Recently, orders for consumer semiconductor components are experiencing a “substantial downward correction” and are deepening. Therefore, the agency believes that the revenue of global wafer foundries will decline even more sharply in the fourth quarter of this year.
Inventory depletion in the consumer electronics market has been lower than expected and a turnaround is unlikely anytime soon. As the economy continues to slump, foundry orders for chips for consumer electronics will be revised down more significantly. Therefore, the sluggish demand will in turn have an impact on the foundry’s wafer shipments and capacity utilization.
At present, the agency predicts that most of the world’s top 10 foundries predict that they will report a very small increase or even decline in revenue in the fourth quarter of 22. Even TSMC, the industry hegemon, will eventually be affected by this wave of order adjustments. Although TSMC’s 7- or 6nm orders may fall more than expected, 5- or 4nm orders will continue to support its revenue generation. According to TrendForce, TSMC’s revenue in the fourth quarter will not decline sequentially, but it is expected to remain largely unchanged compared to the third quarter.
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Let’s take a look at the capacity utilization of the remaining top 10 fabs in Q4’22.
UMC
Trendforce expects UMC to continue to focus on adjusting its product mix to put more capacity into industrial equipment and automotive electronic chips. However, UMC’s capacity utilization rate will still decline by 10 percentage points due to the increase in spare capacity due to the decrease in consumer electronics chip orders.
GF
GF also does not expect to maintain its original capacity utilization because it did not secure sufficient long-term agreements for 8-inch foundry. Huahong’s subsidiary, HLMC, expects capacity utilization to decline at its 55nm node, which makes MCUs, Wi-Fi chips and CMOS image sensors for consumer electronics. Similarly, due to order adjustments related to CMOS image sensors, DDIs and other logic chips, PSMC’s capacity utilization in 8-inch and 12-inch foundries will fall back to 60~65% and 70~75%, respectively.
VIS
The capacity utilization rate of VIS will also fall to about 70%. Nexchip is at risk of a downward revision of new orders for driver ICs and other circuits used in consumer electronics, such as PMIC and CMOS image sensors. At the same time, wafer foundries have not yet reached mass production standards due to other process technologies, and product structure adjustment is limited. These variables will cause Nexchip’s capacity utilization to drop to 50-55%.
However, semiconductor manufacturers such as fabs are still increasing their investment in the third quarter of this year. According to the SEMI report, from the second quarter to the third quarter of 2022, global semiconductor equipment sales increased by 9% and 7% year-on-year to reach $28.75 billion.
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SEMI President and CEO said, “Third quarter semiconductor equipment revenue growth is consistent with the positive forecast for 2022. “Equipment spending increased 9% sequentially in the third quarter, reflecting the semiconductor industry’s determination to enhance fab capacity to support long-term growth and technological innovation.”
