The semiconductor manufacturer TSMC's 12-inch factory has another production accident. Within one day, depending on the severity of the circumstances, two "pollution incidents" occurred in "one large and one small", and the locations were both at the Nanke 14 factory in Taiwan. The number of affected 12/16nm 12-inch wafers may reach tens of thousands. It is expected that HiSilicon, MediaTek , Nvidia and other customers will be affected. TSMC responded that this incident will not affect the financial forecasts announced in the first quarter and will minimize the losses.
On the 28th, two "polluted cases" occurred in TSMC's Nanke 14 Factory. From early in the morning, the iron ion pollution caused by etching in the previous period was first reported, and later it was photoresist pollution, and the impact expanded to tens of thousands of 12-inch production capacity. Even if the entire incident has not been clarified within TSMC, the market has been rumored to be full of rumors.
A large and a small "polluted" incident broke out in Tongtiantong factory
Because as the size of terminal electronic products becomes smaller and smaller, semiconductor components are also shrinking, resulting in the iron ion testing specifications becoming more and more stringent. According to the industry, the etching (etch) iron ion pollution that was reported at the beginning of the 28th did not pass TSMC's internal inspection procedures. However, this incident was resolved immediately, and the number of wafers affected was only a few hundred pieces, which was still not a problem and would not have too much impact.
But soon, on the same day on the 28th, the second "case" broke out in TSMC's 14 factory. According to the industry, the photoresist used by the factory was contaminated, causing partial scrapping of wafers in the factory to occur, because contamination of the front transistors may cause abnormal leakage of the wafer, which will affect the yield and reliability of the output.
Figure | Chemical raw material pollution incident broke out in TSMC 14. Employees in the factory have been told to stop taking leave and conduct a comprehensive inspection of the entire factory. (Source: TSMC)
TSMC responded that it was because it used chemical raw materials that had errors from the original specifications, which affected the yield of the wafers. It is currently clarifying the cause of the incident and is communicating with customers about the details and subsequent processing.
TSMC also emphasized again that the affected wafers are expected to be refilled in the first quarter. If there is a part that cannot be refilled in the first quarter, it should be able to be refilled in the second quarter. However, according to the current progress estimate, it will not affect the financial forecast released in the first quarter.
The industry revealed that TSMC's photoresist suppliers include Japanese merchant Xinyue, JSR, etc., as well as American merchant Dow Electronics (Dow Electronic Materials). The photoresist raw materials used in 14 factories this time should belong to non-Japanese merchants. TSMC's production capacity may be as high as tens of thousands of pieces.
At present, most of the employees of TSMC Nanke Factory 14 have been notified to cancel their leave and conduct full testing.
Supply chain analysis. If the final test result is that there is a problem with this batch of chemical raw materials, you can ask the supplier for compensation. However, if it is caused by the incorrect equipment parameters used by TSMC, the compensation problem will be more complicated.
TSMC Nanke 14 Factory is a major production center for the 12/16nm process. Its main customers include HiSilicon, MediaTek, Nvidia, etc. Although TSMC's current process technology has entered the high-end generation of 10nm and 7nm, 12/16nm has always been in demand, and is the mainstay of TSMC's operations, replacing 28nm and becoming a very important technology generation for TSMC.
How important is 12/16nm accounting for TSMC's revenue? Taking the second and third quarters of 2018 as examples, accounting for as high as 25% of revenue (including a small part of 20 nanometers). By the fourth quarter of 2018, the proportion of revenue from the 16nm and 20nm processes dropped to 21%, because the high unit price 7nm process began mass production, diluting the revenue share of the 16nm process.
The wave of customer order cuts has spread from 28nm to 16nm and 7nm
In fact, since the second half of 2018, the global prosperity has begun to cool down significantly from its peak, but compared with the decline in popularity of 28nm orders, the demand for 12/16nm process orders is still very hot and popular, and customers place orders in a steady stream. However, this situation has changed since the beginning of 2019. Recently, the market has reported that 12/16nm process orders are no longer as popular as before, and the overall order popularity has cooled significantly compared to the previous one.
