In 2013, TSMC maintained its leading position in the total foundry segment of the global semiconductor industry, with an estimated market segment share of 49%. TSMC achieved this result amid 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 2013, 50% of TSMC’s wafer revenue came from manufacturing processes with geometries of 40/45nm and below.
With TSMC’s focus on customer trust, the Company strengthened its Open Innovation Platform® (OIP) initiative in 2013 with additional services. During the 2013 Open Innovation Platform® (OIP) Ecosystem Forum, the Company revealed 16nm FinFET Reference Flow (both full-chip and IP Design) and 3D-IC Reference Flow, to highlight the success of design enablement through OIP. The OIP Ecosystem Forum, which was held in October 2013 at San Jose, California, was well attended by both customers and ecosystem partners to demonstrate 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 which the Company either developed or rolled out in 2013 include:
TSMC estimates that the worldwide semiconductor market in 2013 reached US$322 billion in revenue, a 5% growth compared to 2012. Total foundry, a manufacturing sub-segment of the semiconductor industry, generated total revenues of US$37 billion in 2013, or 11% YoY growth.
Industry Outlook, Opportunities and Threats
Industry Demand and Supply Outlook
Following 16% growth in 2012, foundry segment again posted double-digit growth, to 11% in 2013, mainly driven by fabless market share gains over IDM and process technology advancement.
TSMC forecasts total semiconductor market growth of 5% YoY in 2014. Over the longer term, due to: increasing semiconductor content in electronics devices; continuing market share gain of fabless; and increasing in-house Application-Specific Integrated Circuits (ASIC) from system companies, foundry sales are expected to display much stronger growth than the projected 4% compound annual growth rate (CAGR) for the total semiconductor industry from 2013 through 2018.
As an upstream supplier in the semiconductor supply chain, the condition of the foundry segment is tightly correlated with the market health of the 3Cs: communications, computer and consumer.
The communications sector, particularly the handset segment, posted a modest 4% growth in unit shipments for 2013. Smartphones, which have much stronger growth and higher semiconductor content, have been leading the growth of the sector.
The continuing transition to 4G/LTE and LTE-Advanced handsets will bring positive momentum to the market. Smartphones with increasing performance, lower power and more intelligent features will continue to propel the buying interest of new handsets in 2014. The growing popularity of mid- to low-end smartphones in the emerging countries is also a new catalyst driving 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 (i.e. device footprint), plus the appetite for higher performance to run complicated software, will continue to accelerate the migration to advanced process technologies in which TSMC is already the leader.
The computer sector’s unit shipments dropped 10% YoY in 2013, after a decline in 2012. Cautious spending in developed countries, lack of innovation, and budget competition from tablets, were among the factors causing the weak demand.
Moving into 2014, Personal Computer (PC) market will continue to decline. Meanwhile, increasing affordability of Ultrabooks, the introduction of new operating systems, and corporate replacement are expected to stimulate PC demand.
Requirements of lower power, higher performance and integration for key computer components such as CPU, GPU, Chipset, etc., should drive product design demand for leading process technologies.
The consumer sector faced the sharpest decline ever in 2013: aggregated unit shipments fell 7% YoY. The sales of handheld consumer electronics, such as digital cameras, MP3 players, and handheld game consoles, were significantly impacted by the growth of mobile computing (e.g. smartphones, tablets, etc.), while the home consumer electronics, such as DTV and DVD player, were reaching the plateau of their sales.
Consumer electronics may start to regain growth momentum in 2014, thanks to the launch of new-generation game consoles and the emerging smart wearable devices. Riding on the strong growth of mobile computing and the support from the world’s leading companies, smart wearable devices are expected to leap in the coming years.
Meanwhile, increasing innovations in the consumer sector have also encouraged new usage models, such as integration of touch sensing, motion recognition, high-resolution and 3D display. Besides the need for advanced technologies, specialty technologies such as CMOS Image Sensor (CIS), High-Voltage (HV) drivers, embedded memory, micro-controller and MEMS are becoming prominent requirements. With its comprehensive technology portfolio, TSMC will be able to capitalize on these trends.
As a fast-growing application, tablets are increasing their contributions to foundry segment revenue. Led by major OEMs and China tablet makers, around 256 million tablets were shipped in 2013 compared with 165 million units in 2012. The strong sales momentum will continue in 2014, driven by increasing penetration into emerging countries and more diversified applications of tablets, such as Point-of-Sale (POS), education, and medical. TSMC forecasts the tablet market will grow at a 16% CAGR from 2013 through 2018, and become a strong growth driver for both the semiconductor industry and the foundry segment.
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 semiconductor foundry leader for both advanced and specialty process technologies. As a result, the Company commanded a 49% market share in 2013. In terms of TSMC’s net revenue geographic distribution, 71% came from companies headquartered in North America; 13% from the Asia Pacific region, excluding China and Japan; 7% from Europe; 6% from China; and 3% from Japan. By end product application, 15% of TSMC’s net revenue came from the computer sector, 54% from communications, 10% from consumer products, and 21% from industrial and standard products.
TSMC’s leadership position is based on three defining 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 to develop next-generation leading-edge technologies. The Company has also established its technology leadership on more mature technology nodes by applying the lessons learned on leading-edge technology development to push its specialty technologies to more advanced process nodes. Beyond process technology, TSMC has established front-end and back-end integration capabilities that result in faster time-to-production and creates the best power, performance and area sweet spot.
TSMC has gained manufacturing acclaim for its industry-leading management, and is extending its leadership through the Open Innovation Platform® and Grand Alliance initiatives. The TSMC Open Innovation Platform® initiative hastens the pace of innovation amongst the semiconductor design community, its ecosystem partners and TSMC’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 that 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 our customers, electronic design automation (EDA) partners, IP partners, and key equipment and materials suppliers at a new, higher level of collaboration. Its objectives are to help our customers, the alliance members and ourselves win business and stay competitive.
The foundation for customer trust is a commitment TSMC made when it first opened for business over a quarter of a century ago: to never compete with our customers. As a result, TSMC has never owned nor marketed a single semiconductor product design, but rather has focused all of its resources on becoming the dedicated manufacturing resource of choice for the semiconductor industry.
TSMC is confident that its differentiating strengths will enable it to leverage the foundry segment’s attractive growth opportunities. TSMC has invested heavily in leading-edge 20nm and 16nm FinFET technologies, which are in volume production and risk production, respectively. The Company has also invested heavily in the 10nm process node that is currently in technology development. We maintain our technology leadership by collaborating in the technology development process through early engagement and technology definition that provides a smooth transition for our advanced technology customers. At the same time, the Company maintains its leadership in specialty technologies by broadening its offerings and pushing them to more advanced process nodes.
Numerous other efforts are also underway to ensure manufacturing excellence through product grade enhancements and manufacturing technology innovation.
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