The latest TrendForce report reveals a notable 7.9% jump in 4Q23 revenue for the world's top ten semiconductor foundries, reaching $30.49 billion. This growth is primarily driven by sustained demand for smartphone components, such as mid and low-end smartphone APs and peripheral PMICs. The launch season for Apple's latest devices also significantly contributed, fueling shipments for the A17 chipset and associated peripheral ICs, including OLED DDIs, CIS, and PMICs. TSMC's premium 3 nm process notably enhanced its revenue contribution, pushing its global market share past the 60% threshold this quarter.

TrendForce remarks that 2023 was a challenging year for foundries, marked by high inventory levels across the supply chain, a weak global economy, and a slow recovery in the Chinese market. These factors led to a downward cycle in the industry, with the top ten foundries experiencing a 13.6% annual drop as revenue reached just $111.54 billion. Nevertheless, 2024 promises a brighter outlook, with AI-driven demand expected to boost annual revenue by 12% to $125.24 billion. TSMC, benefiting from steady advanced process orders, is poised to far exceed the industry average in growth.

TrendForce's research indicates a dynamic third quarter for the global foundry industry, marked by an uptick in urgent orders for smartphone and notebook components. This surge was fueled by healthy inventory levels and the release of new iPhone and Android devices in 2H23. Despite persisting inflation risks and market uncertainties, these orders were predominantly executed as rush orders. Additionally, TSMC and Samsung's high-cost 3 nm manufacturing process had a positive impact on revenues, driving the 3Q23 value of the top ten global foundries to approximately US$28.29 billion—a 7.9% QoQ increase.

Looking ahead to 4Q23, the anticipation of year-end festive demand is expected to sustain the inflow of urgent orders for smartphones and laptops, particularly for smartphone components. Although the end-user market is yet to fully recover, pre-sales season stockpiling for Chinese Android smartphones appears to be slightly better than expected, with demand for mid-to-low range 5G and 4G phone APs and continued interest in new iPhone models. This scenario suggests a continued upward trend for the top ten global foundries in Q4, potentially exceeding the growth rate seen in Q3.

Intel Foundry Services (IFS) and Tower Semiconductor, a leading foundry for analog semiconductor solutions, today announced an agreement where Intel will provide foundry services and 300 mm manufacturing capacity to help Tower serve its customers globally. Under the agreement, Tower will utilize Intel's advanced manufacturing facility in New Mexico. Tower will invest up to $300 million to acquire and own equipment and other fixed assets to be installed in the New Mexico facility, providing a new capacity corridor of over 600,000 photo layers per month for Tower's future growth, enabling capacity to support forecasted customer demand for 300 mm advanced analog processing.

This agreement demonstrates the commitment from both Intel and Tower to expand their respective foundry footprints with unparalleled solutions and scaled capabilities. Intel will manufacture Tower's highly differentiated 65-nanometer power management BCD (bipolar-CMOS-DMOS) flows, among other flows at Intel's Fab 11X in Rio Rancho, New Mexico.

TrendForce reports an interesting shift in the electronics landscape: dwindling inventories for TV components, along with a surging mobile repair market that's been driving TDDI demand, have sparked a smattering of urgent orders in the Q2 supply chain. These last-minute orders have served as pivotal lifelines, propping up Q2 capacity utilization and revenue for semiconductor foundries. However, the adrenaline rush from these stop-gap orders may be a short-lived phenomenon and is unlikely to be carried over into the third quarter.

On the other hand, demand for staple consumer products like smartphones, PCs, and notebooks remains sluggish, perpetuating a slump in the use of expensive, cutting-edge manufacturing processes. At the same time, traditionally stable sectors—automotive, industrial control, and servers—are undergoing inventory correction. The confluence of these trends has resulted in a sustained contraction for the world's top ten semiconductor foundries. Their global revenue declined by approximately 1.1% for the quarter, amounting to a staggering US$26.2 billion.

