Foundry data shows the cracks in the semiconductor market

Foundry data shows the cracks in the semiconductor market

Market news |
By Nick Flaherty

Although there are still sporadic shortages of specific components, the curtain has officially fallen on a two-year wave of shortages in general says the latest foundry data from Trendforce. “A prelude to inventory correction was officially revealed in 3Q22,” it said in its latest report.

Steady weakening of overall demand for consumer electronics has meant brands have gradually suspended stocking. However, stable demand for automotive and industrial equipment is key to supporting the ongoing growth of foundry output value.

Limited additional capacity in 2Q22 led to growth in wafer shipments and a price hike for certain wafers, driving sales from the top ten foundries to US$33.20 billion in 2Q22. However quarterly growth fell to 3.9% on a weakening consumer market.

TSMC as the largest foundry by far saw slowing growthof 3.5% to US$18.1bn.

Orders have been slashed for large display drivers and TV chips, and order volumes fell for non-Apple smartphone application processors and peripheral power management chips, as well as mid-to-low-end microcontrollers.

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The new iPhone is expected to prop up a certain amount of stocking momentum for the sluggish market, so foundry revenue will continue to grow. But foundries are furiously migrate production capacity to sectors of stable demand such as automotive and industrial equipment, says the report.

Production is moving from 7nm to 5nm nodes, which increased 11.1% QoQ and providing the best revenue performance in 2Q22. The 7/6nm market was uncertain given murky mid/low-end smartphones market conditions and client order revisions, the node maintained a backstop in the form of mainstream products originating from HPC customers. Revenue generated by this node increased by 2.8% QoQ says Trendforce.

Samsung started shipping its first devices on its 3nm gate all around (3GAE) process, with the first wave of customers including PanSemi, a Chinese cryptocurrency mining company. The 3nm node is not expected to contribute to revenue until the end of 2022, at the earliest.

UMC’s new 28/22nm production capacity went online smoothly in 2Q22, driving the growth of overall wafer shipments and ASP. This node’s revenue share moved up to 22% this quarter while 2Q22 revenue reached US$2.45 billion, growing 8.1% QoQ, and the highest in the top ten.

GlobalFoundries benefited from the release of a small amount of new production capacity and long-term agreement (LTA) guarantees for most of its production capacity. Revenue in 2Q22 reached US$1.99 billion, a quarterly increase of 2.7%.

SMIC’s 2Q22 revenue reached US$1.90 billion, up 3.3% QoQ, while its proportion of revenue in the smartphone sector fell to 25.4%. The smart home sector maintains strong growth momentum and revenue from related application products such as Wi-Fi, Bluetooth, PMIC, and MCU peripheral IC for networking and smart control devices increased by approximately 23.4% QoQ.

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