time-to-market, yield, operational efficiency, are also important factors. So comparing YMTC 128L to Micron 128L physical attributes are pointless.

Real comparison look something like this:
- when YMTC is producing 128L, Micron is on the more cost effective 176L node
- YMTC volume is still just a fraction of Micron's. Operation cost for larger volume is usually more cost effective
- YMTC makes their chips with new equipments. Micron makes theirs with mostly fully depreciated systems.
- YMTC buys new tools that are overkill for their current needs. Micron use old systems ("recycled") from their old DRAM process
- YMTC uses the less cost effective Xtacking (marketed to be better technically because it provides better memory density), Micron still uses the CUA (CMOS under array approach). But does the ~1mm reduction in size in x & y direction improvement from Xtacking really a big deal? It's not. This is why no one is going with that approach yet. There is no technical barrier for everyone to go to "Xtacking". people chose not to do so because they could obtain similar bit density with CUA and still have good yield.

All of the above points to a higher Cost-of-business line item on YMTC's income statement as well as a lower gross margin than their peers. So where is YMTC's advantage over their competition? The name of the game in the memory segment is who makes more money.

So, you declaring Micron is not competitive compare to YMTC is just plain incorrect.

YMTC is the new kid on the block. We are trying to build ourselves up first, then we will need to improve the technical & operational efficiency to sustain a healthy competitive business model from Profit/Loss standpoint. While YMTC is still in the growth phase, let's not kid ourselves and falsely hype it to be something that its not (yet).

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How do you know YMTC isn't buying used tools that are also depreciated for the I/O wafer? Or using Xtacking so they can at least partially outsource the I/O wafer while keeping their array wafer and the bonding process in house? This way they can leverage foundry capability rather than have to build everything themselves.

I didn't declare Micron as uncompetitive, I said it may be hard for them to recover market share. And it will be. Any market share they have lost to YMTC is during a boom in the market. YMTC is unlikely to lose market share even in a downturn because their demand is not solely price driven but security driven. With lower Micron market share, more companies are likely to sample YMTC products and find them useful, and the security minded among them might change suppliers permanently.

It's very possible for a new company to have cost and operational advantage over a complacent competitor coasting on momentum and monopoly status. It is also possible for a new company with a specific selling point that others can't match - national security - to have a superior value proposition.

tokenanalyst said:

Yes my bad that is foundry cost per wafer. This table says that lithography cost per wafer in EUV ramps up with chiplets compared with other fab tools. But as you said chiplets require smaller dies that could have better yields and less defect than a single monolithic die so is kind of a puzzle.​

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Ah, I see. Yeah, those guys missed the essence of the chiplet's benefit.

tokenanalyst said:

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They are saying that in this case that for 5nm that cost on litho tools per wafer increase a lot.

Personally I take this with a grain of salt because there some other variables that this guys are not considering.

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These guys are full of it. In their assumptions they purposed made the chiplet size to something not optimal (on purpose). No one would do that in real life. Designer would make sure the chiplet size would not cause the scanner to be inefficient by factor of ~1.8x per the example they used.

And like mentioned earlier, they didn't take into consideration that a larger area is exposed to higher failure rate from defects or other parametric yield loss causes. This is actually probably the most significant cost saving factor for going to chiplet.

So the fact they used an unrealistic and unfavorable condition & omitted the best justification for chiplet in their assumptions is cause for us to, do what you said, take it with a grain of salt. LOL

FairAndUnbiased said:

It's very possible for a new company to have cost and operational advantage over a complacent competitor coasting on momentum and monopoly status. It is also possible for a new company with a specific selling point that others can't match - national security - to have a superior value proposition.

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It seems quite clear that for the time being YMTC will be limited only by its production capacity of about 100K wpm, that should increase to 300K wpm next year thanks to the opening of their new fab at the end of the year (if there won't be "surprises").

YMTC lives in a kind of privileged situation now, not a market one, mainly, due to various reasons, it will sell anything that is able to produce. It's priority at the moment seems to be to ramp up capacity before the "faucet" of foreign equipments closes.

european_guy said:

It seems quite clear that for the time being YMTC will be limited only by its production capacity of about 100K wpm, that should increase to 300K wpm next year thanks to the opening of their new fab at the end of the year (if there won't be "surprises").

YMTC lives in a kind of privileged situation now, not a market one, mainly, due to various reasons, it will sell anything that is able to produce. It's priority at the moment seems to be to ramp up capacity before the "faucet" of foreign equipments closes.

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I think they're limited not by supply of foreign equipment (which I think they're actually stockpiling) but by its integration into new fabs. There's evidence for stockpiling in general:


Some short sighted market fundamentalists think this is stupid but I disagree. It's insurance.

Exposure to domestic manufacturers can already package 4nm mobile phone CPU​

There is news tonight that the domestic Changdian Technology (JCET) official announced that it can realize the packaging of 4nm mobile phone chips, and in addition to mobile phone chips, CPUs for PCs, graphics card GPU chips, etc. can also be packaged.