Intel Corporation (Nasdaq: INTC) today announced that it has mutually agreed with Tower Semiconductor (Nasdaq: TSEM) to terminate its previously disclosed agreement to acquire Tower due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement, dated Feb. 15, 2022. In accordance with the terms of the merger agreement and in connection with its termination, Intel will pay a termination fee of $353 million to Tower.

"Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy," said Pat Gelsinger, CEO of Intel. "We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs. Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future."

TrendForce reports that the global top 10 foundries witnessed a significant 18.6% QoQ decline in revenue during the first quarter of 2023. This decline—amounting to approximately US$27.3 billion—can be attributed to sustained weak end-market demand and the compounded effects of the off-peak season. The rankings also underwent notable changes, with GlobalFoundries surpassing UMC to secure the third position, and Tower Semiconductor surpassing PSMC and VIS to claim the seventh spot.

Declining capacity utilization rate and shipment volume contribute to widened revenue decline
The revenue decline in Q1 was primarily influenced by declining capacity utilization rates and shipment volume across the top 10 foundries. For instance, TSMC generated US$16.74 billion in revenue—marking a 16.2% QoQ drop in revenue. Weakened demand for mainstream applications such as laptops and smartphones led to a significant decline in the utilization rates and revenue of the 7/6 nm and 5/4 nm processes, falling over 20% and 17%, respectively. While the second quarter may see temporary relief coming from rush orders, the persistently low capacity utilization rate indicates that revenue is likely to continue declining, albeit at a slower pace compared to Q1.

Intel's planned purchase of Tower Semiconductor Ltd. has been pushed back by another quarter, as a regulatory decision has not been made by China's State Administration for Market Regulation (SAMR). Intel announced the $5.4 billion deal in mid-February 2022, and set an estimated 12-month window for its completion. It is now one month overdue, with the first quarter of the financial year set to end next week. Intel is hopeful that it will get full regulatory approval by June 2023.

In light of SAMR not budging since the suspending of its review of the Intel-Tower merger, Intel Israel has issued a response this week: ""While we continue to work to close the Tower transaction within the first quarter of 2023, the transaction may close in the first half of 2023, subject to certain regulatory approvals and customary closing conditions."

Intel Foundry Services, the semiconductor foundry business of Intel, has onboarded an undisclosed fabless customer, the company disclosed in its Q4-2022 Financial Results presentation. This signals that the company wants to serve the semiconductor manufacturing industry beyond its own products, and scale up to demands, just like TSMC, UMC, Samsung Foundry, or other such semiconductor foundries do. The customer is looking to build chips on the Intel 3 foundry-node, which is rumored to offer performance/Watt and transistor-density figures comparable to TSMC 4N (4 nm EUV). Intel will extensively use Tower Semiconductor's silicon fabrication IP in the deal. Throughout its manufacturing lifecycle (from risk production to mass-production and completion), the deal is expected by Intel to generate over $4 billion in revenue for the company.Image Courtesy: VideoCardz

he U.S. Defense Advanced Research Projects Agency (DARPA) has selected Intel for Phase 1 of the Space-Based Adaptive Communications Node (Space-BACN) program, which aims to create a low-cost, reconfigurable optical communications terminal that will translate information between diverse satellite constellations. A Space-BACN satellite terminal will enable communications between satellite constellations, enabling data to be sent anywhere around the planet at the speed of light.

DARPA is planning for a future where tens of thousands of satellites from multiple private sector organizations deliver broadband services from low earth orbit (LEO). The goal of Space-BACN is to create an "internet" of satellites, enabling seamless communication between military/government and commercial/civil satellite constellations. The program will facilitate collaboration among partners to ensure that the terminal being designed is reconfigurable to provide interoperability among the participating constellation providers.

International semiconductor consortium or ISMC is a new joint venture between Abu Dhabi-based Next Orbit Ventures and Israeli Tower Semiconductor that is getting ready to invest big. The consortium is said to be looking at investing no less than US$3 billion in a chip foundry based in Karnataka, India. Maybe the most interesting part here is that Tower Semiconductor is set to be acquired by Intel, assuming the deal passes all regulatory reviews. This means that Intel could be replacing Tower Semiconductor in the consortium before the new fab has been finished.

