Opinionated - China Chipping Away to Semiconductor Dominance

[bolo]

The basic pillars of a successful products are the 3 or 4 Ps of marketing:
Product
Promotion
Price
and
Place

The conventional wisdom of marketing for most products is to start off growing from within then develop overseas for expansion due to obvious reasons. So the larger the no of consumers the better

To help business to be success locally, a sizeable mass of people who can afford to buy your products is a always a plus. Our semi-conductor companies have struck the proper cord to flourish in China because:
1. the products fit into the growing and affordable handset and computer markets
2. Price - obvious reasons
3. Place - obvious reasons
4. Promotion for semi conductors is different from most consumer products. The functionality of the products is the key

Samsung also started off its business in S Korean. Since its the population of S korea is relatively small so it needs overseas expansion for sustainable growth

In the handset market, China brands still can hold on to its market shares and they are gaining prominence overseas because all the Ps are there

As for China made cars, they are facing very hard times to compete with foreign brands at the moment because the most important factor - product quality lags behind Chinese consumers' growing critical demands which are in tandem with their increasing personal wealth and purchasing power

Car making asks for more complicated technology than making mobile handsets

In this regard, there is still a lot of rooms for us to improve and catch up with foreign brands

But in India, the 4 'P"s have a different meaning

 

[Aegis DDG]

But in India, the 4 'P"s have a different meaning

 

[Martian2]

Staring down the TSMC semiconductor gun barrel

Why is IBM (the leader of the Common Platform Alliance) trying to sell its fabs in New York?[1]
Why is Global Foundries trying to sell its business via an IPO in 2015?[2]
Why is Samsung desperate to "Kill Taiwan" (ie. "Kill TSMC")?[3]

The answer is the same for all three questions. TSMC has 50% of the global foundry business[4] (ie. they own leading-edge process technology and manufacture the chips) and it is growing at double-digits.[5]

The reason for TSMC's relentless and astonishing growth is technology leadership in ARM-based RISC (reduced instruction set computing) chips.

TSMC looks unbeatable for years to come. Here's why.

2011 (4th quarter) TSMC mass produces 28nm logic chips and ships to customers.[6]
2014 (1st quarter) TSMC announces mass production of 20nm logic chips.[7]
2015 (early 2015) TSMC announces commencement mass production date for 16nm FINFET logic chips.[8]

eInfochips launches design services for 16nm silicon chips - Financial Express
"A recent TSMC report suggests that 16nm FinFET technology will achieve 55 percent power reduction and 35 percent higher speed as compared to the standard 28nm HK/MG planar process."

[Additional technological improvements]
2014 (end 2014) TSMC announces 16nm FINFET+ with performance enhancement and/or lower power supply requirement[8]
2015-2016 TSMC announces 16nm FINFET Turbo with improved performance enhancement and/or improved lower power supply requirement[8]

2015 (4th quarter) TSMC announces risk production date for 10nm logic chips.[9]

The only company in the world that can match TSMC technology is Intel. However, Intel process technology is specialized for CISC logic chips. It takes two to three years to customize a design for Intel process technology.[10] Also, Intel has stated it has no intention of competing against TSMC on price.[11]

In conclusion, TSMC's revenue and profit will continue to scale with the growth in the mobile market. TSMC looks unbeatable for the next five years. As an example, TSMC's 28nm debuted in 2011. After three years, TSMC continues to dominate the 28nm market.[12]

----------

References:

1. IBM Is Looking Forward to Sell Semiconductor Fabs - X-bit labs
2. Globalfoundries eyes IPO as ATIC sets expectations | EE Times
3. Samsung wants to kill Taiwan - Targets Hon Hai, TSMC | TechEye
4. TSMC eyes 50% global market share - Taipei Times (Wed, Mar 26, 2014)

5. TSMC 1Q14 sales beat guidance | DigiTimes
"TSMC 1Q14 sales beat guidance
Steve Shen, DIGITIMES, Taipei [Thursday 10 April 2014]

Taiwan Semiconductor Manufacturing Company (TSMC) has announced consolidated revenues of NT$49.96 billion (US$1.66 billion) for March, up 6.7% sequentially and 13.2% on year."