Compared with the traditional chip stacking technology, the advantage of multi-dimensional heterogeneous packaging is that higher-density chip packaging can be achieved by introducing an interposer and its multi-dimensional combination.

FairAndUnbiased said:

How do you know YMTC isn't buying used tools that are also depreciated for the I/O wafer? Or using Xtacking so they can at least partially outsource the I/O wafer while keeping their array wafer and the bonding process in house? This way they can leverage foundry capability rather than have to build everything themselves.

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I'm aware roughly what systems they have in their fab. YMTC makes both their array wafers and I/O wafers. I now for certain, other guys relocated litho tools from their DRAM operations and that YMTC buys their new (they didn't have an old DRAM fab with old equipments to spare).

FairAndUnbiased said:

I didn't declare Micron as uncompetitive, I said it may be hard for them to recover market share. And it will be. Any market share they have lost to YMTC is during a boom in the market. YMTC is unlikely to lose market share even in a downturn because their demand is not solely price driven but security driven. With lower Micron market share, more companies are likely to sample YMTC products and find them useful, and the security minded among them might change suppliers permanently.

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that's a lot of thing you "said". no way I could've inferred all of those from what little you actually said.

you basically only said:
"I don't see their technical advantage" and "if prices are even comparable (they won't be, China always does it cheaper) then YMTC's product is superior to Micron."

From what little you said, in response,
I tried to explained cost function and not technical advantage is more important. I also explained the intrinsic advantage Micron has over YMTC in response to what you said. I assumed comparison of intrinsic cost function delta without any external assist. But you are correct, if there's subsidies that would allow YMTC to sell below cost then this is an inherent advantage they have over Micron.

FairAndUnbiased said:

It's very possible for a new company to have cost and operational advantage over a complacent competitor coasting on momentum and monopoly status. It is also possible for a new company with a specific selling point that others can't match - national security - to have a superior value proposition.

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I've done a financial & operation analysis of all 3D NAND players based on their installed base, and process flow, etc. Points I shared before are what we got out of our analysis. I didn't see a "YMTC does it cheaper...then is superior" situation with the result of the analysis. Of course, my analysis could be incomplete or inaccurate.

My intent is not to steal your thunder or question you. Just trying to share findings from my previous analysis. I prefer not to debate hypotheticals. I had outlined very specific points that we thought differentiates the other players from YMTC. If you reach different conclusion with your own detailed analysis, then would be happy to discuss further and learn anything new you uncover.

@hvpc bro your opinion? 5nm and 7nm are TSMC money maker, will it affect TSMC expansion plan? TSMC Arizona FAB is small compare to their other FAB in Taiwan at 20k WPM, BUT the Chip will be costly to produce, so a white elephant vanity project? I think with the recession looming the demand will drop for high end chips and China is the only bright spot. Again the gods favors the Chinese, I can't believed they choose an Atheist country than that of the Land of freedom loving religious people...lol

AMD, Apple, and Nvidia Reportedly Cutting Back on TSMC 5nm Orders​

By published 1 day ago
Oversupply, artificial shortages, or something else?


(Image credit: Shutterstock)


As demand for client PC chips is slows, some of TSMC's largest customers are reportedly cutting down their orders to the world's number one contract maker of chips. So far, Apple, AMD, and Nvidia have either reduced their orders, or plan to do so, reports . In particular, AMD is winding down orders for products made using N7/N6 nodes, whereas Nvidia is mulling cutting down orders that could impact the upcoming .

AMD reduced orders for products made on TSMC's N6 and N7 process technologies by 20,000 wafers for Q4 2022 and Q1 2023. Since AMD is about to release its next-generation desktop CPUs () and GPUs () using TSMC's N5 node, it's logical for the company to reduce orders for chips made on previous-generation fabrication technology. However, AMD's current-generation Rembrandt processors are made using the foundry's N6 technology. Furthermore, even next-gen Raphael uses an I/O die fabricated on the N6 node, so a potential reduction in N6 orders might affect supply and availability of AMD's future Ryzen 7000-series CPUs as well.

Nvidia is also looking forward to reducing orders for TSMC's N5 (or perhaps 4N) production from TSMC. The company's next-generation 'Ada Lovelace' GPUs are set to be made at TSMC using one of the company's N5 nodes (presumably 4N, which is customized "4nm for Nvidia"). Nvidia's partners have plenty of GeForce RTX 30-series GPUs and boards, and miners are dumping their graphics cards and feeding a second-hand cards market . Adding an all-new GeForce RTX 40-series into the mix could further oversupply the GPU market.

Since Nvidia (and AMD) made pre-payments to TSMC for capacity and agreed to certain terms, TSMC is apparently unwilling to reduce production of chips for Nvidia, but it agreed to delay the first deliveries, possibly up to Q1 2023, which essentially means that Nvidia could delay the GeForce RTX 40-series launch. This would allow Nvidia and its partners to sell off existing cards, but it could also provide AMD with an opportunity to release its Radeon RX 7000-series GPUs before Nvidia launches its next-gen offerings.

