A global chip supply crunch is expected to ease next year, following a series of capacity expansions by foundry service providers over a three-year period to next year, the Market Intelligence and Consulting Institute (MIC, 產業情報研究所) said on Wednesday.
The world’s foundry services providers led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are to boost capacity by 10 percent this year and 7 percent next year, after experiencing 10 percent annual growth last year, the Taipei-based institute said.
The global output of 8-inch wafers is to increase to 10 million units per month next year, up about 25 percent from fewer than 8 million units in 2020, it forecast.
Photo: Reuters
The imbalance in chip supply and demand became evident last year as the stay-at-home economy, driven by the COVID-19 pandemic, boosted demand for notebook computers, coupled with demand for smartphones and vehicles, MIC senior analyst Cheng Kai-an (鄭凱安) said at a virtual technology forum.
“As global foundry service providers continue expanding capacity, we expect semiconductor supply to become stable gradually in 2023,” Cheng said.
With slowing demand for PCs and consumer electronics this year due to high inflation, and the economic effects from COVID-19 and Russia’s invasion of Ukraine, chip supply surplus may return in 2024, he said.
Chipmakers should carefully adjust their capacity increases to cope with short-term oversupply, he added.
Chip designers started to feel the pinch of slumping demand for smartphones and consumer electronics in the first half of this year, leading to falling demand for display driver ICs used in smartphones and TVs, Cheng said.
Chip designers are scaling back orders with their foundry partners as a result, but supply of power management ICs and microcontrollers remains insufficient, he said.
In the long term, 5G-related devices, high-performance computing applications and automotive electronics are expected to continue driving semiconductor demand and growth, Cheng said.
Chinese chipmakers are boosting capacity faster than their global peers, benefiting from Chinese government funding, as Beijing seeks to reach 70 percent of chip self-sufficiency by 2025, the institute said.
However, that target is impractical, as China is expected to boost chip supply within the country to 19.4 percent in 2025, from 15.9 percent in 2020, Cheng said, citing data from semiconductor market research firm IC Insights.
Rapid capacity expansion boosted China’s ranking to No. 1 in the world’s foundry industry last year, with a market share of 22.6 percent, the MIC said.
Taiwan was No. 2 with an 18.9 percent share, followed by South Korea with 17.3 percent, MIC data showed.
Local semiconductor companies’ production value is expected to grow 17.5 percent annually to NT$4.37 trillion this year, outpacing the world semiconductor industry’s 10.4 percent growth, the MIC said.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS