tech

As nations and companies vie for supply chain security and technological leadership, investment is booming.

Fab facilities, packaging, testing and assembly, as well as research and development, all attracted substantial funding in 2023. Companies are investing in offshore locations such as India and Malaysia to gain access to a larger workforce and lower costs, while also collaborating with governments to ensure the security of domestic supply chains.

Looking ahead, as emerging technologies capture the interest of consumers and markets, artificial intelligence (AI), quantum computing, and data applications seem poised to capitalize on these investments. Next, let's analyze over 100 notable chip industry facility/fab investments in 2023.

The semiconductor industry remains a global system

Despite governments seeking to establish domestic advantages, businesses continue to invest overseas. "It will take a long time to be completely independent of other countries or regions, and I don't think that's the best for our industry or technological innovation," said Ajit Manocha, President and CEO of SEMI. "Today, it's a well-connected system. We start with the substrate, then we manufacture the chips. In terms of substrates, most materials and chemicals are produced in Japan, with some in Europe and the United States, design is mostly done in the United States, front-end manufacturing is largely in Taiwan and South Korea, assembly industries are in China, Southeast Asia. Then, the final testing is in the United States, and distribution comes from the United States, so we are interdependent across six or seven regions of the world. Bringing everything into the United States would pose many challenges. Building an entire ecosystem in one region is very time-consuming and would lose the advantage of specialization."

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SEMI forecasts that between 2022 and 2026, 94 new 200mm and 300mm wafer fabs will come online, with 78 already operational, adding equipment, or under construction. Sixty-three are located in Asia, 18 in the United States; according to SEMI's Q3 2023 Global Fab Forecast, 13 are in Europe and the Middle East. "Whether it's the United States or other countries, everyone fully recognizes that this is a global industry, and we are interdependent with multiple regions," Manocha said. "We need to cooperate."

Beyond the challenges of trying to establish independent systems, Manocha also warned of the need to maintain international partnerships. "We need to have clear policies so that we can collaborate with other regions. We don't need to concentrate everything in one country." Fabs face various risks, from fires, floods, to ice storms, as seen in Texas. "The frequency of these disasters has increased, so we need multiple centers for the semiconductor industry, not just the few centers we have today," he said. "That's why I hope we can welcome India as a new hub, but there is still a long way to go."

In 2023, India and Malaysia attracted nearly a dozen investments. "From the perspective of the R&D field, there are compelling reasons to build in these two regions," said David Henshall, Vice President of Business Development and Government Relations at a semiconductor company. "Many design companies are setting up centers there because of the large number of undergraduate and graduate students and the favorable economic conditions. Workforce development is a huge issue, so we have been working with India to meet some of these needs. Some companies and the Indian government are viewing semiconductors as a way to help them develop their economy because of the research done there and the talent available there."

Major investments in India and Malaysia include:Synopsys is establishing a chip design center in Odisha and has partnered with IIT Bombay to open a virtual fab solutions lab in Mumbai.

Micron Technology is investing $825 million in Gujarat, India, for DRAM and NAND assembly and testing.

AMD's investment in R&D, design, and engineering in Bangalore and Karnataka, India, amounts to $400 million.

Applied Materials is spending $400 million to build a manufacturing equipment collaboration engineering center in Bangalore, India.

Infineon's global investment totals around $5.5 billion, with a portion of it allocated to the expansion of its 200mm silicon carbide power factory in Kulim, Malaysia.

Bosch is investing approximately $376 million in Penang, Malaysia, for automotive testing and sensors.

"The new Synopsys lab at the Indian Institute of Technology, Bombay, strategically focuses on TCAD (Technology Computer-Aided Design) because it plays a crucial foundational role in the advanced chip manufacturing lifecycle," said Aveek Sarkar, Vice President of Engineering, Circuit Design, and TCAD Solutions at Synopsys. Students trained in the lab will gain TCAD expertise to help address the complex power, performance, and area/cost challenges in manufacturing chips at the most advanced process nodes.

Government as a Key Player

National security is a primary concern for certain governments, as evidenced by the United States' ban on exporting advanced chips to China.

However, the semiconductor industry's top concerns are talent shortages, climate threats, and supply chain issues. "These are three global challenges," Manocha said. "No single company, no single country, no single CEO can solve these problems. When I was in corporate life, I often said, 'Keep the government out of my business.' But now what I'm saying is, we need government involvement to address these global challenges."Selected Government/Industry Investments:

Under the CHIPS Act, the U.S. Department of Commerce is authorized to allocate $3 billion for advanced packaging, including a pilot facility.

BAE Systems received the first CHIPS Act funding—$35 million initially, to modernize its microelectronics center and increase the production of fighter jet chips.

The U.S. Department of Defense provided $35 million to GlobalFoundries for tools to produce large-scale 200mm GaN-on-SiC chips.

The EU and Belgium invested $1.6 billion in imec for the expansion of its cleanroom test facilities.

The 7.5 billion euro 300mm wafer fab of GlobalFoundries and STMicroelectronics is funded by France and the EU's chip act.

The South Korean government is supporting the establishment of a semiconductor mega-cluster in Yongin.

TSMC, Bosch, Infineon, and NXP's $11 billion joint venture in Germany is planned under the framework of the EU's chip act.