6. TSMC 28nm Technology in Volume Production
"Hsinchu, Taiwan – October 24, 2011 –TSMC (TWSE: 2330, NYSE: TSM) today announced that its 28nm process is in volume production and production wafers have been shipped to customers. TSMC leads the foundry segment to achieve volume production at 28nm node."

7. TSMC Begins Volume Production of Chips Using 20nm Process Technology - X-bit labs
8. TSMC Fighting for Apple's 16nm A9 Processor Business - Patently Apple
9. Taiwan Semiconductor Manufacturing Company Limited
10. Electronics Weekly News | General | Intel's 14nm for mobile delayed till 2015
"Intel’s 14nm for mobile delayed till 2015
David Manners
13th February 2014
...
Intel’s 14nm delay must be worrying Altera which had been promised access to the process this year."

11. TSMC: Intel’s Threat In Foundry Business Is Overstated, Says Citi - Emerging Markets Daily - Barrons.com
"Jan 15, 2014 - Intel's CEO said the company won't compete on price with lower cost chipmakers such as TSMC. When Intel's factory capacity is opened to ..."

12. TSMC capacity booked to the end of 3Q14 | DigiTimes

 

[bolo]

Staring down the TSMC semiconductor gun barrel

Why is IBM (the leader of the Common Platform Alliance) trying to sell its fabs in New York?[1]
Why is Global Foundries trying to sell its business via an IPO in 2015?[2]
Why is Samsung desperate to "Kill Taiwan" (ie. "Kill TSMC")?[3]

The answer is the same for all three questions. TSMC has 50% of the global foundry business[4] (ie. they own leading-edge process technology and manufacture the chips) and it is growing at double-digits.[5]

The reason for TSMC's relentless and astonishing growth is technology leadership in ARM-based RISC (reduced instruction set computing) chips.

TSMC looks unbeatable for years to come. Here's why.

2011 (4th quarter) TSMC mass produces 28nm logic chips and ships to customers.[6]
2014 (1st quarter) TSMC announces mass production of 20nm logic chips.[7]
2015 (early 2015) TSMC announces commencement mass production date for 16nm FINFET logic chips.[8]

eInfochips launches design services for 16nm silicon chips - Financial Express
"A recent TSMC report suggests that 16nm FinFET technology will achieve 55 percent power reduction and 35 percent higher speed as compared to the standard 28nm HK/MG planar process."

[Additional technological improvements]
2014 (end 2014) TSMC announces 16nm FINFET+ with performance enhancement and/or lower power supply requirement[8]
2015-2016 TSMC announces 16nm FINFET Turbo with improved performance enhancement and/or improved lower power supply requirement[8]

2015 (4th quarter) TSMC announces risk production date for 10nm logic chips.[9]

The only company in the world that can match TSMC technology is Intel. However, Intel process technology is specialized for CISC logic chips. It takes two to three years to customize a design for Intel process technology.[10] Also, Intel has stated it has no intention of competing against TSMC on price.[11]

In conclusion, TSMC's revenue and profit will continue to scale with the growth in the mobile market. TSMC looks unbeatable for the next five years. As an example, TSMC's 28nm debuted in 2011. After three years, TSMC continues to dominate the 28nm market.[12]

----------

References:

1. IBM Is Looking Forward to Sell Semiconductor Fabs - X-bit labs
2. Globalfoundries eyes IPO as ATIC sets expectations | EE Times
3. Samsung wants to kill Taiwan - Targets Hon Hai, TSMC | TechEye
4. TSMC eyes 50% global market share - Taipei Times (Wed, Mar 26, 2014)

5. TSMC 1Q14 sales beat guidance | DigiTimes
"TSMC 1Q14 sales beat guidance
Steve Shen, DIGITIMES, Taipei [Thursday 10 April 2014]

Taiwan Semiconductor Manufacturing Company (TSMC) has announced consolidated revenues of NT$49.96 billion (US$1.66 billion) for March, up 6.7% sequentially and 13.2% on year."

