Based on TSMC's official January 2022 revenue report, it looks like the company is set for another great year. Month-on-month revenues are up by 10.8 percent compared to December of last year and year-on-year revenues are up a whopping 35.8 percent. In actual money, that corresponds to a revenue of NT$172.18 billion, or roughly US$6.18 billion, so we're not talking about small potatoes here.

TSMC is forecasting a growth in sales of between 25 to 29 percent this year, assuming they can continue to deliver as expected to their customers. The first quarter sales are expected to land between US$16.6 and 17.2 billion, or around a 7.4 percent increase compared to last quarter. Its closest competitor in Taiwan also announced record profits, although at a mere NT$20.47 billion or about US$735 million. This is a month-to-month increase of a mere 0.95 percent, but an annual increase of a healthy 31.83 percent. UMC is expecting to be operating at full capacity for the remainder of this year, although no additional production capacity is expected. The company is said to be increasing its prices by five percent this year.

In a surprising outcome, Taiwanese GlobalWafers purchase of German Siltronic has failed, due to the German Ministry for Economic Affairs having failed to approve the deal. The €4.35 billion deal had been approved by all other regulators globally, but the German Ministry for Economic Affairs claims that they didn't have enough time to go over the review process locally by the deadline that was set. It appears that they're blaming their counterparts in the PRC for having been too slow in their approval process, as the Germans wanted to go over the Chinese approval, before committing to their own approval.

The deal might not be dead in the water though, but it looks like GlobalWafers is going to have to make a new offer and start the entire process over again. Had the deal gone through, GlobalWafers would've become the world's second largest 300 mm silicon wafer producer, behind Japanese Shin-Etsu, overtaking Sumco, which is also based out of Japan. GlobalWafers already owns a majority stake in Siltronic, but the question now is if GlobalWafers will maintain that share, or look to invest elsewhere. One option on the table for GlobalWafers is apparently the US, but at the same time, the majority shareholder of Siltronic wants to sell, ideally to GlobalWafers. Although it's only speculation at this point, it has been suggested that the German government wanted to retain Siltronic as a local company, especially due to growing interest by the EU to expand foundry type businesses in Europe. GlobalWafers is said to make an announcement by the end of this week as to whether they will continue with the Siltronic purchase or not.

Up until a few weeks ago, Taiwan had been largely spared from local spread of the Coronavirus, but the Omicron variant has bypassed the defences that were set up to prevent the virus from spreading. Although the amount of verified cases are still comparatively very low, there's a cluster of over 100 cases confirmed in a free trade zone near the Taoyuan airport, which has so far mostly affected Askey, but other companies in the same free trade zone have had their staff tested and are waiting for the results. As a preventive measure, TSMC, UMC and other companies are already implementing working from home rules for staff that aren't critical to production.

TSMC already started what they call epidemic prevention measures last week and called off unnecessary face to face meetings, paused international business trips and limited local business trips, among other things. TSMC has also stopped all regional shuttle buses between its various locations in Taiwan, as well as local shuttle buses between plants, to help prevent any potential spread. The company is also said to have closed most of its staff facilities and even suspended its Chinese New Year party, which is one of the highlights for many workers in Taiwan, largely due to the giveaways that the companies are doing, in addition to any bonuses that are being paid around this time of the year. Time will tell if Taiwan can continue to stave off the virus, but to date, 73.2 percent of the population has taken two shots of vaccine, although the government is already pushing for a third dose, largely because most people have received the AstraZeneca vaccine which is considered as giving less protection against the Omicron variant. It should be noted that neither TSMC or UMC have any chip plats in Taoyuan, but TSMC does have a backed fab at the opposite end of Taoyuan.

The Taiwanese President, Tsai Ing-Wen, told local media that she believes that Taiwan can become self-sufficient when it comes to semiconductor equipment, although this is obviously not something that would happen overnight. A large part of why this has even been considered seems to be the current pandemic, as although Taiwan might not have suffered much from the pandemic itself, the nation has suffered when it comes to imports, as just in time production and delivery systems have broken down, which has affected most industries in Taiwan.

In 2021 Taiwanese semiconductor companies invested some NT$1 trillion (~US$36.3 billion), of which 70 percent was in equipment, according to the President, with around NT$600 billion (~US$21.8 billion) of that money being towards imported equipment. It also shows that local semiconductor equipment makers have a lot of work to do, especially if they're intending to catch up with their international competitors. The President also mentioned that the local semiconductor equipment industry grew by 28.7 percent in 2021, although it was still relatively small at NT$116.7 billion (~US$4.2 billion), but she was quoted as saying that she's 100 percent certain that Taiwan has the ability to make all semiconductor equipment the [local] industry needs.