The total budget of the U.S. CHIPS and Science Act of 2022 is $280 billion, indicating a substantial funding boost in the coming years. This includes many subcategories, particularly the $52.7 billion under the "American Chip Initiative," aimed at semiconductor manufacturing, R&D, and workforce development, as well as an additional $24 billion in tax credits for chip production.

Lora Weiss, Director of the Office of CHIPS Research and Development at the U.S. Department of Commerce, stated at the online kickoff event for the project: "CHIPS for America is a historic effort to bring semiconductor manufacturing back to the U.S. and support chipmakers in establishing a robust ecosystem. This will help establish at least two new large-scale manufacturing facility clusters for cutting-edge logic chips, driving advancements in fields such as artificial intelligence, biotechnology, and quantum computing. We anticipate that the U.S. will become home to multiple large-volume advanced packaging facilities and a global leader in advanced scale packaging for the most complex chips, rather than sending these chips overseas for packaging (which is currently done mostly overseas)."Packaging is a level playing field for innovation

"A revolution is happening here because we are moving from these large monolithic chips to heterogeneous integration, and packaging different small chips together," says Henshall of SRC. "Because this is new, there is actually no R&D infrastructure globally, so this is a great opportunity for the U.S. to do more domestic business. This is where we maintain our lead in the technology field, and due to the CHIPS Act and other factors, there are many opportunities here."

Packaging is also undergoing a transition from circular wafers to rectangular or square panels. Keith Best, Director of Product Marketing at Onto Innovation, says, "Panels are effectively replacing because you can no longer handle the size of these new packages on the wafer." He cites TSMC's 3D structures and RDL interlayers as examples. To help companies adapt to new technologies, Onto has launched the Packaging Application Center of Excellence (PACE). "Customers are looking for help to define their next node process, but they don't have time to stop the production line for R&D. It's too complex. Therefore, they are looking for proactive OEMs to help them accelerate learning and the technology roadmap."

PACE is equipped with Onto's lithography steppers, inspection, and metrology tools, which are essential to support the advanced packaging process development roadmap of OEMs and their customers. Plating, drilling, and other processes and operations will be provided by other OEM partners in their factories. "Every partner involved in the development work has a vested interest in success because they can help each other."

Currently, any country has the opportunity to become a global leader in advanced packaging, but when the technology becomes the norm, the order may change. Best says, "Countries will continue to offshore what has become routine. If you look at history, OSATs will adopt processes provided by U.S. packaging manufacturers to reduce costs. Now, when the technology of advanced IC substrates changes, there will be a turning point that shifts to the next node. These OSATs may not be able to provide the yield and pricing of the new package designs they used to do because the technology is beyond their reach. Therefore, if you have a new factory in the U.S. specifically built for advanced packaging—equipped with the right cleanroom capabilities and peripheral technologies to help them succeed at the next node—they can actually become pioneers and capture the market while it is still hot. Then, after a while, advanced packaging will become a commodity and be pushed overseas again."

Major packaging investments:

Amkor invests $2 billion in Arizona for advanced packaging.

TSMC invests $2.9 billion in Miaoli County, Taiwan, for advanced packaging.

Onto Innovation's Packaging Application Center of Excellence is located at its headquarters in Massachusetts, USA.

JCET invests approximately $656 million in its automotive advanced packaging factory in Shanghai, China.Purdue University, Cadence, SRC, imec, and the Advanced System Integration and Packaging Institute (ASIP), a partner located in Indiana.

Resonac's Packaging Solutions Center (PSC) located in California.

SEMI's Manocha states that advanced packaging is Moore's Law 2.0 because it is the way to achieve continuous size reduction. Onto's Best agrees: "It's not just about linewidth. By combining small chips into heterogeneous integrated packaging, you can achieve more powerful functionality than a single chip."

Artificial Intelligence and Other Emerging Technologies Drive Demand

"You can see that we are currently experiencing a bit of an oversupply of chips, but this is purely due to the economic downturn," says Manocha. "The reason I am very optimistic about this industry is that artificial intelligence is definitely a significant driver of continuous growth." Other market drivers listed by Manocha include 5G, 6G, 7G, quantum computing, cryptocurrencies, and autonomous machines.

There has also been explosive growth in technology in the healthcare, automotive, and agriculture sectors, with continuous growth in social media and data centers. All of these require advanced chips.

"Everyone has heard of artificial intelligence; it is now a buzzword," says SRC's Henshall. The reality is that it has existed for decades. But due to advancements in chip technology and speed, it is more useful than ever before. The proliferation of generative artificial intelligence has led more people to invest in the research and development of chip hardware, which is indeed exciting for us. If you look at the sources of R&D funding, you will find that the market is there.

Investments in Artificial Intelligence, Quantum, and Data:

Siemens invests $150 million in Dallas-Fort Worth production infrastructure to help power U.S. data centers and accelerate the adoption of artificial intelligence.

Expedera's engineering development center in the UK focuses on edge AI inference.NVIDIA, the Jülich Supercomputing Centre, and the German ParTec Quantum Computing Lab.

TSMC reports the establishment of a 2nm wafer fab in Kaohsiung, Taiwan, to keep up with the "AI wave."

The U.S. Department of Energy's Berkeley and Jefferson Laboratories' $300 million high-performance data facility center located in Virginia.