6. TSMC 28nm Technology in Volume Production
"Hsinchu, Taiwan – October 24, 2011 –TSMC (TWSE: 2330, NYSE: TSM) today announced that its 28nm process is in volume production and production wafers have been shipped to customers. TSMC leads the foundry segment to achieve volume production at 28nm node."

7. TSMC Begins Volume Production of Chips Using 20nm Process Technology - X-bit labs
8. TSMC Fighting for Apple's 16nm A9 Processor Business - Patently Apple
9. Taiwan Semiconductor Manufacturing Company Limited
10. Electronics Weekly News | General | Intel's 14nm for mobile delayed till 2015
"Intel’s 14nm for mobile delayed till 2015
David Manners
13th February 2014
...
Intel’s 14nm delay must be worrying Altera which had been promised access to the process this year."

11. TSMC: Intel’s Threat In Foundry Business Is Overstated, Says Citi - Emerging Markets Daily - Barrons.com
"Jan 15, 2014 - Intel's CEO said the company won't compete on price with lower cost chipmakers such as TSMC. When Intel's factory capacity is opened to ..."

12. TSMC capacity booked to the end of 3Q14 | DigiTimes

CAn you clarify what you mean by Samsung trying to kill Taiwan?

 

[Martian2]

CAn you clarify what you mean by Samsung trying to kill Taiwan?

Taiwan's TSMC is crushing Samsung in logic chip manufacturing

Take a look at the Samsung technology roadmap. It looks like Samsung is about two years behind TSMC at 20nm. TSMC started 20nm commercial mass production in January 2014. According to Samsung's chart, Samsung's tape-out at 20nm won't occur until the end of 2014. It's unlikely to be a milestone for Samsung 20nm commercial mass production, because Samsung would have already crowed about a prior tape-out for a commercial logic chip.

Also, let's not forget that Samsung could be optimistic in their projection of a tape-out for a commercial logic chip at 20nm by the end of 2014. People have asked for a specific date and Samsung is noncommittal.

Samsung is a member (ie. IBM licensee) of the Common Platform Alliance. Since IBM is switching from gate-first to gate-last technology at 20nm for the first time, it is quite possible that IBM will experience the same technological problems that plagued TSMC at 28nm (when TSMC made the switch to gate-last). For trivia, Intel made the switch to gate-last at 45nm.

Samsung's goal of "killing Taiwan/TSMC" is due to its inability to breathe in the foundry business. Apple is moving to TSMC and Samsung will have a miniscule residual foundry revenue.

 

[Martian2]

A Turkish guy is trolling the Chinese Economy and News thread. Thus, I have put the following news item in here due to the tangential relationship to IBM.

I'll revert to discussing Intel, Samsung, Global Foundries, MediaTek, and Qualcomm in the next few days.

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Taiwanese beats 20,000 students to win IBM's Master of the Mainframe World Championship

Taiwan Today

"News Ticker
Publication Date： 04/10/2014
Source： Taiwan Today

(Courtesy of IBM)

Taiwan students turned in top performances at the IBM Master the Mainframe World Championship April 8 in New York. Shih Yong-siang from National Taiwan University’s Graduate Institute of Computer Science and Information Engineering took top honors, while Jhang Jia-sian from the Graduate Institute of Computer Science and Information Engineering at National Central University in Taoyuan County, northern Taiwan, finished 28th among 43 contestants from 22 nations. Open to international college and high school contestants for the first time this year, the one-month championship running March 10 - April 8 saw around 20,000 competitors go head to head."

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IBM developing next generation of mainframe professionals | ComputerWeekly

"IBM developing next generation of mainframe professionals
Kayleigh Bateman
Thursday 10 April 2014 10:30

IBM has announced three Massive Open Online Courses (MOOCs) in a bid to develop the next generation of mainframe professionals.

