
Global chip manufacturing is in transition, say ATREG, Yole CEOs
Global chip manufacturing has entered a transition phase, according to an overview of the challenges and opportunities for 2023, written by Stephen Rothrock, CEO of wafer fab broker ATREG and Jean-Christophe Eloy, CEO of analyst Yole Group.
The change has been prompted by the aftermath of the Covid-19 pandemic and rising US-Chinese political tension, the two assert.
While recessions in various markets and geographic regions are expected in 2023 chip companies recognize the need to invest in manufacturing capacity as the long-term demand for chips is increasing. The problem is being able to sustain major investment during a recessionary phase to provide needed capacity three and four years hence.
Lower margins, more partnership
The authors note that there is an increased use of wafer fab upgrading to try and assuage the cost. The US Chips Act and imminent European Chips Act also part of the solution to this problem. However, the US Chips Act at US$52 billion and European Chips Act at €43 billion (about US$45 billion), do not compete with the amount of money invested in semiconductor subsidies by China so far. Rothrock and Eloy put this at US$73 billion plus US$50 billion in government grants, equity investments, and low-interest loans.
While much of this investment is focused on leading-edge silicon the two authors point out that one of the major opportunities is the transition from silicon to compound semiconductors in the form of GaAs, SiC and GaN. These technologies feed into opportunities in power semiconductors for electric vehicles and microLED displays.
However, at whichever node a chip company is operating there is an exponential increase in cost to move to next level and to scale up. As a result Rothrock and Eloy are predicting that while financial markets’ expectations of gross margins of 40 to 60 percent must be reset there will also be increased use of partnerships and consortia to build manufacturing facilities. STMicroelectronics work with Tower Semiconductor and the announcement of a 300mm wafer fab in Grenoble to be built with Globalfoundries, are examples of this trend.
Related links and articles:
The 2023 global fab landscape: opportunities and obstacles
News articles:
European Chips Act amended, softened, approved
Monitor, response parts of European Chips Act misguided, says think tank
European Chips Act could include powers for EU control
Opinion: Next Crolles wafer fab helps keep Europe in the deep tech game
