In 2014, TSMC maintained its leading position in the total foundry segment of the global semiconductor industry, with an estimated market segment share of 54%. 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 2014, 42% 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 2014 with additional services. During the 2014 Open Innovation Platform® Ecosystem Forum, the Company revealed 16nm FinFET Plus Reference Flow (both full-chip and IP Design), to highlight the success of design enablement through OIP. The OIP Ecosystem Forum, which was held October 2014 in 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 that the Company either developed or rolled out in 2014 include:
TSMC estimates that the worldwide semiconductor market in 2014 reached US$354 billion in revenue, a 10% growth compared to 2013. Total foundry, a manufacturing sub-segment of the semiconductor industry, generated total revenues of US$42 billion in 2014, or 14% YoY growth.
Industry Outlook, Opportunities and Threats
Industry Demand and Supply Outlook
Following 11% growth in 2013, the foundry segment again posted double-digit growth, to 14% in 2014, mainly driven by fabless market share gains over IDM and by process technology advancement.
TSMC forecasts total semiconductor market to grow mid single digit in 2015. Over the longer term, due to increasing semiconductor content in electronics devices, fabless companies’ continuing market share gains, and increasing in-house Application-Specific Integrated Circuits (ASIC) from system companies, foundry segment revenue growth is expected to be much stronger than the projected 4% compound annual growth rate (CAGR) for the total semiconductor industry from 2014 through 2019.
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 2014. Smartphones, which have much stronger 25% 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 double digits growth to the market. Smartphones with increasing performance, lower power and more intelligent features continue to propel buying interest for new handsets in 2015. The growing popularity of mid- to low-end smartphones in 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 1% YoY in 2014, after a 10% decline in 2013. Slowing decline was driven by replacement cycles, Windows XP expiration, and the slowdown in tablet sales.
The personal computer (PC) market is expected to decline low to mid single digit in 2015, with increasing variety (e.g. Convertible, Ultrabook and Chromebook), the introduction of new operating systems, and consumer replacement 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’s unit shipments declined 3% in 2014, as growth from TV game console and set-top-boxes was offset by the decline on digital cameras, MP3 players, and handheld game consoles, as well as the result of smartphone cannibalization.
Consumer electronics will be flat to slightly decline in 2015. The 4K UHD TVs will also continue the high growth within the otherwise flattening TV market in 2015. TSMC will be able to capitalize on these trends with advanced technologies for 4K UHD TV market.
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 54% market share in 2014. In terms of TSMC’s net revenue geographic distribution, 69% came from North America; 13% from the Asia Pacific region, excluding China and Japan; 7% from China; 6% from Europe; and 5% from Japan. By end product application, 10% of TSMC’s net revenue came from the computer sector, 59% 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 enrich 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 that leadership through its Open Innovation Platform® and Grand Alliance initiatives. The TSMC Open Innovation Platform® initiative hastens the pace of innovation among 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 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 customers, the alliance members and TSMC win business and stay competitive.
The foundation for customer trust is a commitment TSMC made when it first opened for business over a quarter 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 trusted foundry for our customers.
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 System-on-Chip technology (20SoC) and 16nm FinFET Plus (16FF+) technologies. 20SoC technology entered the production stage with smooth ramping and stable yield performance. 16FF+ technology passed full reliability qualification on schedule in the fourth quarter of 2014, and is expected to begin volume ramp around July 2015. Also, the even more leading 10nm technology is under development and on track to start risk production in the fourth quarter of 2015. TSMC maintains 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. At the same time, the Company maintains its leadership in specialty technologies by broadening its offerings and expanding their integration into more advanced process nodes.
Numerous other efforts to ensure manufacturing excellence through product grade enhancements and manufacturing technology innovation are underway.
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