In 2015, TSMC maintained its leading position in the total foundry segment of the global semiconductor industry, with an estimated market share of 55%. TSMC achieved this result despite intense competition from both established players and relatively new entrants to the business.
Leadership in advanced process technologies is a key factor in TSMC’s strong market position. In 2015, 48% of TSMC’s wafer revenue came from manufacturing processes with geometries of 28nm and below.
With TSMC’s focus on customer trust, the Company strengthened its Open Innovation Platform® (OIP) initiative in 2015 with additional services. During the 2015 Open Innovation Platform® Ecosystem Forum, held in September in Santa Clara, California, the Company revealed 10nm FinFET Reference Flow (both full-chip and IP Design), which highlighted the success of OIP-enabled design. The Forum was well attended by both customers and ecosystem partners and demonstrated the value of collaboration through OIP to foster innovations.
TSMC offers the foundry segment’s widest technology portfolio and continues to invest in advanced technologies and specialty technologies, which is a key differentiator from our competitors and provides customers more added value.
Technologies that the Company either developed or introduced in 2015 include:
Advanced Packaging Technology
TSMC estimates that the worldwide semiconductor market in 2015 was US$354 billion in revenue, representing zero year-over-year growth, a sharp plunge from the 10% YoY growth recorded in 2014. In the foundry sub-segment of the semiconductor industry, total revenues were US$44 billion in 2015, representing 4% YoY growth.
Industry Outlook, Opportunities and Threats
Industry Demand and Supply Outlook
The decline in the foundry segment growth to 4% in 2015 from 14% in 2014 was driven mainly by a market slowdown and a prolonged inventory correction.
TSMC forecasts the total semiconductor market to grow 1% in 2016. Over the longer term, driven by increasing semiconductor content in electronic devices, continuing market share gains by fabless companies, and expanding in-house Application-Specific Integrated Circuits (ASIC) from system companies, the Company expects foundry segment revenue growth to be much stronger than the 3% compound annual growth rate projected for the total semiconductor industry from 2015 through 2020.
As an upstream supplier in the semiconductor supply chain, the foundry segment is tightly correlated with the market health of the three Cs, communications, computer, consumer, and the emerging IoT.
The communications sector, particularly the Smartphone segment, posted a 10% growth in unit shipments for 2015. Although the growth is slowing down, continuing transition to 4G/LTE and LTE-Advanced will bring mid- to high-single digit growth to the Smartphone market in 2016. Smartphones with increasing performance, lower power usage and more intelligent features will continue to propel buying interests. The increasing popularity of low-end smartphones in emerging countries will also drive the growth of the sector.
Low-power IC is an essential requirement among handset manufacturers. The SoC design for more optimized cost, power and form factor (device footprint), plus the appetite for higher performance to run complex software and higher resolution video will continue to accelerate the migration to advanced process technologies, in which TSMC is already the leader.
After a 1% decline in 2014, the computer sector’s unit shipments dropped 8% YoY in 2015. The decline was driven by prolonged replacement cycle, inventory correction, the end of Windows XP migration, and the new Windows 10 free upgrade.
The personal computer market is expected to decline by mid-single digit percentage in 2016. Increasing variety (e.g. Convertible, Ultrabook and Chromebook), the business adoption of Windows 10, and steady consumer upgrades to aging PCs, however, are expected to help buoy PC demand.
Requirements of lower power, higher performance and the integration of key computer components such as CPU, GPU, Chipset, etc., should drive demand for product redesign towards leading process technologies.
The consumer sector’s unit shipments declined 6% in 2015. While new-generation TV game consoles and set-top boxes still showed positive growth, the rest of the sector – TVs, MP3 players, digital cameras and hand-held game consoles – continued to decline due to economic softness and foreign exchange issues, as well as functional cannibalization by smartphones.
Although consumer electronics will continue to decline in 2016, 4K (UHD) TVs and 4K set-top boxes should achieve high growth within the sector. TSMC will be able to capitalize on these trends with advanced technology offerings.
The Internet of Things (IoT) is taking shape as the “next big thing,” since more and more devices are being connected to the Internet. The IoT will have 10X greater installed unit potential than the smartphone will have in 2025. Applications and products benefiting from IoT related technologies include smart wearables, home robots, smart meters, self-driving cars, and so on. These applications and products will require much longer battery life, diversified sensors and low-power wireless connections, which will challenge technology development in new ways. TSMC’s ultra-low-power logic and RF solutions, and diversified sensing technologies will help customers lead the way for this future growth.
