Nowadays, due to challenging competitors and the changing global semiconductor market, many semiconductor firms such as Qualcomm, Socionext and NXP, do not own any foundries for minimizing their operation cost. They outsource their chip production to foundries such as TSMC, GlobalFoundries (GF) and UMC. However, among major players in the global semiconductor market, such as Samsung, Micron and Intel, with many CMOS process patents and technical advantages, still have their foundries. Their production experience and CMOS process technologies can still be useful in narrowing the gap between themselves and their fabless opponents.
Among these major players with fabs, many of them such as Sony, Renesas and Rohm are Japanese firms, which products are competitive in markets of specially semiconductor products with higher margin profits [1, 2, 3, 4, 5, 6] such image sensors [1, 2], microcontrollers [3, 4, 5] and discrete power semiconductor component [6] respectively. That means becoming fabless helps but not guarantees to win in competition in the global semiconductor market. These major Japanese players with fabs need alternative support for their success in the future.
In this article, a joint foundry company, called X, is planned to be established. X will help Japanese semiconductor companies to be winners in the future.
How will X be established? In my opinion, by firstly acquiring 49% of TPSCO (Towerjazz Panasonic Semiconductor Co., Ltd) from Panasonic, then negotiating with Towerjazz from setting up a Joint Venture called X. X will keep all assets of TPSCO including its three manufacturing facilities and Technical Patents. The arrangement of shares of X among Towerjazz, the Japanese Government (INCJ or DBJ) and other Japanese firms follows the previous agreement of the sale of the Toshiba Memory Corporation (TMC) (Now called Kioxia) [7]. That means Towerjazz, will become the major shareholder and have 49% of X share and the Japanese Government (INCJ or DBJ) and other Japanese firms will have the rest 51% of X share. That means the Japanese still control X. Extra financial and technical support can be helpful to persuade Towerjazz to reach an agreement about X with the Japanese Government.
Why choosing TPSCO but not other fabs? The next few paragraphs will explain about this.
Firstly, many major Japanese players have advantages in specific semiconductor devices market. Sony CMOS Image Sensors (CIS) have dominated the global CIS market [8]. Image Sensor is a rectangle but Wafer is circular. As a result, wafer area cannot be fully utilized. For producing Image Sensors with the same size of wafer, more wafer area will be wasted if the sensor area is larger. That result in extremely high pixel yield rate requirement in production [9]. Because of large demand of CIS from smart devices and CCTVs [10], Sony can get large amount of income from their CIS products [11]. Two more 300mm fabs have also been acquired by Sony for higher production capacity of CMOS Sensors [12, 13, and 14]. Renesas has begun their usage of their ultra low power 65nm Silicon on Thin Buried Oxide (SOTB) process in one of their MCUs [15]. SOTB process, a specific SOI CMOS process, achieves ultra low power consumption [16]. That will be suitable to chips used in energy harvesting applications and IOT (Internet of Things) Devices, work for long time without batteries. SOI chips fulfil low power consumption with less initial investment in more advanced micro – refinement technology [17, 18]. That provides semiconductor firms with more cost – effective technical platform for their devices. GF even develops and produces chips using its fully depleted SOI process [19]. Integrated Power devices can also be widely used in various applications such as future electric vehicles and trains [20]. They need alternative technical support for accelerating their research and development (R & D) process for lower power dissipation and lower production cost. TPSCO is a successful foundry which provides special CMOS process solutions, used in Image Sensors, Low power Silicon on Insulator (SOI) and Power devices [21]. The competitiveness of TPSCO is based on its relative technical patents and professional R&D engineer.
By licensing TPSCO technical patents to major Japanese semiconductor players, they will be capable for rolling out their products more quickly. Earlier release of products is a key factor of victory in the global semiconductor market.
Some people may think that the technical patents licensed from X may be easily leaked. However, X can minimize the risk of technical secret leakage by measures such as Non – Disclosure Agreement (NDA). Japanese Companies can also be requested to produce their products using patents from X at their designated fabs in Japan only.
