Money Pours Into New Fabs And Facilities

Fabs, packaging, test and assembly, and R&D all drew major funding in 2023. Companies poured money into offshore locations, such as India and Malaysia, to access a larger workforce and lower costs, while also partnering with governments to secure domestic supply chains amid ongoing geopolitical turmoil.

Looking ahead, artificial intelligence (AI), quantum computing, and data applications look set to leverage those investments as emerging technology draws interest from consumers and the markets.

See the Table below for over 100 notable chip industry facility/fab investments in 2023.

The semiconductor industry remains a global system
Companies continue to invest offshore even as various governments seek to build a home advantage. “In order to become totally independent of other countries or regions, it’s going to take a long time, and I don’t believe it’s what’s best for our industry or technology innovation,” said Ajit Manocha, president and CEO of SEMI. “Today, this is a very well interconnected system. We start with a substrate and we make a chip. For the substrate, most of the materials and chemicals are produced in Japan, with some in Europe and the U.S. The designs are mostly done in the U.S. The front-end manufacturing is mostly done in Taiwan and South Korea, and the assembly industry is in Southeast Asia. And then, final testing is in the U.S., and the distribution is from the U.S. So we are interdependent on six or seven regions in the world. To bring everything into the U.S. will create a lot of challenges. It will be time consuming to set up the entire ecosystem in one region, and it misses out on the advantages of specialization.”

SEMI expects 94 200mm and 300mm new fabs to come online between 2022 and 2026, 78 of which have begun operation, or are in the process of adding equipment or under construction. Of those, 63 are in Asia with 30 in China; 18 are in the U.S.; and 13 are in Europe and the Middle East, according to SEMI’s World Fab Forecast 3Q23. “There’s a full understanding across the board, whether it’s the U.S. or other countries, that it is a global industry, and we are dependent on and interdependent with multiple regions,” said Manocha. “We need to work in collaboration.”

In addition to the challenges of trying to set up an independent system, Manocha warns of the need to maintain international partners. “We need to create clear policies so we can work collectively with other regions. We don’t need to bring everything into one country, and we do need to make sure that we have enough redundancies in the system so that if unfortunate things like wars happen, we are not hostage to that situation.” Whether it’s fire, floods, or an ice storm in Texas, fabs are at risk from the elements. “The frequency of these calamities has increased and so we need multiple hubs in the semiconductor industry, not just the few hubs we have today,” he said. “That’s why I hope we can welcome India as a new hub, but there is a long way to go yet.”

India and Malaysia attracted almost a dozen investments in 2023. “Looking at it from a lens of the R&D landscape, there are attractive reasons to build in both of those regions,” said David Henshall, vice president of business development and government relations at  Semiconductor Research Corp. (SRC). “Many design companies have built centers there because there are large numbers of both undergraduate and graduate students, and the economics are favorable. And workforce development is an enormous issue so we’ve been working with India to address some of those needs. Some companies, and the Indian government, are looking at semiconductors as a way to help them grow their economy because of the research that’s done there and the talent that’s there.”

Among the key investments in India and Malaysia:

• Synopsys is setting up a chip design center in Odisha, and opened a lab for virtual fab solutions in Mumbai, in partnership with IIT Bombay.
• Micron’ $825 million investment in Gujarat, India, for DRAM and NAND assembly and test.
• AMD’s $400 million R&D, design, and engineering investment in Bangalore and Karnataka, India.
• Applied Materials’ $400 million in Bangalore, India, for a collaborative engineering center for manufacturing equipment.
• Infineon made a total global investment of about $5.5 billion, some of which went into Kulim, Malaysia, to expand its 200mm SiC power fab.
• Bosch invested about $376 million into Penang, Malaysia for auto test and sensors.

“We strategically focused on TCAD (technology computer-aided design) for the new Synopsys lab at IIT Bombay because of its critical, foundational role in advanced chip fabrication lifecycles,” said Aveek Sarkar, vice president of engineering, circuit design, and TCAD solutions at Synopsys. Students trained in the lab will acquire TCAD expertise to help solve the complex power, performance and area/cost challenges of manufacturing chips at the most advanced process nodes.

Government as a key player
National security is a major concern to certain governments, as evidenced by the U.S. banning the export of advanced chips to China, and China retaliating by banning the export of key minerals.

However, the primary concerns for the semiconductor industry are the talent shortage, climate threats, and supply chain issues. “These are three global challenges,” said Manocha. “No single company, no single country, and no single CEO can solve them. When I was in corporate life, I used to say, ‘Keep the government out of my business.’ But now I’m saying, ‘We need governments to be part of the business to solve these global challenges.'”

Selected government/industry investments:

• Under the CHIPS Act, the U.S. Department of Commerce authorized $3 billion for advanced packaging, including a piloting facility.
• BAE Systems received the first CHIPS Act funding award — an initial $35 million to modernize its Microelectronics Center and increase production of chips for fighter jets.
• The U.S. Department of Defense awarded $35 million funding to GlobalFoundries for tools to produce at-scale 200mm GaN-on-Sic chips.
• The EU and Belgium invested $1.6 billion in imec to expand its clean room test facility.
• GF and ST’s €7.5 billion 300mm fab was funded by France and the EU Chips Act.
• The Korean government is backing a semiconductor mega cluster in Yongin.
• TSMC, Bosch, Infineon, and NXP’s $11 billion joint venture in Germany was planned under the framework of the EU Chips Act.

The U.S. CHIPS and Science Act of 2022 has a total budget of $280 billion, so there will be a slew of funding awards over the coming years. That includes a number of sub-categories, notably $52.7 billion under the CHIPS for America program, which is targeted at semiconductor manufacturing, R&D, and workforce development, and another $24 billion in tax credits for chip production.

