Vanguard International Semiconductor Corp (世界先進), a supplier of display driver ICs and power management chips, yesterday said it would not join the enthusiasm for global 12-inch capacity expansion, given budget pressures and overcapacity risks.
The Hsinchu-based chipmaker said that it is expanding capacity to catch up with demand by prioritizing 8-inch wafer capacity at its Fab 3 in Taiwan.
The fab will add 24,000 wafers to its existing capacity by the end of next year, it said.
Photo: Grace Hung, Taipei Times
Additionally, its newly acquired Fab 5 will be ready for deployment in the spring next year for further increases in 8-inch wafer supply, it said.
“We do not have any plan to build a 12-inch fab any time soon,” Vanguard chairman Fang Leuh (方略) said. “It should be reasonable for us to look at the possibility of building a 12-inch fab to expand capacity in the future, given scant accessibility to 8-inch wafer manufacturing equipment and high costs.”
Based on the company’s calculations, 8-inch wafer manufacturing equipment costs have more than doubled over the past two years.
Vanguard said it is making a long-term agreement with customers, and accepting prepayments for newly built 8-inch wafers to absorb a surge in manufacturing costs.
There is a risk of short-term supply gluts to consider, Fang said. Chipmakers are investing in new 12-inch fabs with an aim to begin production in 2023 or 2024, and it is unknown if high-performance computing devices and 5G-related applications would consume that capacity, he said.
Fang said that Vanguard would not follow Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in expanding its footprint in Kaohsiung.
TSMC last week said it plans to build a new 12-inch fab in the southern port city to make 7-nanometer and 28-nanometer chips in 2024 to cope with rising demand.
Demand for 8-inch wafers could outpace supply over the next five years, as supply is expected to grow at an annual compound rate of lower than 3 percent from next year to 2026, Vanguard’s estimates show.
Fang said that it is optimistic about next year’s business outlook, following a strong showing this year.
“Demand looks very strong in the first half of next year. There is no sign of demand subsiding,” he said, adding that Vanguard plans to recruit hundreds of workers to support capacity expansion next year.
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