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Keyword：Joanne Chiao，
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2023/10/18
TrendForce reports that from 2023 to 2027, the global ratio of mature (>28nm) to advanced (<16nm) processes is projected to hover around 7:3 Propelled by policies and incentives promoting local production and domestic IC development, China’s mature process capacity is anticipated to grow from 29% this year to 33% by 2027 Leading the charge are giants like SMIC, HuaHong Group, and Nexchip, while Taiwan’s share is estimated to consolidate from 49% down to 42%
Expansion predominantly targets specialty processes such as Driver ICs, CIS/ISPs, and Power Discretes, with second and third-tier Taiwanese manufacturers at the forefront
Within the Driver IC sector, the spotlight is on high voltage (HV) specialty processes As companies aggressively pursue the 40/28nm HV process, UMC currently dominates, trailed by GlobalFoundries Yet, SMIC’s 28HV and Nexchip’s 40HV are gearing up for mass production in 4Q23 and 1H24, respectively—narrowing their technological gap with other foundries Notably, competitors with similar process capabilities and capacities, such as PSMC, and those without twelve-inch factories like Vanguard and DBHitek, are poised to face challenges head-on in the short term This trend may also have long-term implications for UMC and GlobalFoundries
In the realm of CIS/ISP, 3D CIS structure comprises a logic layer ISP and CIS pixel layer The primary demarcation for mainstream processes is around 45/40nm range for the logic layer ISP, which continues to progress toward more advanced nodes Meanwhile, the CIS pixel layer, along with FSI/BSI CIS, predominantly uses 65/55nm and above processes Currently, TSMC, UMC, and Samsung are the frontrunners in this technology Yet, Chinese players like SMIC and Nexchip are hot on their heels, swiftly closing the gap Their ascent is further fueled by Chinese smartphone titans OPPO, Vivo, and Xiaomi Additionally, domestic shifts prompted by governmental policies are positioning Chinese CIS companies like OmniVision, Galaxycore, and SmartSens to rally behind local production
Power Discretes mainly encompass products like MOSFETs and IGBTs Vanguard and HHGrace have been deeply involved in Power Discrete processes for some time, boasting a more comprehensive process platform and vehicle certification than many competitors However, a wave of Chinese contenders, backed by national policies favoring EVs and solar initiatives, are ready to stake their claim, intensifying global competition in this sector This includes mainstream foundries like HHGrace, SMIC, Nexchip, and CanSemi Additionally, smaller Chinese IDMs and foundries, such as GTA and CRMicro, are also entering the competitive landscape If China massively ramps up its production capacity, it will intensify global competition in Power Discrete manufacturing The impact will not only spark price wars among local Chinese businesses but could also erode the order books and clientele of Taiwanese companies
In a nutshell, while China actively courts both global and domestic IC designers to bolster its local manufacturing presence, the ensuing massive expansion could flood the global market with mature processes, potentially igniting a price war TrendForce notes that as China’s mature process capacities continue to emerge, the localization trends for Driver IC, CIS/ISP, and Power Discretes will become more pronounced Second and third-tier foundries with similar process platforms and capacities might face risks of client attrition and pricing pressures Taiwan's industry leaders, renowned for their specialty processes—UMC, PSMC, Vanguard to name a few—will find themselves in the eye of the storm The battle ahead will hinge on technological prowess and efficient production yields
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email the Sales Department at SR_MI@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit at https://wwwtrendforcecom/news/
2023/10/04
TrendForce research indicates that in 1H23, the utilization rate of 8-inch production capacity primarily benefited from sporadic inventory restocking orders for Driver ICs in the second quarter Additionally, wafer foundries initiated pricing strategies to encourage clients into early orders, offering solid backup However, in 2H23, persistent macroeconomic and inventory challenges led to the evaporation of an anticipated demand surge
Meanwhile, stockpiles in automotive and industrial control segments grew after meeting initial shortages, tempering demand Under fierce price competition from PMIC leader Texas Instruments (TI), inventory reductions for Fabless and other IDMs were drastically inhibited With IDMs ushering in output from their new plants and pulling back outsourced orders, this compounded reductions to wafer foundries This dynamic saw 8-inch production capacity utilization dipping to 50–60% in the second half of the year Both Tier 1 and Tier 2/3 8-inch wafer foundries saw a more lackluster capacity utilization performance compared to the first half of the year