Secondly, TPSCO has manufacture experience of image sensors, SOI chips and integrated power devices. Its staffs also have experience of using patents licensed by clients in semiconductor production. X is a pure wafer foundry player, which only obtains income by its foundry service. Semiconductor firms do not need to worry that X will compete against them [22]. They can also freely to license their patents to X for production of their specific chip products. By offering wafer foundry service to these firms, the production cost of Japanese semiconductor firm can also be reduced. As a result, their products can be more competitive.
Thirdly, previously, the Panasonic Corporation (Panasonic) was actively developing the more micro – refined CMOS process [23]. However, due to its huge financial loss in 2013, its fabs have been sold to TPSCO, a JV of the Towerjazz and the Panasonic (Towerjazz 51%, Panasonic 49%) in 2014 [24]. If INCJ can acquire 49% of TPSCO stock (Towerjazz Panasonic Semiconductor Co., Ltd) from Panasonic and set up X, Panasonic can have more capital for some of its competitive business divisions, which can maximize its profits. After that, X‘s shareholders will not include any chipmaker such as Panasonic and Renesas, That encourages more firms to outsource their chip production to X without worrying about leakage of their technical secrets [22].
Fourthly, for sharing increasing cost in investment on equipment and R & D of advanced technology, the Japanese Government has started cooperation with other foreign stakeholders [7] in supporting its domestic semiconductor industry. TMC is a good example of this. TPSCO currently cannot produce chips using process less than 45nm [21]. However, by offering high add – value foundry service for CMOS devices with better profitability to clients, Towerjazz is still a profitable company with satisfactory financial record [25]. Unlike its opponents such as Samsung and TSMC, TPSCO does not have urgent needs to invest initially on expensive production systems. As a result, the risk and the cost can be effectively controlled. That explains Towerjazz is a good partner for establishing X.
Fifthly, many of major Japanese chipmakers such as Renesas and Sony rely on TSMC to produce their products using 40nm CMOS process and less [27, 28]. However, most of TSMC fabs are located in Taiwan, where is prone to earthquakes. Earthquakes result in damage of expensive advanced machines and delay in chip production. Repair of foundries and its equipment can spend weeks [26]. Some firms such as Apple, Sony and Socionext have also outsourced part of their production to other foundries [27, 28, and 29]. That means alternative foundry partners are essential to reduce business risk due to natural disasters.
Sixthly, Technology licenses are being another more important income source of semiconductor firms. Semiconductor firms such as the ARM Holding (ARM), which earn income by licensing its technology design instead of products. When firms outsource their chips, using designs licensed from ARM, to foundries such as TSMC, they are required to pay for licenses from ARM [30]. If Renesas gets more income from other chipmakers, outsourcing production of their chips using SOTB technology to X, that results in extra capital to development of 40nm or less SOTB CMOS Process.
However, due to rapidly changing market and demand, X still needs to invest in more cost – competitive and advanced micro – refinement technology in the future. For further development of X, some strategic partners can be useful. In my opinion, the best strategic partner is the TMC. The advantages of choosing TMC as the future strategic partner are shown below:
TMC is an advanced foundry with its 3D multi wafer CMOS Process Technology Platform down to 15nm [31]. 28nm or less micro – refined Technology Platform can be the basis for X‘s upcoming semiconductor process technologies, used in CMOS Image Sensors and microcontrollers with ultra low power consumption.
Toshiba and TMC have R & D and production experience in chip production using nanoimprint technology [32, 33]. This enables cost reduction when using more micro – refined process technology [34]. That will be possible to make X‘s Wafer foundry business more competitive.
Nowadays, TMC is still profitable but its profit can be affected by price of memory chips [35]. Some of its competitors such as Intel and Micron also have their alternative sources of income [36]. Hynix is also developing its wafer foundry business [35]. By licensing TMC patents to X, clients of X need to pay for their license of TMC patents when using TMC technology in their chips.
