Research firm TrendForce forecasts that global foundry revenue will drop by around 4 percent for 2023.
The major IC design houses have cut wafer input for 1Q23 and will likely scale back further for 2Q23. Currently, foundries are expected to maintain a lower-than-ideal level of capacity utilization rate in the first two quarters of this year. Some nodes could experience a steeper demand drop in 2Q23 as there are still no signs of a significant rebound in wafer orders.
Looking ahead to the second half of this year, orders will pick up for some components that underwent an inventory correction at an earlier time.
IC design houses are preparing to lower the share of chip production based in China, and the effect of this reallocation of foundry orders will be increasingly noticeable in 2H23 and become quite obvious by 2024.
The supply and demand conditions of the foundry market will become regionalized. This will cause divergences among foundries with respect to capacity utilization. The recovery of the foundry industry’s capacity utilization will be influenced by seasonal patterns and clients’ inventory levels and geographical distribution of orders within the supply chain.
Sales of consumer electronics including smartphones, notebook computers, and TVs are in a slump because of the traditional low season. The sluggish pace of inventory consumption will affect foundry orders from IC design houses for components such as consumer-grade PMICs, MOSFETs, etc.
8-inch wafer foundries still suffer an ongoing decline in capacity utilization rate. The 8-inch wafer orders for 2Q23 show a slight demand rebound. This is attributed to some orders involving special industrial computers and a few clients adjusting order allocation among foundry partners.
TrendForce said 8-inch wafer foundries’ capacity utilization rates will remain mostly constant between 1Q23 and 2Q23.
TSMC, which has 12-inch wafer foundries operating with the advanced nodes, is expected to keep a lower-than-ideal level of capacity utilization rate in 1H23. TSMC should be able to raise the rate of its 7nm node in 2H23, though the increase will be limited.
TSMC’s 5nm node rate will return to the optimal level in 2H23 thanks to stock-up activities related to the releases of new devices during the peak season.
Samsung’s foundry capacity utilization rate will stay low for its ≤8nm nodes through 2023 because its main clients Qualcomm and NVIDIA have opted to reallocate orders to other foundries.
TSMC, UMC, and GlobalFoundries, which have 12-inch wafer foundries operating with the mature nodes, will mostly retain a capacity utilization rate of 75~85 percent in 1H23. TSMC, UMC, and GlobalFoundries are expanding into application segments that offer a more stable level of demand. Examples include automotive electronics, industrial equipment, and medical devices.