Industry insiders analyzed that the capacity utilization rate of TSMC Nanke 14 Factory 12/16nm has dropped to about 80%, but compared with the capacity utilization rate of 28nm, it may be only 60%, or even lower. Nanke 14 Factory is already considered the operating pillar of TSMC. Before
, it was reported that the 28nm production capacity was idle for too long, and the capacity utilization rate continued to drop to a new low every quarter. Therefore, TSMC internally considered shutting down the 28nm machine first.
"Pollution" accident is different from the last "virus" incident, but it is not a small accident that affects the production capacity of tens of thousands of pieces.
In August 2018, TSMC only had a "virus incident" that caused a sensation in the semiconductor industry. At the moment, the company estimated that it would reduce revenue by about US$250 million, but the final financial report only listed a revenue loss of less than US$100 million.
But after this accident, the outside world was very surprised that TSMC, which has always maintained internal information security, would also encounter such an outrageous virus attack event, and it did not happen in a single factory, but a cross-factory virus attack. The joint effect is that all semiconductor factories have begun to strengthen information security in the factory to prevent the outflow of core confidential data.
The "pollution incident" that occurred on the 28th is different from the last virus invasion incident. Industry analysis shows that wafer factories operate very precisely and complexly, because accidents caused by various semiconductor chemicals, raw materials, etc. often occur, but if the number of damaged wafers reaches tens of thousands, it is no longer a small accident, and subsequently involves customer handling or compensation issues.
Figure | Fabs operate very precisely and complexly, and various chemical raw materials are not easy to manage. If you are not careful, you may suffer heavy losses (Source: TSMC)
Some industry insiders joked that this pollution incident saved TSMC's customers. Anyway, the prosperity is not good, and so many wafers are not needed. It just can reduce the purchase of goods. However, if this accident occurs when the production capacity is very full, subsequent compensation may be troublesome.
The above is of course a joke circulating in the industry, because when IC design customers place orders, they will make strict quantitative assessments based on different process technologies. This only reflects the dilemma of the semiconductor industry being too cold recently, and orders and demand have also declined sharply.
Recently, the situation of customer order cuts not only occurred at 28nm, but spread to 16nm, but has always been a 7nm process that is highly anticipated. TSMC has also confirmed that it is no longer in full load state and capacity utilization has begun to loosen.
Industry insiders know that Apple's order cuts are the main reason. Even though TSMC's 7nm still has many customers such as AMD, a single Apple accounts for as much as two-thirds of TSMC's 7nm process revenue. Once Apple cuts orders, no customer can immediately fill the order gap.
Therefore, TSMC proposed that in the first quarter of 2019, revenue fell by 22% month-on-month, a correction rate greater than market expectations, and gross profit margin also dropped to 43%~45%.
Furthermore, due to the slowdown in global economic growth, the expected growth rate of the global semiconductor industry will drop from 8% last year to 1% (excluding storage), and the growth rate of the foundry industry will only remain the same, lower than the 6% growth rate in 2018.
TSMC's 12-inch factory in Nanjing also started importing from the 16nm process and will further import 12nm technology in the future.
The first customer of the Nanjing factory is the extremely legendary Bitmain in 2018. When Bitcoin prices were high, it was reported that Bitmain showed its strong strength and planned to include 15,000 to 20,000 pieces of production capacity in Nanjing factories. However, after Bitcoin collapsed in the second half of 2018, this incident no longer existed.
The semiconductor industry is well-known for its prosperity and cold winter. As the world leader in wafer foundry and one of the top three semiconductor factories (excluding storage), TSMC issued quarterly financial warnings affect the operation of the entire IC industry.
It is only after the "virus incident" broke out in August 2018 that TSMC frequently experienced unexpected events. This "one-day double swing" incident made people sweat the control of TSMC in the factory. This time, the inconsistency of chemical specifications can be attributed to the supplier's mistakes. However, how to strengthen the inspection of internal security maintenance and supply chain management in the future is a more important topic.
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