Much of the technology industry in Taiwan is located in various science parks located around the island and the three largest scientific parks in Taiwan raked home US$127 billion in sales last year, or an increase of 23.58 percent compared to 2020. The semiconductor industry accounted for nearly 72 percent of that, although, the fact that the three largest science parks are home to companies like TSMC, UMC, MediaTek, Kingston, Realtek, AU Optronics, Winbond, Innolux and many others, so it's not surprising that the largest share of revenue is coming from here. It should be noted that the 72 percent figure is only for the first three quarters of 2021, so it might end up being even higher.

The numbers are based on data from the Ministry of Science and Technology (MOST) and after semiconductors, optoelectronics were bringing in the highest revenue streams with an increase of over 29 percent compared to 2020, to a sales value of almost US$18 billion, which is truly dwarfed when compared to the semiconductor sales. In third place was sales of computers and computer accessories which accounted for a comparatively measly US$4.78 billion, or an increase of 13.53 percent. The trend is expected to continue in 2022, assuming Taiwan isn't affected by the pandemic.

The development of AI and 5G has boosted the demand for high-end semiconductor chips. In order to enhance critical capabilities of Taiwan's chip industry for this emerging market, the Department of Industrial Technology (DoIT), Ministry of Economic Affairs (MOEA), Taiwan, has supported ITRI to establish the Heterogeneous Integration Chip-let System Package Alliance (Hi-CHIP). This alliance will help create a complete ecosystem covering package design, testing and verification, and pilot production, which will achieve the goal of supply chain localization and expand business opportunities.

According to DoIT, the global semiconductor industry is keen to develop heterogeneous chip integration processes, yet there is no effective solution to realize the high-mix low-volume manufacturing required. The Hi-CHIP alliance will provide a trial production platform to assist relevant industry players in accelerating time-to-market.

The semicondustor market in 3Q21 is red hot with total revenue of the global top 10 IC design (fabless) companies reaching US$33.7 billion or 45% growth YoY, according to TrendForce's latest investigations. In addition to the Taiwanese companies MediaTek, Novatek, and Realtek already on the list, Himax comes in at number ten, bringing the total number of Taiwanese companies on the top 10 list to 4.

Qualcomm has been buoyed by continuing robust demand for 5G mobile phones form major mobile phone manufacturers with further revenue growth from its processor and radio frequency front end (RFFE) departments. Qualcomm's IoT department benefited from strong demand in the consumer electronics, edge networking, and industrial sectors, posting revenue growth of 66% YoY, highest among Qualcomm departments. In turn, this drove Qualcomm's total 3Q21 revenue to US$7.7 billion, 56% growth YoY, and ranking first in the world.

According to reports out of Taiwan, Intel's meeting with TSMC might not have ended up in favour of Intel, as TSMC has apparently asked Intel to pay up a deposit in advance to get access to its upcoming 3 nanometer node. This is unlikely to be what Intel had hoped for, but at the same time, the 3 nanometer node is likely to be popular among many of TSMC's customers, unless the cost becomes prohibitive.

Intel was apparently hoping to be able to get a dedicated production line, much in the way of what Apple has at TSMC, but it seems like this is going to cost and the question is if Intel is willing to pay or not. The reason for a dedicated production line could also come down to Intel wanting to make chips at TSMC using Intel specific tricks of the trade, that Intel doesn't want TSMC or its competitors to get too much insight into. Time will tell what will come out of this meeting between the two semiconductor giants, but it seems like Gelsinger has changed his mind about Taiwan, as he said that "Intel would continue to invest in Taiwan".

Intel and TSMC are positioning themselves as two competing foundries for a significant period. However, as the difficulties in semiconductor manufacturing rise, the collaboration of the two seems inevitable. Not because Intel is eyeing TSMC's clients, but because of the race to produce the most minor and best possible semiconductor node. We already know that Intel plans to use some of TSMC's nodes for its Ponte Vecchio accelerator that contains 47 tiles. However, we didn't realize just how big the contract between the two companies was. According to the latest report from DigiTimes, Intel is supposed to become one of the top three clients at TSMC.

As the report notes, the collaboration should extend to at least TSMC's 2 nm node, expected in 2025. After that, the state of semiconductors is unknown. Intel has a solid chance to be in the top three customers in 2023 and become one of the primary sources of profit for the Taiwanese giant. We are excited to see how this prediction plays out and hope to hear more from both in the future.