Heading into 2024, with the prevailing economic turbulence, the overall semiconductor foundry capacity utilization rate will face challenges in recovery The 8-inch capacity utilization for 1Q24 is poised to mirror—or potentially dip below—4Q23 figures, revealing a glaring lack of recovery indicators
However, starting from 2Q24, TrendForce posits that while clarity on end sales remains murky due to overarching economic risks, inventory levels are expected to wane, returning to a healthier equilibrium The ensuing periodic restocking and the added momentum from orders shifted to Taiwanese foundries (owing to decoupling from China), should keep the 8-inch utilization rate from diving further The average annual utilization rate for 8-inch wafers in 2024 is pegged around 60–70% A swift return to yesteryear’s peak capacity seems difficult for now
Taiwanese and Korean semiconductor foundries face the brunt of order curtailments
A closer look reveals Chinese foundries, such as SMIC and HuaHong Group (primarily HHGrace for 8-inch), exhibiting marginally superior 8-inch utilization rates than their Taiwanese and Korean peers The proactive pricing approaches of Chinese foundries and China’s push for domestic IC substitution and production are key drivers However, despite price reduction across foundries in 2H23, a predominantly conservative market outlook from clients, combined with the absence of urgent orders, meant these reductions rendered limited assistance to the 8-inch wafer utilization rate in the latter half of the year
Panning to 2024, SMIC and HHGrace are forecast to outpace their Taiwanese and Korean counterparts in an 8-inch utilization rate resurgence HHGrance could even see a stellar rebound, reaching 80–90% On the Taiwanese front, TSMC grapples with PMIC order pullbacks, predicting an expected drop in 8-inch utilization to below 60% from 4Q23 to 1Q24 UMC and PSMC, in the same span, are gearing up to maintain levels above 50%
Furthermore, even traditionally resilient Japanese and European IDMs commenced their inventory recalibration in 3Q23, potentially further stalling the recovery timeline for the 8-inch capacity utilization rate TrendForce insights suggest that, with mounting inventory pressures, Infineon is curtailing orders to external foundries such as UMC and Vanguard This strategy will likely suppress Vanguard’s 8-inch utilization rate into 1Q24, casting a gloomier shadow than earlier projections
Korean heavyweight, Samsung, has prioritized its 8-inch production for large-sized Driver ICs, CIS, and smartphone PMICs However, the persistent softness in consumer demand has prompted their clientele toward a more guarded-order strategy Furthermore, Chinese CIS patrons, aligning with local manufacturing inclinations, are transitioning toward native foundries Consequently, Samsung’s 8-inch utilization rate has languished in 2H23, with expectations set at approximately 50% throughout 2024
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email the Sales Department at SR_MI@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://wwwtrendforcecom/news/
2023/09/05
TrendForce reports an interesting shift in the electronics landscape: dwindling inventories for TV components, along with a surging mobile repair market that’s been driving TDDI demand, have sparked a smattering of urgent orders in the Q2 supply chain These last-minute orders have served as pivotal lifelines, propping up Q2 capacity utilization and revenue for semiconductor foundries However, the adrenaline rush from these stop-gap orders may be a short-lived phenomenon and is unlikely to be carried over into the third quarter
On the other hand, demand for staple consumer products like smartphones, PCs, and notebooks remains sluggish, perpetuating a slump in the use of expensive, cutting-edge manufacturing processes At the same time, traditionally stable sectors—automotive, industrial control, and servers—are undergoing inventory correction The confluence of these trends has resulted in a sustained contraction for the world’s top ten semiconductor foundries Their global revenue declined by approximately 11% for the quarter, amounting to a staggering US$262 billion
Additionally, the urgency in the supply chain seems largely fueled by demand for LDDI and TDDI components This demand surge has catapulted Nexchip—a key player closely aligned with the panel industry’s fortunes—back into the top ten rankings
Weak demand in advanced processes impacts TSMC’s Q2 revenue, a number of foundries expected to stabilize in Q3
