Due to the effect of China's order transfer, the research and survey estimate that the wafer foundry production capacity will rebound from Q3.

(Photo by reporter Hong Youfang)

[Reporter Hong Youfang/Hsinchu Report] TrendForce pointed out that due to the continued spread of IC design customers’ order cuts, the utilization rate of foundry capacity in the first half of this year will decline quarter by quarter, and some processes in the second quarter will even be lower than those in the first half of the year. Orders are expected to replenish in the second half of the year, but the global political and economic trends are the biggest variable, and the recovery rate of capacity utilization may not be as fast as expected. However, the continued supply chain shift and the expected psychology of the peak season will still help drive the utilization of 8-inch and 12-inch capacity. The rate will pick up from the third quarter, and the output value of wafer foundry in 2023 is expected to decrease by about 4% annually, a decline greater than that in 2019.

According to TrendForce, it is worth mentioning that geopolitical risks have prompted the continuous shift of the supply chain, and IC factories are gradually preparing to reduce the proportion of products produced in Chinese factories.

The order transfer effect will gradually ferment in the second half of 2023, and it will become more obvious after 2024. The supply and demand of wafer foundries will gradually tend to develop regionally, which will lead to differences in the capacity utilization rate of wafer foundries in the second half of the year. Depending on the customer's inventory level and traditional peak season factors, the distribution effect of the supply chain is also worthy of attention.

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In terms of different manufacturing processes, the 8-inch order transfer is more obvious, and the 12-inch mature manufacturing process is more stable than the advanced manufacturing process.

TrendForce believes that the demand for consumer terminals such as smartphones, laptops, and TVs has entered the off-season, and the slow destocking will further affect orders for consumer products such as power management ICs and MOSFETs, leading to major 8-inch wafer foundries this quarter. Capacity utilization continued to decline.

The recent 8-inch fab order replenishment will occur sporadically in the second quarter, mainly due to the demand for special industrial computers. A small number of customers switch the proportion of production between wafer foundries, and the contribution to the overall 8-inch capacity utilization rate is still limited. Utilization will be about the same as in Q1, with no clear signs of recovery yet.

For the 12-inch advanced process, TSMC’s capacity utilization rate in the first half of this year is still not satisfactory, and the rate of increase in 7nm capacity utilization rate in the second half of the year is still limited; 5nm needs to rely on new product peak season stocking to bring it back to a healthy level.

For Samsung, the capacity utilization rate of advanced processes below 8 nanometers is low throughout the year, mainly due to the impact of major customers Qualcomm (Qualcomm) and Huida (NVIDIA) transferring orders.

TrendForce said that the 12-inch mature process includes fabs such as TSMC, UMC, and GlobalFoundries, and is actively deploying relatively stable products such as automotive, industrial control, and medical. The capacity utilization rate in the first half of 2023 will be maintained at 75-85%. Among them, the capacity utilization rate of 28nm is better than that of mature processes such as 55/40nm, and the wafer foundry with a high proportion of consumer products has fallen more, about 65~75%.

Geopolitical risks may continue in the second half of 2023, and end customers will continue to transfer supply chains in order to take the lead in launching supplier inspections in response to the US government's bid.

At the same time, IC design factories have also shifted some orders to non-Chinese fabs for production, most of which are 8-inch products, and related order transfer measures have gradually increased since the second half of the year. It is expected that non-Chinese foundries such as UMC and World Advanced will , In the second half of 2023, the recovery performance of 8-inch capacity utilization rate will be slightly better than the average.

Overall, after a year-long inventory correction period, some end consumer products are expected to restart their inventory replenishment momentum to stock up for the peak season at the end of the year. Driven by the demand for products with special specifications and urgent orders, the utilization rate of 8-inch and 12-inch production capacity will increase significantly from the third quarter.

However, considering that the general economic situation is still unclear, the overall increase may be limited, and it will be difficult to return to the full load in a short time.

The medium and long-term supply and demand status of wafer foundries will gradually lean towards the layout of multiple production capacity in various regions. According to TrendForce statistics, in recent years, there will be more than 20 new wafer fabs in the world, including 5 in Taiwan, 5 in the United States, 6 in China, and Europe. 4, Japan, South Korea and Singapore 4.

Geopolitics has promoted the awareness of localized production in various countries. Semiconductor resources have gradually become strategic materials for various countries. In addition to considering business and cost structures, wafer foundries also have government subsidy policies to meet customers' localized production needs. To maintain a balance between supply and demand, the diversification of future products and pricing strategies are the key to the operation of wafer foundries.

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