TSMC to Invest in Japan

Nikkei Business recently reported that TSMC has decided to invest in Japan and the decision would have been impossible without Ibiden, the number one company in the global semiconductor packaging substrate industry.

Competition is heating up in the semiconductor packaging industry as well as foundry microfabrication. More and more companies are increasing their investments in packaging and collaborating in the industry. It is said that packaging capabilities will determine their rankings in the industry in 10 years.

Packaging, which is a post-process technology, was deemed less important than pre-process technologies until the early 2010s. At that time, the role of packaging was limited to chip protection and substrate connection. Things changed in 2016, when Apple chose TSMC instead of Samsung Electronics regarding its application processors. At that time, TSMC succeeded in reducing the thickness of the chip by 20 percent and raising its speed by 20 percent by developing fan-out wafer-level packaging.

In fact, TSMC is already the third- or fourth-largest player in the packaging industry. Its cooperation with Japan is because packaging processes are getting increasingly complicated. In this sector, new technologies have been developed very fast, examples of which include through-silicon via (TSV) for chip stacking for different uses and system-in-package (SiP) for chip combination. Especially, automotive electronics and server chips entail large package product sizes and fan-out wafer-level packaging for size reduction is not perfect for those chips.

According to industry sources, TSMC is trying to overcome the limitations with flip chip ball grid array (FC-BGA), what Ibiden is good at. It is to connect chips to substrates on a surface instead of line basis and advantageous for large-area packaging. Cooperation with Ibiden can lead to preferential supply in the field of FC-BGA packaging, where a global undersupply is ongoing. In addition, Japan, home to Toyota and Honda, has a large demand for automotive electronics chips. TSMC is planning to set up a post-processing R&D center by investing 20 billion yen and set up another one at the University of Tokyo.

In South Korea, Samsung Electro-Mechanics developed panel level packaging in 2018 to compete with TSMC’s fan-out wafer-level packaging. With the former, which has a yield of over 95 percent, a chip and a main board can be directly connected without a semiconductor package substrate. The business unit of Samsung Electro-Mechanics became a part of Samsung Electronics in 2019 and Samsung Electronics has refined the technology for further utilization. In addition, Samsung Electronics has developed new techniques such as vertical logic-SRAM stacking and a package incorporating one logic and four high bandwidth memory chips.

Samsung Electro-Mechanics is continuing to concentrate on packaging as well. It is planning to produce semiconductor package substrates for servers as well as for mobile and PC use. The company’s semiconductor package substrate sales for this year are estimated at 1.44 trillion won, up 19 percent year on year, with FC-BGA accounting for about one-third. In addition, the company’s related operating profit ratio is expected to reach an all-time high.

U.S. companies are making efforts together with their government. Intel is building semiconductor packaging facilities in Rio Rancho, New Mexico at an investment of US$3.5 billion. Apple recently unveiled its technology for simultaneous M1 processor-memory packaging. The U.S. government prepared a related R&D budget of US$10.5 billion in May this year.