In a season of fluctuating fortunes, TSMC—the titan of chipmaking—posted a Q2 revenue of US$1566 billion, managing to limit the quarterly downturn to a modest 64% While the revenue stream from 7/6 nm manufacturing processes flowed freely, the 5/4 nm sectors witnessed a contraction
However, hope is on the horizon as TSMC looks forward to a likely boost in 3Q23 With the iPhone’s latest production cycle as a strong tailwind, the semiconductor giant anticipates a surge in demand for related components Plus, the introduction of the costly yet revolutionary 3 nm process is set to make its financial debut, providing a much-needed jolt to offset the stagnation seen in mature processes As a result, TSMC’s Q3 revenue landscape appears not only poised to stabilize but also primed for a potential rebound
Samsung’s foundry business hit a high note in Q2 with an impressive revenue of US$323 billion—a robust QoQ leap of 173% However, the third quarter is likely to be affected by a sluggish economy, driving down demand for Android smartphones, PCs, and laptops As a result, the utilization rate for 8-inch fabs continues to decline While Samsung hopes for a silver lining courtesy of Apple’s new device inventory buildup, the uplift in revenue growth may be limited
Meanwhile, GlobalFoundries played it cool in Q2, virtually holding the line with a nominal revenue increase of 02% to around US$185 billion Revenue from sectors like smartphones and automotive showed growth, while the networking sector saw a contraction However, as Q3 begins taking shape amid economic turbulence, GlobalFoundries possesses the ability to stabilize itself in the form of long-term contracts in specialized niches—from US aerospace and defense to healthcare—as well as long-term agreements (LTAs) for automotive-related orders These contracts not only solidify GlobalFoundries’ foothold but also effectively underpin its capacity utilization rates Therefore, the company’s revenue is projected to maintain its equilibrium in the third quarter
UMC saw a windfall in Q2, riding high on emergency orders for TV and Wi-Fi SoCs This boost pushed their Q2 revenue to a tidy US$183 billion—a solid 28% bump QoQ However, a glance into Q3 reveals an economic landscape that looks less than rosy Consumer spending is showing no signs of a significant recovery, and those previous emergency orders are starting to dry up, leading to a decline in both capacity utilization and revenue
Meanwhile, SMIC is embracing its own set of challenges and opportunities The company reported a 67% QoQ revenue surge in Q2, landing at US$156 billion It’s a ‘tale of two wafers,’ though; while its 8-inch wafer revenue took a downturn, 12-inch chips surged by approximately 9% QoQ The spotlight here is on the ‘Made in China’ pivot—SMIC’s robust revenue growth is primarily fueled by domestic substitutions in specialized chips, ranging from Driver ICs (AMOLED DDI, TDDI) and NOR Flash to MCUs Although 2023 may not promise a peak season, SMIC’s shipments and capacity utilization are poised to continue improving, driving revenue growth in the third quarter
The second quarter saw a striking change among the foundries ranked sixth to tenth, with Nexchip making a triumphant return to the number ten spot Meanwhile, the rest of the lineup held their ground HuaHong Group, Tower Semiconductor, and PSMC mostly stayed the course, with Q2 revenues remaining largely static or experiencing a slight downturn compared to the previous quarter Predictions suggest that Q3 will tread the same financial path as Q2
The quarter had its share of drama with an unexpected surge of emergency orders, mostly originating from the display sector This windfall particularly benefitted niche players like VIS and Nexchip Fueled by last-minute LDDI orders, VIS saw a stellar revenue uptick of 191% QoQ, rocketing to US$321 million This rise wasn’t confined to one product; both small and large-size DDIs, as well as PMIC sectors, saw commendable revenue hikes However, end-user demand has yet to fully recover While Q3 operations are expected to show some growth, the momentum is likely to be restrained
In a staggering comeback, Nexchip’s second-quarter revenue soared by an eye-popping 654% QoQ, reaching a remarkable US$268 million and eclipsing DB Hitek to retake its seat at the tenth spot This stratospheric leap was fueled by a confluence of factors: a surge in last-minute restocking orders for LDDI and TDDI components, and the successful roll-out of high-margin products using the higher-priced 55 nm process These drivers jacked up Nexchip’s capacity utilization rate to an impressive 60–65%, catalyzing an exhilarating sprint in revenue growth
