Eight-inch SiC foundry will rise rapidly, and small and medium-sized wafer foundries will be under great pressure

According to the "Taiwan Information and Communications Industry Prospects in 2023" press conference held yesterday by the Taiwan Institute of Information and Communications Technology (MIC), the top ten industry prospects and trends in 2023 were announced. With the increased emphasis on net-zero transformation and sustainable ESG, The Information Strategy Council predicts that as major international manufacturers mass-produce 8-inch silicon carbide, the development of Taiwan's third type of compound semiconductor will be accelerated. MIC, the Information Council, said that major international manufacturers Wolfspeed and II-VI have started mass production of 8-inch silicon carbide wafers, which will affect Taiwanese manufacturers from four aspects. First, the Taiwanese factory will follow up on the mass production development of 8-inch silicon carbide, which will help establish a complete silicon carbide supply chain and get rid of the constraints of major international manufacturers; second, it will drive the development of 8-inch GaN-on-SiC wafers by Taiwanese factories.

Third, wafer foundries enter the 8-inch silicon carbide/gallium nitride wafer foundry; fourth, accelerate the introduction of high-power applications. When the cost-effectiveness of 8-inch silicon carbide wafers is higher than that of 6-inch silicon carbide wafers, there will be Helps reduce the cost of Taiwanese manufacturers obtaining silicon carbide substrates to invest in component production, improve the competitiveness of silicon carbide/gallium nitride component foundry production, and accelerate high-frequency and high-power applications such as electric vehicles, energy, communications/satellites, high-speed rail, industrial control, and mobile Introduction of fast charging.

In 2023, the world will continue to observe three key points, including: the improvement of the cost-effectiveness of mass production of 8-inch silicon carbide wafers, the priority introduction of product applications after reducing wafer costs, and the follow-up introduction of 8-inch silicon carbide wafers by major manufacturers. Mass production schedule.

In addition, Taiwanese factories including Global Crystal (6488) and Jiajing (3016), both affiliated to Sino-American Crystal (5483), are accelerating their silicon carbide layout. Global Crystal will significantly expand its silicon carbide substrate production capacity by 2 times in 2022 and will continue to do so in 2023. Increase capital expenditures; Jiajing's silicon carbide will grow by more than 80% in 2022 compared with the previous year, and its production capacity will be doubled. If it were not for the slow delivery of equipment, it should be able to develop more production capacity. It is estimated that the production capacity of gallium nitride in 2023 will be An increase of 2.5 times compared with 2021, and silicon carbide production capacity will increase by 4 to 5 times.

The terminal market situation has not improved, the semiconductor market demand is weak, and the inventory reduction time is longer than expected. Research institutions pointed out that some small and medium-sized mature process wafer foundries are facing a battle to defend the 50% capacity utilization rate, and their operations are under pressure.

TrendForce’s research report points out that at this stage, wafer foundry manufacturers are facing slower than expected sales of consumer electronics products, short-term demand has not recovered, and customers are increasingly cutting orders for wafer foundry consumer products, which is affecting wafer manufacturing. Shipments and capacity utilization declined.

TrendForce expects that the revenue growth of most of the top ten foundry manufacturers will converge or decline in the fourth quarter of this year. This wave of order cuts will also affect TSMC. The 7nm and 6nm order revisions are more severe than expected, but due to the decline in revenue Supported by 5nm and 4nm, the quarterly growth is expected to converge and may remain flat in the fourth quarter.

Looking at the overall capacity utilization rate, although UMC actively converted its production capacity to automotive and industrial control-related products in the fourth quarter, it was still difficult to resist the production capacity vacancies released by the loss of orders for consumer products, and the capacity utilization rate is expected to fall by 10%.

Due to revised orders from logic foundry customers such as CMOS image sensors and panel driver ICs, Power Semiconductor's 8-inch and 12-inch production capacity utilization rates will fall to 60-65% and 70-75% respectively in the fourth quarter; the world's advanced production capacity The utilization rate will drop to about 70%; Jinghe Integration's capacity utilization rate may drop to 50-55%.

The semiconductor supply chain has recently experienced slower than expected inventory digestion, and customers such as image sensors and automotive chips have also lowered their forecasts for wafer foundries to produce wafers next year. However, Lu Xingzhi, a former foreign analyst in the semiconductor industry, said that this time the wafer foundry capacity utilization rate is better than the previous declines, which means that the market demand is not bad, and the inventory will be digested in the first quarter of next year, and in the second quarter at the earliest. Looking to start building inventories, the semiconductor industry is expected to increase quarter by quarter next year, which is different from the downward trend this year.

Although China is gradually unblocking, end-market demand is still weak. Semiconductor supply chain industry players pointed out that inventory digestion is slower than expected. Some mobile phone chips have once again cut orders, and customers such as image sensors and automotive chips have also lowered their wafer prices for next year. Foundry production volume.

However, Lu Xingzhi believes that the average capacity utilization rate of this wafer foundry down cycle is 66%, which is no worse than the past down cycles. During the subprime mortgage crisis in 2008, the capacity utilization rate dropped to only 33%. It was 44% during the crisis and about 55% during the Asian financial crisis. He said that the industry is currently clearing inventory. When the inventory is cleared from the fourth quarter to the first quarter of next year and normal demand returns, inventory will begin to be built. However, it is not yet known when the wafer foundry capacity utilization rate will return to 100%. .

Looking forward to next year, Lu Xingzhi pointed out that semiconductor operations have declined quarter by quarter this year and will rise quarter by quarter next year. The stock market is also optimistic about rising quarter by quarter. "The worst has passed," but it is expected that there will be a "baseless bomb" next year. If the war between Ukraine and Russia ends, the semiconductor recession cycle will truly end. He believes that the four worst industries currently include driver ICs, panels, gallium arsenide, and game cards. However, there are signs of improvement, and other fields are still in the bottom-out stage.