What does the future of eight-inch wafer fabs depend on?

Source: Content from Financial News Express , thanks Thank you .

Regarding the outlook for the 8-inch foundry industry this year, Fang Lu, chairman of World Advanced, said frankly that although the visibility is only two months at present and the second half of the year is not yet visible, even so, he is still optimistic about the four aspects of 5G demand, power management, discrete components, and IDM outsourcing this year. World Advanced said frankly that due to the continuous inventory adjustment of some customers this quarter, the visibility is about two months at present, so it is not possible to say about the second half of the year. However, based on historical experience, the second half of the year will be better, and it is expected that the economy will pick up in the second half of this year, but it is not known which month it will pick up.

Zhang Donglong, Vice President of Sales and Business of World Advanced Semiconductor, mentioned that the overall wafer foundry is expected to remain flat in 2019, among which the 12-inch foundry will grow, but the 8-inch part is expected to decline slightly. However, for World Advanced Semiconductor, because of its advantages in production lines such as driver chips and discrete components, it is estimated that World Advanced Semiconductor will still perform well this year.

Zhang Donglong further mentioned that from the perspective of 8-inch wafer foundry this year, 5G-related products are currently in the strongest demand, including power management chips used in base stations. The speed of accelerating the construction of these clients has exceeded original expectations. In addition, in terms of IDM outsourcing, the power PMIC chip segment has seen stable growth.

In addition, Fanglue also added that although international IDM factories are building their own wafer fab production capacity, the expansion is not large and the speed of expansion is not as fast as the growth of market demand. For this reason, the outsourcing orders that World Advanced has received from IDM customers this year continue to increase steadily. It is estimated that this year, World Advanced's revenue contribution from IDM factories will exceed 30%.

In response to the fact that international IDM manufacturers have recently lowered their outlooks for this year, or released the argument that this year's performance is not as good as expected, which seems to be different from the views of the world's advanced manufacturers, Fanglue responded that first, the world's advanced discrete component customers are many, and the impact will be relatively dispersed. Second, the customers' downward revisions are mainly because this year's growth is not as good as previously thought, but in the final analysis, discrete components still have growth this year, the difference is that the growth rate is not as large as originally expected.

Finally, regarding the fact that international IDM factories have begun to transfer PWM production to 12-inch factories, Fanglue responded that, first, there are many types of PWM. Second, the parts that will be transferred to 12-inch factories are mainly large power supplies (such as 100 to 200 amperes), high voltages, and parts with larger chip particles. The rest will still be produced in 8-inch factories for greater efficiency.

In addition, World Advanced also added that the revenue contribution from automotive electronics this year will be a high single-digit percentage, about 8% to 9% annual growth rate. As for the production of fingerprint recognition and under-screen fingerprint chips, World Advanced has three technologies. The first is capacitive, which was mass-produced last year. The second is OPTICAL optical, and the production line is currently being prepared. The third is ultrasonic fingerprint recognition technology, because the Singaporean company previously acquired has this technology, so this technology will be in place in the future. Finally, in terms of GaN, World Advanced is still in preparation, and it is expected that real mass production will not start until next year.