While the consumer electronic market has yet to rebound fully, Nexchip is not sitting idle The company is projected to sustain its upward trajectory in both capacity utilization and revenue as it marches into Q3 This optimism hinges on China’s growing trend of domestic substitution, amplified by Nexchip’s relentless marketing blitz Adding to this momentum is the advent of mass production for new offerings from CIS clients in 2H23 As these elements synergize, Nexchip’s Q3 promises not just growth, but another potentially dazzling performance
Looking ahead to the third quarter, the seasonal demand for the latter half of the year is projected to be softer than in previous years Anticipated orders for premium mainstream chips—such as Application Processors (AP) and modems—as well as peripheral ICs are set to bolster the capacity utilization metrics for partners in Apple’s intricate supply chain Further turbocharging this landscape is an uptick in orders of high-end HPC AI chips, adding a burst of momentum to high-value manufacturing processes TrendForce predicts that the revenue of the top ten global semiconductor foundries is likely to rebound from its lowest point in the third quarter, followed by gradual growth thereafter
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/07/05
On June 30th, the Netherlands introduced new export restrictions on advanced semiconductor manufacturing equipment Despite facing export controls from the US, Japan, and the Netherlands, TrendForce anticipates the market share of Chinese foundries in terms of 12-inch wafer production capacity will likely increase from 24% in 2022 to an estimated 26% in 2026 Moreover, if the exports of 40/28nm equipment eventually receive approval, there’s a chance that this market share could expand even further, possibly reaching 28% by 2026 This growth potential should not be dismissed
Several manufacturing processes including photolithography, deposition, and epitaxy will be subject to these recent export restrictions Beginning September 1st, the export of all controlled items will require formal authorization TrendForce reports that Chinese foundries have been primarily developing mature processes like 55nm, 40nm, and 28nm Furthermore, demand for deposition equipment can be largely met by local Chinese vendors, meaning concerns regarding expansion and development are minimal The main limiting factor, however, remains the equipment used in photolithography
TrendForce research indicates that businesses to be impacted first include SMIC’s Beijing and Shanghai fabs, as well as Nexchip’s A3/A4 fabs in Hefei TrendForce assesses that Nexchip’s Hefei fabs may experience far less disruption, as their short-term production focus remains on more mature processes Conversely, SMIC’s Beijing and Shanghai fabs may be forced to delay their expansion plans, pending permission for their equipment vendors to proceed with shipments
The US Export Administration Regulations (EAR) is primarily aimed at limiting China’s growth in advanced process, rather than mature ones Although export regulations from the US, Japan, and the Netherlands cover equipment used across both mature and advanced process generations, it’s namely equipment used in 45nm to more advanced processes which will require inspection However, mainstream equipment for mature processes ranging from 45–28nm could potentially still require export authorization as well Even though Chinese foundries will likely face a lengthy equipment review process, forcing them to delay their expansion plans for 40nm and 28nm processes, their ambitious positioning in the 28nm market ensures their development pace remains strong
It’s worth noting that, while advanced processes such as 1Xnm are currently not the primary focus of Chinese foundries, China’s potential for further development in this area is anticipated to face increased obstacles with the enforcement of more comprehensive export regulations
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/06/12
TrendForce reports that the global top 10 foundries witnessed a significant 186% QoQ decline in revenue during the first quarter of 2023 This decline—amounting to approximately US$273 billion—can be attributed to sustained weak end-market demand and the compounded effects of the off-peak season The rankings also underwent notable changes, with GlobalFoundries surpassing UMC to secure the third position, and Tower Semiconductor surpassing PSMC and VIS to claim the seventh spot
Declining capacity utilization rate and shipment volume contribute to widened revenue decline
The revenue decline in Q1 was primarily influenced by declining capacity utilization rates and shipment volume across the top 10 foundries For instance, TSMC generated US$1674 billion in revenue—marking a 162% QoQ drop in revenue Weakened demand for mainstream applications such as laptops and smartphones led to a significant decline in the utilization rates and revenue of the 7/6 nm and 5/4 nm processes, falling over 20% and 17%, respectively While the second quarter may see temporary relief coming from rush orders, the persistently low capacity utilization rate indicates that revenue is likely to continue declining, albeit at a slower pace compared to Q1
