Thu, Nov 09, 2023 page12

• GlobalWafers sees tepid demand due to high inventories

  PICKUP AHEAD: Despite inventory pressure, the company has secured more long-term supply pacts, with average prices expected to rise next year

  • By Lisa Wang / Staff reporter
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  GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, on Tuesday offered a lukewarm outlook for this quarter and next after revenue last quarter fell 2.9 percent to NT$17.38 billion (US$538.95 million) from the previous quarter as customers digested inventory and were cautious about wafer restocking.

  Revenue this quarter would be slightly lower than last quarter and revenue momentum next quarter would remain weak, GlobalWafers chairwoman Doris Hsu (徐秀蘭) told investors.

  A pickup in demand is likely in the second quarter of next year, when customers’ inventories fall, Hsu said.

  

  An employee works in a clean room with wafers at the Fraunhofer Institute for Electronic Nano Systems ENAS in Chemnitz, Germany, on Sept. 13.

  Photo: EPA-EFE

  GlobalWafers factories making smaller-diameter wafers suffered the most, with a capacity utilization rate of 60 to 65 percent, while its 8-inch factory usage dropped to 80 to 90 percent as demand started trending down last quarter, she said.

  Its 12-inch factories fared better, with a utilization rate of 90 to 100 percent, she added.

  A couple of months ago, GlobalWafers saw that demand from some integrated device manufacturing (IDM) customers was soft, particularly for automotive components and applications, Hsu said.

  The company now sees the slowdown as a short-term phenomenon, as those customers are striving to deplete inventories, she said.

  Despite the inventory pressure, GlobalWafers has secured more long-term supply agreements (LTA) and most customers are honoring them, the company said.

  The company expects average selling prices for LTA customers to climb next year, given higher depreciation costs and improving demand, it said.

  Capital spending this year would fall short of the firm’s target of NT$40 billion, as it has pushed out deliveries of construction materials and manufacturing tools to cope with sagging demand, it said.

  However, next year would be the peak of capital spending for GlobalWafers, it said, adding that the construction of its new US fab is on track.

  Separately, contract chipmaker Vanguard International Semiconductor Corp (世界先進) on Tuesday warned of weakening revenue growth this quarter, as it faces challenges from softening demand for auto chips.

  Wafer shipments this quarter are expected to contract by 8 to 10 percent from last quarter, Vanguard said.

  Average selling prices would be little changed, or down 2 percent sequentially, due to soft demand and intensifying competition from Chinese peers, it said.

  Gross margin would be between 22 and 24 percent this quarter, down from 26.5 percent last quarter, it said.

  Factory utilization is to deteriorate to between 55 and 65 percent this quarter, it added.

  “Overall, market demand remains soft,” Vanguard vice president Claire Chen (陳姿鈞) said. “We are seeing a recovery in large display driver ICs for TVs, while demand for notebook computers is stabilizing. The automotive and industrial segments are still under inventory correction.”

  To cope with the challenging environment, Vanguard is exploring new business opportunities in emerging applications such as artificial intelligence (AI) servers, AI PCs, electric vehicles and high-performance computing devices, company president John Wei (尉濟時) said.

  Hopefully, the efforts would yield significant results next year, he said.
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