Finally, my idea aim to establish X, a Japanese foundry. This foundry aims to help the Japanese Semiconductor firm by its wafer foundry service and its patent transfer. By introduction of suitable R & D partner, X will be helpful in continuous victory of Japanese firms in global semiconductor market.
[1] https://www.lightstalking.com/sony-dominates-image-sensor-market-share-in-2019/
[3] https://www.icinsights.com/news/bulletins/NXP-Acquires-Freescale-Becomes-Top-MCU-Supplier-In-2016/
[4] https://www.eettaiwan.com/20200604nt61-china-speeds-the-process-for-self-sufficiency-of-mcu/
[6] https://zhuanlan.zhihu.com/p/128566870
[7] https://global.toshiba-memory.com/tmchd-news-20190301-1-e.html
[8] https://finance.technews.tw/2013/12/18/sony-invest-more-moeny-in-cmos/
[10] https://semiengineering.com/cmos-image-sensors-cis-past-present-future/
[12] https://www.renesas.com/jp/en/about/press-center/news/2014/news20140129.html
[13] https://www.sony.net/SonyInfo/News/Press/201512/15-1204E/index.html
[14] https://www.ettoday.net/news/20191111/1577049.htm
[16] https://www.renesas.com/us/en/solutions/key-technology/sotb/process.html
[17] http://www.semiinsights.com/s/electronic_components/23/35846.shtml
[19] https://www.globalfoundries.com/cn/technology-solutions/cmos/fdx/22fdx
[20] https://tetsudo-ch.com/7520689.html
[21] https://tpsemico.com/technology-portfolio/
[22] https://buzzorange.com/techorange/2019/07/25/samsung-tsmc-chip/
[23] http://www.fabtech.org/news/_a/panasonic_and_renesas_use_hkmg_with_ultra_low_k_for_32nm_soc_devices/
[24] https://fnc.ebc.net.tw/FncNews/else/76574
[25] https://towerjazz.com/investors/2018-annual-report/
[26] https://archive.eettaiwan.com/www.eettaiwan.com/ART_8800648510_480202_NT_d83158d9.HTM
[27] https://www.digitimes.com.tw/tech/dt/n/shwnws.asp?cnlid=13&id=0000285414_3P15Y3ZK0KZAWX5ZB5MXT
[28] https://udn.com/news/story/7240/4680936
[29] https://www.design-reuse.com/news/36442/sony-fdsoi.html
[31] https://business.kioxia.com/en-apac/news/2016/20160217-1.html
[32] https://about.kioxia.com/en-jp/rd/cutting-edge-researches/technology-topics/topics-8.html
[33] https://global.canon/en/news/2017/20170720.html
[34] https://chinaflashmarket.com/Producer/kioxia/News/153008
[35] https://finance.technews.tw/2020/04/16/sk-hynix-q1-profit-prediction/
[36] https://finance.technews.tw/2019/04/23/sk-hynix-will-buy-magnachip-foundry/
Update: On 28/11/2019, Nuvoton Technology (Nuvoton), a Taiwanese semiconductor company, acquired the Panasonic Semiconductor Solutions (PSCS) by 250 Million USD. After end of the acquisition, the employees, patents of PSCS and 49% of TPSCO Stock will also under control of Nuvoton. However, Nuvoton also develops and sell its semiconductor products such as MCUs. Clients of TPSCO may tend to change their foundry partner due to their concern over potential leakage of their technical secrets.
In my opinion, Panasonic can temporary keep the TPSCO stock. However, it is more beneficial for INCJ and other Japanese Funds to acquire the TPSCO stock from Panasonic. At the same time, TSMC is preparing to use its 40nm (and below) CMOS Technology to produce CIS for SONY. That results in more undesirable business environment for TPSCO. For getting more financial and technological support, it is possible for Towerjazz not to maintain its TPSCO majority ownership in the future [37].
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