More likely is that Nvidia will launch the new GeForce RTX 40-series 'Ada Lovelace' GPUs, but it won't ship as many models at first in order to let its partners sell off their existing GeForce RTX 30-series inventory. Regardless, it's unclear whether demand for previous-generation products will be strong enough once RDNA 3 and Ada Lovelace graphics cards make their appearance, especially not at the wildly inflated prices of the past year, which is why so many companies are heavily pushing "GPU sales" right now — sell them while you can.

Even Apple, one of the world's largest makers of consumer electronics, is reportedly cutting down orders for iPhone 14 components by 10% from 90 million initial units, DigiTimes notes. No clear reason was given, though softening demand and no real need for users to upgrade are likely factors.

While there might be a temporary oversupply of client CPUs, GPUs, and SoCs, the industry seems to be optimistic about the long-term demand. At present AMD, Apple, Broadcom, Intel, MediaTek, Nvidia and Qualcomm are all queuing up for TSMC's next generation N3 (3nm class) process capacity, reports . It remains to be seen who is going to use which process — there are currently five variants slated to arrive in the next year or two: N3, N3E, N3P, N3S, N3X. N3 will be a long lasting node for TSMC, so we are likely talking about multiple fabrication technologies here.

Neither Apple, nor AMD, nor Nvidia would confirm or deny talks about production orders to TSMC.





1 day ago — Due to softening demand, AMD, Apple, and Nvidia are reportedly reducing orders for TSMC's 5nm wafers.

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  20 hours ago — Sales of AMD processors and graphics cards expected to drop given ... AMD, Apple, and Nvidia Reportedly Cutting Back on TSMC 5nm Orders.

european_guy said:

It seems quite clear that for the time being YMTC will be limited only by its production capacity of about 100K wpm, that should increase to 300K wpm next year thanks to the opening of their new fab at the end of the year (if there won't be "surprises").

YMTC lives in a kind of privileged situation now, not a market one, mainly, due to various reasons, it will sell anything that is able to produce. It's priority at the moment seems to be to ramp up capacity before the "faucet" of foreign equipments closes.

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Hi, bro.
Question, what is the reason behind the 300K wpm next year statement? I wonder if you heard something that I had missed.

There is not that many equipment available in the market to support a 200K wpm growth in one year. Also, YMTC's second fab could handle maximum another 100K wpm. More cleanroom space would be needed for it to reach the 300K wpm you speak of.

FairAndUnbiased said:

I think they're limited not by supply of foreign equipment (which I think they're actually stockpiling) but by its integration into new fabs. There's evidence for stockpiling in general:

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Some short sighted market fundamentalists think this is stupid but I disagree. It's insurance.

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Bro,
Actually, I think the westerners are selling us short. SMIC is not stockpiling equipments, they are making good use of these equipments into actual wafers out.

Westerners had long been, and continues, to underestimate the capacity growth in China. They just couldn't believe we could convert tool purchases into physical wafers out so quickly.

So here, I disagree with them calling all the tool purchases "stockpiling". I've seen analyst grossly project this year and next year's wafer capacity growth in china. By year end, I'm sure they will be surprised to find out these "stockpile" of equipment actually churns out more wafers than they had anticipated.

ansy1968 said:

@hvpc bro your opinion? 5nm and 7nm are TSMC money maker, will it affect TSMC expansion plan? TSMC Arizona FAB is small compare to their other FAB in Taiwan at 20k WPM, BUT the Chip will be costly to produce, so a white elephant vanity project? I think with the recession looming the demand will drop for high end chips and China is the only bright spot. Again the gods favors the Chinese, I can't believed they choose an Atheist country than that of the Land of freedom loving religious people...lol

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I don't think current market dynamic will affect any announced expansion plan. With equipment shortage expected to last well past 2025, the big 3 jockeying to position themselves for 3nm/2nm, they have no choice but to continue to chug along with their plan.

We are all aware there's a waitlist to acquire critical equipments such as EUV scanners. If tsmc stops investing or delay taking shipments of tools, their slot goes to Samsung or Intel. Anything tsmc "abandons", I'm sure the other two players would gladly take those systems in place of tsmc.

tsmc was also undersupplying the market demand for 7/5/3nm to begin with. So any change in delivery timing by Apple, Nvidia, just means tsmc reshuffle their other orders. I think this is precisely what Mark Liu said they will do. tsmc basically mentioned these soft spots in their order-in-hand, but they also said reshuffling their capacity to other higher demand segments will mean their capacity utilization will remain at same level.

BUT, if one of them flinch and the other two follow suit and delay their investment, that mean domestic fabs will benefit. Currently domestic fabs are not able to procure enough equipments to support our expansion due to WFE having to allocate tools for other fabs around the world. So, whatever the world could no longer afford to buy would enable us to grow faster.

tsmc slowing their investment is unlikely. but let's hope they do.