Text / Lin Hongda
Whether you are UMC, PSMC, or the world’s most advanced shareholders, you should be concerned regarding TSMC’s legal meeting in the second quarter of this year. Because, in this legal meeting, Wei Zhejia, president of TSMC, admitted that the inventory of the semiconductor industry will not be fully digested until the first half of next year. However, even if the market conditions are not good, TSMC can still maintain growth. Another meaning of this sentence is that in the past more than a year, the supply of semiconductors has been in short supply, and almost every fab has made a lot of money by raising prices.
The first wave hits the 8-inch fab. “Financial News” reported that on July 7, the market research institute TrendForce issued a report stating that “the tide of cutting orders is coming, and the capacity utilization rate of 8-inch wafers will be affected the most in the second half of the year.” From power control IC (PMIC), Image sensors (CIS) and some MCUs (microcontrollers) are affected by the decline in demand for consumer electronics such as TVs, PCs and mobile phones, and the capacity utilization rate of 8-inch fabs will no longer be fully loaded in the second half of the year.
Capacity utilization rate has hidden worries in the second half of the year
Chen Yiping, deputy general manager of Isaiah Research, observed that the average capacity utilization rate of 8-inch wafers in the second half of the year will remain at 95% to 100%, and the capacity utilization rate of some fabs will drop to regarding 90%.
“Financial News” analysis, another wave of impact points to mature processes above 55nm. For example, display driver ICs need to be produced using mature processes, and the demand for mobile phones has dropped significantly, and the impact will soon spread to mobile phone display driver IC companies and fabs. “A major Taiwanese mobile phone driver IC manufacturer, the unit price of driver chips was close to US$8 at the beginning of this year, but now it is only US$5.5, and customers still hope to drop below US$5.” Industry sources revealed that in April this year, the original driver IC factory was still working Samsung’s OLED driver IC big order cheered, and at the end of May, the big order was suddenly cancelled.
A chain of knock-on effects unfolded immediately. On May 31, the trading volume of PSMC increased sharply that day, and the stock price fell for consecutive days; on June 20, the driver IC factory Qijing Optoelectronics lowered its financial forecast for the second quarter. On July 15, PSMC said at its online legal meeting that the capacity utilization rate will be revised in the next two quarters. PSMC expects the revision to last for at least two quarters, hoping that the economy will return to normal levels next year; general manager Xie Zaiju said, 12-inch fabs are more affected than 8-inch fabs.
“Financial News” reported that the third wave of impact will affect the capacity utilization rate of the 28nm process. This is the capacity that manufacturers are most interested in expanding production last year, and the competition is also the most fierce. Chen Yiping observed that the average capacity utilization rate of 28nm in the second half of this year is regarding 100%, but some capacity utilization rates will drop to 95% to 100%. Dissatisfaction of production capacity began to appear.
In fact, there are many signs that the semiconductor manufacturing industry may face challenges this year. For example, on June 30, DRAM giant Micron announced its financial forecast that revenue for the next quarter would fall between $6.8 billion and $7.6 billion, far below analysts’ estimates of $9.1 billion. As DRAM demand is an important indicator for the electronics industry, Micron’s forecast has put pressure on the semiconductor industry’s stock price.
According to the “Financial News” report, why can’t the shortage of automotive chips make up the gap? Industry insiders analyzed that “there are many restrictions on the production of automotive-grade chips”. Once the equipment for producing automotive-grade chips has been certified, it cannot be changed casually. “The price of automotive-grade chips is good, but the production line will be stuck.” Plus certification It is time-consuming. For Taiwan fabs that seek to maximize capacity utilization, it is difficult for automotive chips to quickly fill the production capacity. Taking TSMC as an example, although automotive chips have grown by 14% this quarter, they still account for only 5% of revenue. .
Kissinger comes to Taiwan to talk regarding delaying shipments
Many European and American IC design companies also reported the situation of order deferral. For example, AMD’s new processors will be launched at TSMC one month later, and Huida also reported that the new 40-series graphics cards will be launched one month later due to inventory problems. Intel CEO Henry Kissinger will come to Taiwan in August. It is rumored that he is going to negotiate with TSMC, and the 3-nanometer chips originally booked will be delayed.