Pat Gelsinger is planning a trip to Asia next week, where he'll stop over in Taiwan and Malaysia according to Bloomberg. There he's apparently planning to hold talks that show that manufacturing in Asia is a key part to his efforts of turning Intel's fortunes around. It's said that he'll also be meeting with TSMC.

This will be Gelsinger's first trip to Asia as Intel's CEO, largely due to the pandemic, although outside of meeting with TSMC, his schedule wasn't further mentioned, but it's likely he will be meeting with key partners and suppliers. Intel does some of its chip packaging in Malaysia, on the island of Penang to be more specific, where plants have been temporarily closed due to the pandemic, which in turn has hurt supply for the tech companies located there.

The chip shortage discussion has been very focused on TSMC for some reason and although the company is without a doubt the world's leading foundry, the company is making its living from being a cutting edge foundry, whereas much of the components that there's a shortage of are made on far older nodes at many different foundries. Taiwanese UMC is one of the foundries that makes many of the automotive semiconductors, as well as key components when it comes to power regulation and is considered the world's third largest foundry.

Until 2018, UMC was competing head on with TSMC, although the company was always about a node behind TSMC, which led to a management team decision to slow down its node transition and instead to focus on speciality technologies. The company has done well in this niche, with a revenue of about US$6.2 billion in 2020. However, UMC is starting to feel the pressure from its competitors in China, as the PRC government is making a push for local production of local IC designs.

Intel is reportedly in talks with TSMC to secure foundry allocation to meet its product roadmap execution. The company is sending an executive delegation to meet with TSMC later this month, to secure foundry capacity for the N3 (3 nm) silicon fabrication node, and ensure that Intel's allocation isn't affected by other customers such as Apple. As part of its IDM 2.0 strategy, Intel has decided to build its products essentially as multi-chip modules with each block of IP built on a silicon fabrication node most optimal to it, so the company maximizes cutting-edge foundry nodes only on the technology that benefits from it the most. N3 will play a vital role with logic/compute tiles in products bound for 2023, as N3 hits critical volume in the first half of the year.

In related news, Intel CEO Pat Gelsinger speaking at the Fortune Brainstorm Tech conference, stressed on the importance for American chip designers to seek out semiconductor manufacturing in America, and cautioned against investing in Taiwan (without naming TSMC). This comes in the wake of geopolitical uncertainty in the region. In response to this statement issued to DigiTimes, TSMC CEO Mark Liu downplayed the matter, and said that Gelsinger's statement wasn't worth responding to, and that he doesn't slander industry colleagues. TSMC and Samsung have each announced multi-billion Dollar foundry investments in the US, in attempts to make the global semiconductor supply chains resilient to any security situation that may emerge in East Asia.

Since Intel CEO Pat Gelsinger joined the company earlier this year, the messaging language from Intel has changed radically, as it has become a no-nonsense message of Intel going back to its roots as a leading foundry and a leading chip maker. However, Gelsinger might've overstepped a little bit as of lately, as during a conference in California, he went on record saying that Intel deserves special treatment by the US government, in favor of some of its competitors.

At the same time, it's not hard to see why Intel thinks the US government should favor it and other US companies like Micron and Texas Instruments, over Samsung and TSMC. However, Intel's selling argument here is that investing in non-US companies means that the R&D money and IP ends up abroad, which isn't entirely true when it comes to foundries. Gelsinger also complained about the fact that Samsung and TSMC was getting large government subsidies in their home countries and claimed that because of those subsidies, Intel was competing with Korea and Taiwan, rather than with Samsung and TSMC.

The emergence of the COVID-19 pandemic led to severe delays in manufacturing and logistics. In particular, governments worldwide began implementing border restrictions in 2Q20 to combat the ongoing health crisis, leading to a sudden decline in order volumes for channel-market SSDs, according to TrendForce's latest investigations. Annual shipment of SSDs to the channel (retail) market reached 111.5 million units in 2020, a 15% YoY decrease. In terms of market share by shipment, Kingston, ADATA, and Kimtigo once again occupied the top three spots, respectively.

Looking at the channel market for SSDs as a whole, NAND Flash suppliers (among which Samsung possessed the largest market share) accounted for around 35% of the total shipments in 2020, while SSD module makers accounted for the other 65%. The top 10 module makers accounted for 71% of channel-market SSD shipments from all SSD module makers. Taken together, these figures show that the market remained relatively oligopolistic in 2020. However, it should be noted that TrendForce's ranking of SSD module makers for 2020 takes account of only products bound for the channel market and under brands owned by the module makers themselves; NAND Flash suppliers were therefore excluded from the top 10 ranking.