IBM’s MOOCs are being provided free, through partnerships with Syracuse University, Marist College and the Linux Foundation.

Nmedia - Fotolia

The announcement was made at the supplier’s Mainframe50 event in New York this week, held to mark IBM’s 50th anniversary of the mainframe. Some 500 people from 38 countries gathered for the anniversary celebration.

Steve Mills, senior vice-president, sales and distribution at IBM, said: “It’s been 50 years for the mainframe, but we’re really at the beginning of how the technology will continue to change our lives. The mainframe is the workhorse of businesses around the world.”

Mainframe skills development

During the event, Pat Toole, general manager, IBM System z at IBM, said: “There is a skills challenge in our industry – in attracting young people to understand and add value to those in businesses [and] skilling up those already in the workforce.”

The event also showcased the winners of IBM's Master of the Mainframe World Championship 2014, in which 20,000 students participated across 38 countries.

The students work remotely, receiving training from IBM zEnterprise instructors on how the platform supports cloud, big data and analytics, mobile and security initiatives. Competitors are then tasked to build a business application on the mainframe.

The 2014 championship winner was Yong-Siang Shih from National Taiwan University.

Master of the Mainframe 2012 winner Dontrell Harris was present to reveal how he is now a mainframe capacity and performance analyst at Metlife.

“Taking part in the competition has helped me achieved a lot of things and has really changed my life,” he said.

In addition, seven years ago IBM launched its IBM Academic Initiative, which develops enterprise computing skills to aid students in having exposure to IT job opportunities and careers in the sector.

Since its launch, IBM has worked with more than 180,000 students at over 1,000 schools in 70 countries."

 

[senheiser]

its funny how stupid americans and other westerners are. They heavily invested in taiwanese IT industry in the begging years and so did they in hongkongs capital centers and macaus gambling industry.

Now macao and hongkong belong to china and soon taiwan will follow. In a sense these independent territories give china a huge advantage in tricking foreign capital in thinking they arent invest in communist china while the territories bring the money back to the main land investing there.

I think this is one of the reasons why china was and is still growing more than other developing countries.

 

[Martian2]

its funny how stupid americans and other westerners are. They heavily invested in taiwanese IT industry in the begging years and so did they in hongkongs capital centers and macaus gambling industry.

Now macao and hongkong belong to china and soon taiwan will follow. In a sense these independent territories give china a huge advantage in tricking foreign capital in thinking they arent invest in communist china while the territories bring the money back to the main land investing there.

I think this is one of the reasons why china was and is still growing more than other developing countries.

Actually, that's not what happened.

Taiwan was an assembly subcontractor for the United States and Japan. However, Taiwan was different from all of the other countries (e.g. Malaysia, Thailand, Philippines, Indonesia, etc.) and invented their own improvements.

With continuous indigenous Taiwanese patents on PCs and notebook computers, the entire hardware industry migrated to Taiwan. There's an interview where a Silicon Valley engineer said the rise of the Taiwanese computer industry was a complete shock. He said the design work was supposed to remain in Silicon Valley and the low-value-added assembly was to be performed in Asia.

The original plan was to use Taiwanese for cheap assembly. Taiwan was never meant to become an innovator and competitor.

 

[Martian2]

My comment on Bloomberg.

Samsung, Globalfoundries Team Up in Challenge to TSMC - Bloomberg

 

[tonyget]

http://www.pwc.com/en_GX/gx/technol...ductor-industry/assets/china-semicon-2013.pdf
China’s impact on the semiconductor industry

 

[tonyget]

 

[tonyget]

 

[tonyget]

 

[tonyget]

 

[LeveragedBuyout]

I didn't have the time to make it past the first third of the report, but it was a good read. Thank you for providing it. The details about the IC consumption/design gap and "dislocated purchasing" were also telling, as far as it related back to our previous discussions about IP protections. Should be interesting to see how this develops.