Taiwan Semiconductor Manufacturing Company (TSMC) has traditionally excelled in silicon production, while outsourced semiconductor assembly and test (OSAT) service providers specialized in advanced packaging silicon into ceramic or organic casings.
However, recent years have witnessed a transformative phase with the advent of advanced packaging methods necessitating sophisticated tools and cleanrooms akin to silicon production. TSMC, an industry pioneer in innovative packaging technologies aggregated under the 3DFabric brand, has significantly impacted the landscape.
What is foundry business model?
The foundry business model, also known as a semiconductor foundry, is a business approach in the semiconductor industry where a company specializes in the manufacturing (fabrication) of semiconductor devices on behalf of other semiconductor companies, known as fabless semiconductor companies. These fabless companies design and market the chips but outsource the actual fabrication process to the foundry.
Foundry business model has played a crucial role in advancing the semiconductor industry by enabling more efficient and cost-effective semiconductor manufacturing, fueling innovation and growth in various technological sectors.
Read More: Explained: What the hell IDM, Fabless, or Fab-Lite model?
The Evolution of Advanced Packaging:
Since the late 1980s, the foundry business model has been integral to semiconductor production. TSMC, a major player in this model, primarily focused on silicon production, while outsourced semiconductor assembly and test (OSAT) service providers handled packaging into ceramic or organic encasings.
However, recent years have seen a significant shift due to the rise of advanced packaging methods. These methods require cutting-edge tools and cleanrooms comparable to those used in silicon production. TSMC, being a pioneer in innovative packaging, consolidated these technologies under the 3DFabric brand and quickly emerged as a prominent OSAT for advanced packaging.
Companies like Nvidia seek streamlined processes, opting to send blueprints and receive ready-to-ship products. Consequently, they choose TSMC’s services to package their advanced system-in-packages, like H100, utilizing technologies such as integrated fan-out (InFO, chip first) and chip-on-wafer-on-substrate (CoWoS, chip last) pioneered by the foundry.
However, the high demand for CoWoS recently surpassed TSMC’s production capacity, prompting the company to announce plans for expansion.
Why Advanced Packaging?
Several factors contribute to the growing significance of advanced packaging technologies such as TSMC’s CoWoS and InFO, as well as Intel’s EMIB and Foveros.
Firstly, there’s a rising trend towards disaggregated chip designs due to the increasing costs of chip manufacturing, making smaller chips more feasible and yielding better results. Simultaneously, chip designers aspire for larger and more powerful chips. Secondly, the shift towards disaggregated designs utilizing chiplets produced on different nodes is more cost-effective compared to manufacturing a single monolithic chip on a leading-edge node.
Although TSMC generates substantial revenue from advanced chip packaging methods, it remains committed to not competing with its traditional OSAT partners.
Instead, TSMC encourages these partners to enhance their packaging capabilities and adopt similar tools to TSMC and its associates, facilitating the creation of packages compatible with TSMC-made chiplets.
However, the situation is more complex.
Read More: CoWoS: TSMC’s New Secret Weapon for Advanced Packaging
What is the issue with OSAT Partner’s Advanced Packaging capability ?
Major assembly and test specialists like ASE Group, Amkor Technology, and JCET possess advanced chip packaging technologies, many of which are similar to those of TSMC. These OSATs have their advanced packaging facilities and are fully capable of serving fabless chip designers.
While OSATs offer packaging technologies with similarities to TSMC in terms of pitch dimensions and bump I/O pitch dimensions, they differ in terms of flow and may even have slightly distinct electric specifications.
Despite these variations, OSATs utilize the same tools as TSMC, enabling them to package chips using CoWoS interposers. TSMC has already certified two OSATs to conduct the final CoWoS assembly.
EDA Tool Requirement
TSMC’s cutting-edge packaging technologies like CoWoS and InFO rely on electronic design automation (EDA) tools provided by leading companies such as Ansys, Cadence, Siemens EDA, and Synopsys. TSMC aims for OSATs to adopt these identical programs, aligning their technical capabilities with the designs and processes supported by these tools in TSMC’s production.
Dan Kochpatcharin, Head of Design Infrastructure Management at TSMC, emphasized this need, stating, “We encourage their use of the same EDA tools. For example, utilizing TSMC interposer on an OSAT’s substrate. By employing tools like 3Dblox and other appropriate EDA tools for analysis, it simplifies the process for the customer. Our objective is to have a standardized flow, making it more convenient for the customers. If different customers use disparate EDA tools, conducting comprehensive multi-physics analysis for the package becomes notably more challenging, although still feasible.”
OSATs Can’t compete with Giants
In order to meet the increasing demand for advanced packaging methods like CoWoS, semiconductor assembly and test (OSAT) companies need to invest in substantial capacities and advanced tools, which come at a high cost.
However, these OSATs face challenges in keeping pace with major players like Intel, TSMC, and Samsung in terms of investment for advanced packaging facilities. For instance, in the past year, Intel allocated a budget of $4 billion for its advanced packaging plants, while TSMC’s capital expenditures for advanced packaging amounted to $3.6 billion.
In comparison, Samsung invested approximately $2 billion, as estimated by Yole Group and published by EE Times.
On the other hand, ASE Group (along with SPIL and USI) had capital expenditures totaling $1.7 billion in 2022, while Amkor’s spending reached $908 million.
Read more: Explained: What the hell is 3D IC packaging?
Conclusion:
In a landscape where the semiconductor industry is constantly evolving, TSMC stands at the forefront, leading the charge in advanced chip packaging technologies. The future of the industry hinges on collaborative efforts, where TSMC and OSATs align their capabilities and tools, ensuring seamless compatibility and driving innovation. As the demand for advanced packaging continues to surge, strategic investments and collaborative endeavors will play a pivotal role in shaping the semiconductor packaging landscape for years to come.
Reference:
[1] Anandtech