After all the reports of component shortages over the past few months, it now seems that the power related problems in China are having an effect on demand of passive components, such as MLCCs (Multilayer Ceramic Capacitor), various types of resistors and inductors among others. As such, manufacturers of said components in Taiwan are cautious about demand for the rest of this quarter, with even big players like Yageo - they're the third largest manufacturer in the world of passive components - being conservative, if somewhat positive about shipments this quarter, according to Digitimes.

As many of the Taiwanese makers of passive components have factories in China, the power cuts in several provinces are adversely affecting these companies. In the case of Yageo, they claim to be able to maintain their production at its largest facility in China, due to it not being located in one of the so far not affected provinces. Some of its competitors aren't as lucky and have already seen losses in production and aren't expecting things to improve. Besides the power outages, there are still issues with the logistics and shipping, which is further causing problems.

DRAM contract prices are likely to exit a bullish period that lasted three quarters and be on the downswing in 4Q21 at a QoQ decline of 3-8%, according to TrendForce's latest investigations. This decline can be attributed to not only the declining procurement activities of DRAM buyers going forward, but also the drop in DRAM spot prices ahead of contract prices. While the buying and selling sides attempt to gain the advantage in future transactions, the DRAM market's movement in 2022 will primarily be determined by suppliers' capacity expansion strategies in conjunction with potential growths in demand. The capacity expansion plans of the three largest DRAM suppliers (Samsung, SK hynix, and Micron) for 2022 are expected to remain conservative, resulting in a 17.9% growth in total DRAM bit supply next year. On the demand side, inventory levels at the moment are relatively high. Hence, DRAM bit demand is expected to grow by 16.3% next year and lag behind bit supply growth. TrendForce therefore forecasts a shift in the DRAM market next year from shortage to surplus.

It appears that some of the current chip shortages might be artificially induced by one or multiple companies in the chip supply chain, according to an article by TIME Magazine. The article is taking a look at the role TSMC is playing in the global chip production industry and TIME has interviewed TSMC chairman Mark Liu among others in the industry.

Mark Liu is quoted as saying "But I told them, "You are my customer's customer's customer. How could I [prioritize others] and not give you chips?"" when asked about the complaints by car makers, since they were among the first to suggest TSMC was one of the issues. Due to the various allegations against TSMC, Liu had a team collect data points to try and figure out what was going on and to see which customers were truly running low on stock and which customers that might be stockpiling for a rainy day.

There's no secret that Taiwan has been looking at expanding its chip production to other nations, with TSMC having agreed to build a plant in Arizona, while also discussing the subject with the EU. Now it looks like a deal is being worked out with India to build further chip plants there, although it's not clear who the intended manufacturer will be, as TSMC isn't mentioned in the report by Bloomberg.

However, the piece mentions 5G devices and components for electric cars, which suggests that it might not be a cutting edge node we're looking at here, but rather something a bit more conservative like 28 or 14 nm. India would make sense in many ways, but the obvious concern once again is water supply, although so far no exact location has been mentioned for the placement of the fab.

If you were hoping for relief from the electronics shortages, then we have more bad news for you, as China is now being hit by power outages in various parts of the country. The outages are due to shortage in production, as China is trying to balance pollution vs. production, while at the same time trying to make sure its population doesn't feel the worst of the power shortage.

Factories in at least five provinces have suspended production to try and appease the government, which in turn will lead to delays in shipping whatever part or component they're making that is an important cog in the greater machinery that produces so many of the world's goods. Not all factories are affected and the suspension is obviously temporary, but it seems like we can expect a rolling production suspension over the next few months at the very least, which suggests that not everyone will get their new shiny toy from Santa this Christmas.

If you thought that the chip shortage was bad, then the building shortage of passive components, such as capacitors, resistors, inductors and so on, is going to have you in tears. Due to lockdowns in Malaysia and Indonesia, where most of the well known Japanese aluminium capacitors are made, the factories of Chemi-Con, Nichicon and Rubycon have been shut down for most of July and August. The three companies together control some 50 percent of the capacitor market and it's expected that the current situation in Malaysia will lead to a reduction in capacitor shipments by 30 to 60 percent.

