Silicon wafer factory: Long-term contract customers reduce shipments

Latest update time：2024-08-11

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Semiconductor industry inventories are healthier this year than last year, but silicon wafer fabs have seen revenue declines this year compared to the same period last year. The industry pointed out that due to the shortage of silicon wafers during the epidemic, various silicon wafer fabs have signed long-term agreements (LTAs) with customers. However, since the beginning of this year, some processes that are still adjusting inventory and production capacity utilization are not high, and customers have negotiated to reduce shipments, affecting the operation of silicon wafer fabs as expected.

Customer inventory clearance is slower than expected

GlobalWafers' cumulative revenue in the first seven months of this year was 30.412 billion yuan, a year-on-year decrease of 16.71%; Taiwan Semiconductor's cumulative revenue in the first seven months of this year was 7.275 billion yuan, a year-on-year decrease of 15.22%; and Hejing's cumulative revenue in the first seven months of this year was 4.214 billion yuan, a year-on-year decrease of 19.68%.

GlobalWafers Chairman Xiulan Xu recently said that the original estimate of this year's revenue would be the same as last year or grow slightly, but because customers' inventory clearance rate is slower than expected, this year's revenue will be revised down to a single-digit percentage decline compared to last year, and it is expected to return to growth next year.

The semiconductor industry pointed out that there was a shortage of silicon wafers during the epidemic, and customers signed long-term agreements (LTAs) with silicon wafer fabs to ensure a stable supply of materials. However, the market supply and demand reversed at the end of 2022. Customers who signed LTAs were able to fulfill their contracts and pick up goods last year, but since the beginning of this year, some customers with mature processes or who are still adjusting their inventory have been unable to hold on. Wafer foundries have had to negotiate with silicon wafer fabs to reduce shipments, resulting in the operation of silicon wafer fabs this year being lower than expected.

The more mature processes there are, the greater the impact

The semiconductor industry said that TSMC's 3- and 5-nanometer advanced processes are in strong demand and its production capacity is in short supply, but the capacity utilization rate of mature processes is around 70% for UMC, TSMC, and Powerchip. Silicon wafer manufacturers sign long-term contracts with customers, which more or less cover mature processes and will be affected to some extent. If the volume of mature processes is larger, the degree of impact will be greater.

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