“CHIPS for America is a historic effort to bring semiconductor manufacturing back to America and to support chipmakers build a robust ecosystem,” said Lora Weiss, director of the CHIPS Research & Development Office at the U.S. Department of Commerce, during an online launch of the advanced packaging program. “It will help to establish at least two new large-scale clusters of fabrication facilities for the leading-edge logic chips that drive advances in fields like artificial intelligence, biotech, and quantum computing. Instead of sending those chips overseas for packaging, where most of it takes place today, we envision that the United States will be home to multiple, high-volume advanced packaging facilities and become a global leader in advanced scale packaging for the most sophisticated chips.”

Packaging is fair game for innovation
“There is a revolution going on here, because we’re going away from these large monolithic chips to heterogeneous integration and different chiplets being packaged together,” said SRC’s Henshall. “Because this is new, there’s really no R&D infrastructure globally that exists. It’s a little bit of the Wild West right now, and so this is a great opportunity where the U.S. can do a bit more on-shoring. It’s a place for us to stay ahead on the technology front, and there’s a lot of opportunity due to the CHIPS Act and other things.”

Packaging also is undergoing a shift from round wafers to rectangular or square panels. “Panels are taking over effectively because you cannot handle the sizing of these new packages on wafers anymore,” said Keith Best, director of product marketing at Onto Innovation, citing TSMC’s 3D fabric and RDL interposers as an example. To help companies adapt to new technologies, Onto launched its Packaging Application Center of Excellence (PACE). “Customers are looking for help to define their next-node process, and they don’t have the time to take the production line down for R&D. It’s too complicated. So they are looking for proactive OEMs to help them speed up their learning and technology roadmaps.”

PACE houses Onto’s lithography steppers, inspection, and metrology tools, which are required to support the advanced packaging process development roadmaps of the OEMs and their customers. The plating, drilling, and other processes and operations will be provided by the other OEM partners at their facilities. “Each of the partners participating in the development efforts has a vested interest in being successful because they can help each other.”

Any country has a chance to establish itself as the global leader of advanced packaging right now, but the order may shift when the technology becomes the norm. “Countries will continue to offshore the things that have become routine,” said Best. “If you look at the history, the OSATs picked up processes that were given to them by the manufacturers of the packages from the U.S. to reduce costs. Now, there’s going to be an inflection point when the technology changes for advanced IC substrates to move to the next node. Those OSATs may not be able to deliver the yield and the pricing for new package designs that they did before, because the technology is beyond them. So if you have a new facility in the U.S. built specifically for advanced packages — that has the right cleanroom capability and the periphery technology to help them be successful at the next node — they could actually be pioneering and capture the market while it’s still hot. Then, after a period of time, advanced packaging will become a commodity and get pushed overseas again.”

Key packaging investments:

• Amkor’s $2 billion into Arizona for advanced packaging.
• TSMC’s $2.9 billion into Miaoli County, Taiwan, for advanced packaging.
• Onto Innovation’s Packaging Applications Center of Excellence within its Massachusetts , USA headquarters.
• JCET’s approximately $656 million for its auto advanced packaging factory in Shanghai, China.
• Purdue University, Cadence, SRC, imec, and partners’ Institute for Advanced System Integration and Packaging (ASIP) in Indiana.
• Resonac’s Packaging Solution Center (PSC) in California.

Advanced packaging is Moore’s Law 2.0, according to SEMI’s Manocha, because it’s the way that the continued scaling down is achievable. Onto’s Best agrees: “It’s not just the line width that’s important. It’s the package functionality. By combining chiplets into a heterogeneous integrated package, you can achieve greater functionality than you can in a monolithic chip.”

AI and other emerging tech drives demand
“You can see that we’re having a bit of a chip oversupply situation now, but this is purely due to the economic downturn trends,” said Manocha. “The reason I feel very bullish about the industry is because AI is definitely the big fuel that is going to keep growing.” Other market drivers Manocha listed were 5G, 6G, 7G, quantum computing, cryptocurrencies, and autonomous machines.

There also is a technology explosion in health care, automotive, and agriculture, as well as continued growth in social media and data centers. All of those require advanced chips.

“Everybody hears about AI and it’s a buzzword right now,” said SRC’s Henshall. “The reality is it’s been around for decades. But because of advances in chip technology and the speed now, it’s able to be much more useful than it ever was. And the popularity of generative AI is allowing more people to put money into research and development for chip hardware, which is really exciting for us. If you look at where R&D gets funded, it’s where the markets are. So we’ve got a portfolio of eight different programs that people can choose a la carte. And some programs are undernourished, like environmental health and safety. We need to grow that because we need a planet to make chips on. But the markets drive where the bigger budgets are.” The challenge, then, is to spread the funding around to other areas.

AI, quantum, and data investments:

• Siemens’ $150 million investment in Dallas-Fort Worth production of infrastructure to help power U.S. data centers and accelerate adoption of AI.
• Expedera’s engineering development center in the UK focused on edge AI inference.
• NVIDIA, Jülich Supercomputing Centre, and ParTec’s quantum computing lab in Germany
• TSMC’s reported 2nm fab in Taiwan’s Kaohsiung to catch the “AI wave.”
• The U.S. Department of Energy’s Berkeley and Jefferson labs’ $300 million high performance data facility hub in Virginia.

By the numbers

So where is the money flowing? The following table lists prominent new facility/fab investments announced in 2023 and late 2022 since our last report ran, but there are many more beyond this list. Some items contain changes to previously announced plans. The table is currently presented alphabetically according to company or organization but it can also be sorted by country or other features.

Table

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