At the same time, the increased demand for everything from computer parts to renewable energy technology has ramped up demand for these components. Some of that business has been picked up by Taiwanese and Chinese manufacturers, but whereas in the past you could get your order in some four to six weeks, the lead times are now three to six months and that's if you're lucky. DigiTimes is reporting that several Taiwanese component makers have seen a YoY revenue growth of 20 percent or more for the first half of this year.

In view of the ongoing production capacity shortage in the semiconductor industry and the resultant price hike of chips, revenue of the top 10 IC design companies for 2Q21 reached US$29.8 billion, a 60.8% YoY increase, according to TrendForce's latest investigations. In particular, Taiwanese companies put up remarkable performances during this period, with both MediaTek and Novatek posting YoY growths of more than 95%. AMD, on the other hand, experienced a nearly 100% YoY revenue growth, the highest among the top 10.

TrendForce indicates that the ranking of the top five companies for 2Q21 remained unchanged from the previous quarter, although there were major changes in the 6th to 10th spots. More specifically, after finalizing its acquisition of Inphi, Marvell experienced a major revenue growth and leapfrogged Xilinx and Realtek in the rankings from 9th place in 1Q21 to 7th place in 2Q21.

According to Nikkei, TSMC is set to start building a new fab in Kaohsiung, which is Taiwan's third largest city and located in the south of the island. It's also where ASE Technology Holding is located, which is the world's largest chip packaging and testing contractor. So far, TSMC doesn't have any fabs this far south in Taiwan, but it's not without its challenges.

The new fab is said to be designed to build chips on TSMC's 6 and 7 nm nodes, which are currently their most popular nodes, although this is likely to change as their 5 nm node begins to ramp up production. That said, there will still continue to be a huge demand for 6 and 7 nm parts, as these nodes transition to become mainstream production nodes.

Despite the intensifying COVID-19 pandemic that swept Taiwan in 2Q21, the domestic OSAT (outsourced semiconductor assembly and test) industry remained largely intact, according to TrendForce's latest investigations. Global sales of large-sized TVs were brisk thanks to major sporting events such as the Tokyo Olympics and UEFA Euro 2020. Likewise, the proliferation of WFH and distance learning applications propelled the demand for IT products, while the automotive semiconductor and data center markets also showed upward trajectories. Taking into account the above factors, OSAT companies raised their quotes in response, resulting in a 26.4% YoY increase in the top 10 OSAT companies' revenue to US$7.88 billion for 2Q21.

TrendForce indicates that, in light of the ongoing global chip shortage and the growing production capacities of foundries/IDMs in the upstream semiconductor supply chain, OSAT companies gradually increased their CAPEX and expanded their fabs and equipment in order to meet the persistently growing client demand. However, the OSAT industry still faces an uncertain future in 2H21 due to the Delta variant's global surge and the health crisis taking place in Southeast Asia, home to a significant number of OSAT facilities.

Annual shipment of notebook computers and desktop PCs underwent a massive increase in 2020 thanks to the proliferation of the stay-at-home economy brought about by the COVID-19 pandemic last year, according to TrendForce's latest investigations. In particular, notebook shipment increased by a staggering 26% YoY, thereby generating a corresponding demand for DRAM chips. Although the movement of DRAM prices remained stable in 2020, there was a palpable growth in actual DRAM bit demand. Hence, global DRAM module revenue increased by about 5% YoY to US$16.9 billion for 2020.

Looking back at the price trend of DRAM modules for 2020, TrendForce indicates that the market adopted a relative conservative outlook going forward in view of the ongoing pandemic. In turn, various end-products differed wildly in their respective market performances as well. For instance, while demand for notebooks remained strong, smartphone demand was relatively bearish. Server shipment, on the other hand, was at the same time consistent yet indicative of uncertainties, to some degree. In light of the varying performances in the end-markets, PC DRAM prices did not undergo drastic fluctuations throughout the year, and DRAM module suppliers posted earnings performances that were a direct result of their sales strategies, with certain suppliers, including Kimtigo and ADATA, able to raise their revenues by a massive margin.

The panic buying of chips persisted in 2Q21 owing to factors such as post-pandemic demand, industry-wide shift to 5G telecom technology, geopolitical tensions, and chronic chip shortages, according to TrendForce's latest investigations. Chip demand from ODMs/OEMs remained high, as they were unable to meet shipment targets for various end-products due to the shortage of foundry capacities. In addition, wafers inputted in 1Q21 underwent a price hike and were subsequently outputted in 2Q21. Foundry revenue for the quarter reached US$24.407 billion, representing a 6.2% QoQ increase and yet another record high for the eighth consecutive quarter since 3Q19.