Mass Production for 5nm Process Expected to Begin in 2H20
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
Samsung Electronics has declared plans to expand its foundry capacity at the Pyeongtaek 2 line. Meanwhile, TSMC has announced the construction of a new fab in the US. With the foundry industry benefiting from a recent increase in demand, investor interest is rising. We advise keeping an eye on related plays.
Following TSMC, SEC announces foundry capacity expansion
On May 21, Samsung Electronics (SEC) announced that it will expand its foundry capacity at the Pyeongtaek 2 line to respond to EUV-based demand. The new capacity (estimated at 20K wpm) is scheduled to commence operation in 2H21. In February, SEC launched its Hwaseong V1 line, adopting EUV equipment. Of note, SEC plans to expand the V1 line’s capacity within 2020. Overall, SEC’s 2020 non-memory capacity investment is forecast at around W6tn. With mass production for the 7nm logic process currently underway, SEC is predicted to begin mass production for the 5nm process in 2H20.
Market interest in the foundry industry has been rising as of late. In an effort to satisfy US regulations, TSMC has chosen to invest US$12bn in the construction of a new US fab. Meanwhile, racing to replace TSMC, the Chinese government has recently invested US$2.25bn in SMIC to raise the foundry’s level of technological competitiveness.
Pay attention to EUV and non-memory related companies
Despite Covid-19, the foundry industry remains in good shape. TSMC has predicted that global foundry market growth in 2020 will be around 10% y-y. We note that ARM architecture (a mainstay of the foundry) is recently being adopted in high-performance PCs and server semiconductors, not only in low-power/low-performance mobile devices. And, Amazon, Google, Facebook, and Alibaba have all begun using their own chip designs based on ARM architecture. We believe that an increase in chip size stemming from the rising difficulties of tech migration will also positively impact foundry demand.
Backed by SEC’s expanding foundry investment, sales at global semicon equipment and materials companies are predicted to rise. As investment is focusing on EUV-related processes, we advise paying attention to EUV firms. Notable overseas plays include: ASML (EUV exposure equipment), Hoya (EUV masks), Veeco Instruments (EUV mask manufacturing equipment), Lasertec (mask inspection equipment), and JSR (EUV photoresist).
Meanwhile, domestic non-memory-related equipment firms include: Wonik IPS (deposition equipment), TES (gas phase etching equipment), PSK (plasma ashers), Device ENG (FOUP cleaning equipment), KoMiCo (cleaning and coating), S&S Tech (blank masks), JT Corp (test handlers), and Point Engineering (coating services).