Samsung witnessed a decline in both 8-inch and 12-inch wafer capacity utilization rates, leading to a staggering 361% Q1 revenue decline— the highest among industry players in the first quarter—down to US$345 billion While there are sporadic orders for certain components in Q2, it is important to note that most of these orders are driven by short-term inventory replenishment rather than a strong signal of improved end-market demand However, the introduction of new 3 nm products is expected to contribute to revenue in Q2, which will likely alleviate the rate of decline GlobalFoundries reported Q1 revenue of US$184 billion, down 124% QoQ Since the market turnaround in the second half of last year, Global Foundries has maintained stable operations due to strong demand from various sectors such as automotive, defense, industrial equipment, and government applications in the US This consistent performance has allowed GlobalFoundries to surpass UMC and secure the third position in terms of revenue in Q1 Looking ahead to Q2, the company is expected to benefit from stable orders in industrial IoT, aerospace and defense, and automotive sectors, supporting capacity utilization and resulting in revenue levels similar to those in the first quarter
UMC reported a Q1 revenue decline of 176%, amounting to approximately US$178 billion in the first quarter This decline was particularly notable for 28/22 nm and 40 nm processes, both decreasing by at least 20% The company’s capacity utilization rate for 8-inch wafers is projected to fall below 60% in 2Q23 due to a reduction in customer orders for PMIC and MCU However, its 12-inch capacity utilization rate will benefit from urgent orders for 28/22 nm products such as Tcon and TV SoC—resulting in an estimated 80% utilization rate UMC’s revenue is expected to remain steady or experience a slight increase next quarter given the stable ASP SMIC posted US$146 billion in first-quarter revenue—a 98% QoQ revenue decline Revenue from 8-inch wafers fell nearly 30%, while revenue from 12-inch wafers saw a slight increase of 1–2% due to a diverse product portfolio and support from domestic demand in China SMIC is expected to benefit from the recovery of orders for particular products such as Driver IC and Nor Flash and will continue to reap the benefits of Chinese demand Both shipment volume and capacity utilization rate are anticipated to improve, resulting in revenue growth
Weak consumer product demand hits PSMC and VIS revenue hard
The foundry industry has been following a downward trend since the second half of 2022 Second and third-tier foundries, constrained by process technology limitations and high product overlap, face intense competition and lack bargaining power As a result, their operating performance is more volatile in a declining market In Q1, the most notable change from 6th place to 10th place rankings was Tower Semiconductor’s ascent to seventh place The company, supported by demand from the European market, only experienced a relatively modest—in comparison to many other second and third-tier foundries—a quarterly drop of 117% (down to approximately US$360 million)
PSMC benefited from the replenishment of television-related LDDI inventory and experienced a 26% increase in revenue in its HV processes Nevertheless, its other platform products such as PMIC and Power discrete continue to undergo inventory adjustments, and customer willingness to place orders remain cautious The company’s Q1 revenue reached approximately $332 million, representing a quarterly decline of 187% Similarly, VIS witnessed a recovery in wafer orders from both large and small-sized DDI customers as inventory levels approached healthy levels However, PMIC wafer orders remained weak VIS recorded a Q1 revenue of approximately US$269 million, reflecting an 118% quarterly decline Other companies, including HuaHong Group, reported a Q1 revenue of around $845 million—down 42% compared to the previous quarter DB Hitek’s revenue stood at US$234 million, experiencing a 20% QoQ decline
TrendForce expects a continued decline in revenue for the top 10 foundries in Q2, although at a slower rate than in the first quarter While supply chains are expected to gradually build inventory in response to peak season demand in the second half of the year, the accumulation of inventory and slow consumption have currently dampened customer attitudes toward stockpiling Consequently, the overall production cycle of foundries in Q2 is expected to be more relaxed, with limited growth in capacity utilization rates Only sporadic rush orders for products such as TV SoC, WiFi 6/6E, and TDDI are expected to drive any notable increase in utilization rates
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