Not much information is available about ISMC, but the planned chip plant would be one of the first foundries in India, as well as the largest foundry in the nation. So far ISMC has only signed a memorandum of Understanding with the government of Karnataka, so things could still change. However, the US$10 billion incentive by the central Indian government might be part of the reason behind the decision. Tower Semiconductor specialises in various speciality process technologies, such as SiGe, BiCMOS and SOI and manufacturer mixed-signal and RFCMOS chips, as well as CMOS based image sensors, power management chips and various types of non-volatile memory and some MEMS products for its customers. The new fab is expected to bring 1,500 direct and some 10,000 indirect jobs to the region.

The output value of the world's top 10 foundries in 4Q21 reached US$29.55 billion, or 8.3% growth QoQ, according to TrendForce's research. This is due to the interaction of two major factors. One is limited growth in overall production capacity. At present, the shortage of certain components for TVs and laptops has eased but there are other peripheral materials derived from mature process such as PMIC, Wi-Fi, and MCU that are still in short supply, precipitating continued fully loaded foundry capacity. Second is rising average selling price (ASP). In the fourth quarter, more expensive wafers were produced in succession led by TSMC and foundries continued to adjust their product mix to increase ASP. In terms of changes in this quarter's top 10 ranking, Nexchip overtook incumbent DB Hitek to clinch 10th place.

TrendForce believes that the output value of the world's top ten foundries will maintain a growth trend in 1Q22 but appreciation in ASP will still be the primary driver of said growth. However, since there are fewer first quarter working days in the Greater China Area due to the Lunar New Year holiday and this is the time when some foundries schedule an annual maintenance period, 1Q22 growth rate will be down slightly compared to 4Q21.

Back in December, we reported that Tower Semiconductor was one of several semiconductor manufacturers that was considering building a fab in India, largely due to government subsidies. Since then, Intel has stepped in and bought Tower Semiconductor and has taken over the negotiations with the Indian government. What has also come to light is that Tower Semiconductor has been in discussions with the Indian government for over a decade, but apparently the two parties have been unable to come up with a suitable agreement. Tower Semiconductor was apparently ready to cancel any plans on building in India as late as September 2021, but the more recent government initiative renewed their interest.

As to exactly what kind of fab Intel would build, is unclear at this point in time, but it might still be a MEMS fab or it could simply be a testing and packaging plant. Regardless of what kind of facility it'll be, it's interesting that Intel decided to keep the ongoing plans from Tower Semiconductor going. Tower Semiconductor mostly manufactured for fabless companies and were producing some two million wafers a year. It's likely that Intel will carry on producing for the same companies at the same terms for now, although as Tower Semiconductor gets integrated closer with the Intel foundry, things could change.

Update: The Intel acquisition of Tower Semiconductor has gone through for a value of $5.4 billion, at a price of $53 per share. Through the deal, Intel adds Tower Semiconductor's infrastructure, IP, technicians, logistics and clients to its portfolio. Intel CEO Pat Gelsinger said that "Tower's specialty technology portfolio, geographic reach, deep customer relationships and services-first operations will help scale Intel's foundry services and advance our goal of becoming a major provider of foundry capacity globally." He then added that "This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes - unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors." The original story follows.

Intel is reportedly looking to increase its manufacturing capability - and its cadre of wafer-purchasing clients - by acquiring Israeli semiconductor manufacturer Tower Semiconductor. If true, the deal will bring seven additional foundries to Intel's existing infrastructure, capable of 2 million wafer starts per year. The foundries are located across three continents: Tower Semiconductor owns and operates a 150 mm and a 200 mm fab in Migdal Haemek, Israel; two 200 mm fabs in the United States (Newport Beach, California and San Antonio, Texas); two 200 mm fabs in Japan; and one additional 300 mm fab in Japan. The deal could be finalized as soon as this week.