January 19, 2023 — TrendForce’s current evaluation of the foundry market reveals that demand continues to slip for every type of mature and superior nodes. The main IC design homes have lower wafer enter for 1Q23 and can seemingly reduce additional for 2Q23. At the moment, foundries are anticipated to keep up a lower-than-ideal stage of capability utilization price within the first two quarters of this 12 months. Some nodes may expertise a steeper demand drop in 2Q23 as there are nonetheless no indicators of a major rebound in wafer orders. Waiting for the second half of this 12 months, orders will seemingly choose up for some elements that underwent a listing correction at an earlier time. Nonetheless, the state of the worldwide financial system will stay the most important variable that have an effect on demand, and the restoration of particular person foundries’ capability utilization charges is not going to happen as rapidly as anticipated. Taking these elements under consideration, TrendForce at the moment forecasts that international foundry income will drop by round 4% YoY for 2023. The projected decline for 2023 is extra extreme when put next with the one which was recorded for 2019.
TrendForce additionally factors out that the newest geopolitical dangers have led to a geographical realignment throughout the availability chain. Within the case of IC design homes, they’re getting ready to decrease the share of chip manufacturing based mostly in China, and the impact of this reallocation of foundry orders might be more and more noticeable in 2H23 and develop into fairly apparent by 2024. The provision and demand situations of the foundry market will regularly develop into regionalized as properly. This, in flip, will trigger divergences amongst foundries with respect to capability utilization. Therefore, the restoration of the entire foundry business’s capability utilization might be influenced by not solely seasonal patterns and shoppers’ stock ranges but in addition geographical distribution of orders inside the provide chain. This final issue warrants higher consideration as properly.
Order Reallocation Is Extra Vital in 8-Inch Wafer Phase, Mature Nodes Have a Increased and Steadier Capability Utilization Fee In contrast with Superior Nodes in 12-Inch Wafer Phase
Now, getting into 1Q23, gross sales of shopper electronics together with smartphones, pocket book (laptop computer) computer systems, and TVs are in a stoop due to the normal off-season. Furthermore, the sluggish tempo of stock consumption will have an effect on foundry orders from IC design homes for elements similar to consumer-grade PMICs, MOSFETs, and many others. Because of these developments, 8-inch wafer foundries nonetheless undergo an ongoing decline in capability utilization price. Then again, the 8-inch wafer orders for 2Q23 present a slight demand rebound. That is primarily attributed to some orders involving particular industrial computer systems and some shoppers adjusting order allocation amongst foundry companions. However, the contribution from these sources of demand to the utilization of the general 8-inch wafer foundry capability is restricted. TrendForce’s newest investigation signifies that 8-inch wafer foundries’ capability utilization charges will stay principally fixed between 1Q23 and 2Q23. For now, TrendForce doesn’t imagine a considerable restoration will happen within the close to future.
Turning to 12-inch wafer foundries working with the superior nodes, TSMC is predicted to maintain a lower-than-ideal stage of capability utilization price in 1H23. Then, TSMC ought to have the ability to increase the speed of its 7nm node in 2H23, although the rise will nonetheless be restricted. As for TSMC’s 5nm node, its price will ultimately return to the optimum stage in 2H23 due to stock-up actions associated to the releases of recent gadgets through the conventional peak season. Taking a look at Samsung, capability utilization price will keep low for its ≤8nm nodes by 2023 mainly as a result of its fundamental shoppers Qualcomm and NVIDIA have opted to reallocate orders to different foundries.
Concerning 12-inch wafer foundries working with the mature nodes, they are going to principally retain a capability utilization price of 75~85% in 1H23. These foundries, which embrace TSMC, UMC, and GlobalFoundries, are actively increasing into software segments that provide a extra secure stage of demand. Examples embrace automotive electronics, industrial tools, and medical gadgets. Thus, the mature nodes are in a position to preserve a comparatively excessive capability utilization price. TrendForce has additionally noticed that the 28nm node has the next price in contrast with the 55/40nm nodes. Moreover, foundries which have the next proportion of consumer-grade chips within the product combine have skilled a bigger price drop. Their charges have principally dipped to round 65~75%.
Capability Utilization Fee Will Rally in 8- and 12-Inch Wafer Segments in 3Q23 Owing to Anticipation of Peak-Season Demand and Ongoing Realignment of Provide Chain
In 2H23, vital geopolitical dangers will seemingly persist. Moreover, some main OEMs have initiated a evaluate of provide companions in order that they will meet the necessities of the tenders launched by the US authorities. Subsequently, they’ll proceed with their efforts to relocate their provide chains. Additionally, IC design homes have successively moved parts of their orders to foundries based mostly exterior China. Most of those reallocated orders are for 8-inch wafer foundry. Subsequently, non-Chinese language foundries similar to UMC and Vanguard will seemingly see a barely above-average hike within the utilization price of 8-inch wafer foundry capability through the second half of the 12 months.
The marketplace for finish merchandise as a complete has gone by a couple of 12 months of stock corrections. Subsequently, the momentum of stock-up actions will get stronger for sure consumer-grade chips later in 2023 as OEMs prepares for the normal peak season. TrendForce says some pressing orders and some different orders involving merchandise with particular specs will arrive and barely enhance foundry demand in 2Q23. Then, beginning in 3Q23, capability utilization price will climb extra noticeably in each the 8- and 12-inch wafer segments. Nonetheless, this rise in foundries’ capability utilization charges might be constrained by the unsure financial outlook. Thus, foundries will not be anticipated to return to the fully-loaded standing inside the brief time period.
Extra Than 20 New Wafer Fabs Will Be In-built Coming Years as Nations Present Beneficiant Subsidies to Assist Their Building and Foundry Business Marches into New Period of Regionalization
Within the medium to long run, the foundry market will develop into extra fragmented as a result of the constructing and diversification of manufacturing capability will happen throughout totally different areas. TrendForce’s analysis finds that plans for a complete of greater than 20 new wafer fabs have been initiated in recent times. Concerning the geographical distribution of those new fabs, Taiwan could have 5, the US could have 5, China could have six, Europe could have 4, and one other 4 might be positioned amongst South Korea, Japan, and Singapore. Governments worldwide are actually far more conscious of the significance of native manufacturing as a consequence of current geopolitical occasions, and semiconductor chips have regularly emerged as a strategic useful resource. Subsequently, other than business pursuits and price construction, foundries now have to provide a higher consideration to sure international locations’ subsidy insurance policies and their shoppers’ want for native content material. On the similar time, they are going to nonetheless want to keep up a wholesome supply-demand steadiness for the entire market. TrendForce believes a various vary of choices and an efficient pricing technique are the important thing elements that may allow foundries to keep up a profitable operation sooner or later.