Chen Yiping observed that the IC design company is currently adjusting its inventory fiercely. “TSMC said that its inventory status and that of its customers are very healthy, but they said that the inventory adjustment will not be until the middle of next year.” She and the team traced and found that the IC design company’s inventory level has indeed been The decline is because IC design companies quickly cut prices and sold all their inventory to terminal equipment manufacturers. “At present, in the case of mobile application processors (APs), the discount range is around 10% to 20%.”
The Caixun report pointed out that for terminal equipment manufacturers such as notebook computers, they can finally buy components at the cheap prices before the epidemic. Even if the economy is not good, there is room for products to be sold at lower prices. However, for IC design companies, the profit margin is greatly compressed due to the fact that they have to seek cash at low prices and obtain fab capacity at high prices. Chen Yiping observed that from the fab side, the time from customer input to output is regarding 3 to 6 months. Therefore, the number of orders placed now is mostly the forecast for next year’s shipments. The number of orders is conservative, representing a conservative view of the mobile phone market in the first half of next year.
At the same time, TSMC’s inventory is also rising. It is rumored that many IC design companies require TSMC to convert half of the semi-finished products into inventory, and continue processing when needed. TSMC has become an inventory haven for IC design companies. At this quarterly meeting, TSMC’s inventory turnover days did continue to rise. Industry insiders observed that TSMC agreed to use this method to help IC design companies carry inventory in exchange for a reduction in payment days.
The voice of IC design companies has also increased. According to the analysis of “Financial News”, it was reported in the industry that UMC was going to follow TSMC to raise prices once more in July, but it was cancelled due to the reversal of the economy; at the same time, it also actively adjusted its product mix and used various exchange conditions to sell products that were “no time to do”. Pull back with customers. UMC has rich experience in increasing capacity utilization, but the trend of gross profit margin in the second half of the year deserves attention.
“At present, the entire semiconductor supply chain is still hot and cold.” Chen Yiping observed that to buy semiconductor equipment, it is still necessary to place an order 15 to 18 months ago, and the lack of equipment supply has made the entire industry a blessing in disguise. She believes that the actual production capacity this year is only a part of what was originally expected, thus reducing the pressure of oversupply.
TSMC’s US plant delays the move in
However, the “Financial News” report pointed out that the impact of the economic slowdown is also being transmitted to the equipment side. For example, TSMC’s Arizona plant in the United States was originally expected to move into the machine in September this year, but now the time has been changed to the first half of next year; while TSMC 3 Nano’s original production capacity target expected to be achieved by the end of this year was changed to the first quarter of next year. Although the economy is not good, but due to the serious shortage of equipment, semiconductor factories do not dare to rashly cut orders. Except for 8-inch equipment, which has come to an end this year, the supply of other processes will continue to increase next year.
At present, the entire industry chain is looking for signs of bottoming out by adjusting inventories, and it is still unclear when supply and demand will reach a balance. But it can be seen from TSMC’s inventory warning that unless there is a drastic change, it is not easy to expect prosperity. The entire semiconductor industry is returning to its pre-epidemic state. “Before TSMC is bad, other companies will face challenges first.” Industry insiders analyzed.
According to the “Financial News” report, since high-end wafer manufacturing takes 4 to 6 months, the impact of the economic reversal in the second quarter of this year, following affecting companies such as SMC, will it affect TSMC? The fourth quarter law said it will be the indicator. However, even if the economy is not good, TSMC still has the most resources to grab orders from competitors or change its product mix to achieve growth and profit goals.
At present, the economies of Europe, the United States and China are rarely faced with challenges at the same time. Whether TSMC can maintain a rapid expansion growth rate next year, as well as the interest rate hike and inflation in the United States in the second half of the year, will be important indicators to observe the global high-tech industry.
Further reading:
Intel’s new work abandoned Taiwan and went to China but was slapped in the face by local players
