PSMC Withdraws from SBI's 12-Inch Wafer Project in Japan
According to a recent report by the Nikkei, SBI Holdings, Inc. (SBI) has officially terminated its semiconductor manufacturing cooperation agreement with Taiwan's semiconductor foundry, Powerchip Semiconductor Manufacturing Corporation (PSMC). PSMC notified SBI that, due to deteriorating financial performance, it could no longer bear the risks associated with the joint venture.
Despite this setback, SBI remains committed to advancing its semiconductor manufacturing capabilities in Japan, specifically in Miyagi Prefecture, with the support of local government. Recognizing its lack of expertise in semiconductor development and design, SBI is actively seeking partnerships with new, specialized firms to fulfill its objectives.
In August, SBI also invested approximately 10 billion yen in the AI-focused startup Preferred Networks. This investment aims to leverage Preferred Networks' AI semiconductor design technologies for collaborative development of AI semiconductor solutions.
Earlier reports indicated that on July 5, 2023, PSMC and SBI had reached an agreement to establish a 12-inch wafer foundry in Japan, utilizing resources from both the Japanese government and industry to bolster the nation's semiconductor supply chain. This agreement was signed in Tokyo by Frank Huang, Chairman of PSMC, and Yoshitaka Kitao, Chairman of SBI, outlining plans for a preparatory company to initiate development activities related to the 12-inch wafer plant.
In August 2023, PSMC and SBI formally established a joint venture named JSMC, Inc., to further progress in constructing the 12-inch wafer foundry in Japan. On October 31, 2023, PSMC announced a memorandum of understanding with SBI and the Miyagi Prefectural Government, confirming the selected site for JSMC's first wafer factory at the Second Kita Sendai Central Industrial Park in Okawa Village, Miyagi Prefecture. The effectiveness of this agreement is contingent upon the Japanese government's announcement of subsidy amounts for the project.
A spokesperson for SBI revealed in an interview last October that the investment for the 12-inch wafer foundry project was projected to be between 800 billion and 900 billion yen, with ongoing negotiations regarding government subsidies. Based on past subsidies for similar projects, analysts estimated that the joint venture could receive approximately 140 billion yen in support.
However, it was unexpected that just one year after forming the joint venture JSMC, SBI and PSMC would part ways. The Nikkei reported that the primary reason for this decision was PSMC's financial challenges, attributed to intensified competition from mainland Chinese companies. PSMC, which specializes in mature process semiconductors, has faced several consecutive quarters of operational losses, prompting a strategic shift to prioritize its existing business operations over the Japanese foundry project.
Financial reports show that in Q1 of this year, PSMC recorded revenues of NT$10.82 billion, a modest 3% increase from the previous quarter, with a gross margin of 15.4% and a net loss of NT$439 million. In Q2, revenues rose to NT$11.12 billion, a year-on-year increase of 1% and a quarter-on-quarter rise of 3%, yet gross margin dropped to 5.3%, with net losses escalating to NT$1.96 billion. Cumulatively, PSMC's losses for the first half of 2024 reached NT$2.397 billion, significantly impacted by a NT$500 million loss from wafer scrapping due to the 7.3 magnitude earthquake in Hualien, Taiwan, on April 3, along with ongoing competitive pressures and low capacity utilization.
Currently, PSMC operates four 12-inch wafer fabs and two 8-inch wafer fabs, providing a monthly capacity of 400,000 8-inch equivalent wafers, with plans for further capacity expansion at its latest facility, the Gongliao P5 plant.