The electronics industry consists of a long and complex supply chain, the elements of which are highly dependent and correlated with each other. At the upstream IC manufacturing level, it is important for IC vendors to have sufficient and flexible supply to support the dynamic market situation. The foundry vendors are playing an important role to ensure the health of the supply chain. As a leader in the foundry segment, TSMC provides leading technologies and large-scale capacity to complement the innovations created along the downstream chain.
TSMC is the worldwide semiconductor foundry leader for both advanced and specialty process technologies, commanding a 55% market share in 2015. Net revenues by geography were: 68% from North America; 12% from the Asia Pacific region, excluding China and Japan; 8% from China; 7% from Europe, the Middle East and Africa; and 5% from Japan. Net revenues by end-product application were: 8% from the computer sector, 61% from communications, 8% from consumer products, and 23% from industrial and standard products.
TSMC’s leadership position is based on three defining competitive strengths and a business strategy rooted in the Company’s heritage. TSMC distinguishes itself from the competition through its technology leadership, manufacturing excellence and customer trust.
As a technology leader, TSMC is consistently first among dedicated foundries that provide next-generation leading-edge technologies. The Company has also established its leadership on more mature technology nodes by applying the lessons learned on leading-edge technology development to enrich its specialty technologies to more advanced process nodes.Beyond process technology, TSMC has established front-end and backend integration capabilities that result in faster time-to-production and create the best power, performance and area sweet spot.
TSMC has gained manufacturing acclaim for its industry-leading management and is extending that leadership through its Open Innovation Platform® and Grand Alliance initiatives. The TSMC Open Innovation Platform® initiative hastens the pace of innovation in the semiconductor design community and among its ecosystem partners, as well as the Company’s IP, design implementation and design for manufacturing capabilities, process technology and backend services. A key element is a set of ecosystem interfaces and collaborative components initiated and supported by TSMC that more efficiently empower innovation throughout the supply chain and drive the creation and sharing of newly created revenue and profits. The TSMC Grand Alliance is one of the most powerful forces for innovation in the semiconductor industry, bringing together customers, electronic design automation (EDA) partners, IP partners, and key equipment and materials suppliers at a new, higher level of collaboration. Its objective is to help customers, alliance members and TSMC win business and stay competitive.
The foundation for customer trust is a commitment TSMC made when it opened for business in 1987: to never compete with its customers. As a result, TSMC has never owned or marketed a single semiconductor product design, but instead has focused all of its resources on becoming the trusted foundry for its customers.
TSMC is confident that its differentiating strengths will enable it to prosper from the foundry segment’s many attractive growth opportunities. TSMC maintains its technology leadership by collaborating in the development process through early engagement and technology definition that provides a smooth transition for TSMC’s advanced technology customers.
TSMC’s 20nm System-on-Chip technology (20SoC) entered the volume production stage with stable yield performance, while its 16nm FinFET Plus (16FF+) process started volume production in mid-2015. By leveraging the success of 16FF+, TSMC introduced a highly competitive cost-effective solution, 16nm FinFET Compact technology (16FFC), which started volume production in the first quarter of 2016. In addition, TSMC’s 10nm FinFET technology began customer product tape-out in the first quarter of 2016. Also, 7nm FinFET technology is under development with good progress. This technology is expected to start risk production in the first quarter of 2017. At the same time, the Company has maintained its leadership in specialty technologies by broadening its offerings and expanding their integration into more advanced process nodes.
Numerous other efforts are underway to ensure manufacturing excellence through product grade enhancements and manufacturing technology innovation. On the advanced 3D IC packaging technology front, InFO PoP technology for advanced mobile products was successfully qualified in the fourth quarter of 2015 and is expected to start volume production in the first half of 2016. In addition, CoWoS-XL (CoWoS® technology that features extra-large interposer of >32mmx26mm in size) was successfully developed and qualified in 2015. This technology is expected to start volume production in the first half of 2016.
To address challenges inherent in the electronic product life cycle and increased competition from other semiconductor manufacturing companies, TSMC continually strengthens its core competitiveness and deploys both short-term and long-term technology and business development plans to meet Return on Investment (ROI) and growth objectives.
● Short-term Semiconductor Business Development Plan
● Long-term Semiconductor Business Development Plan