Capacity fully loaded! Chip prices will continue to rise!

According to reports, major wafer foundries Liandian, World Advanced, Liji Electric, SMIC and GF will all plan to raise their wafer foundry quotations again to cope with the continued tight production capacity.

According to the report, the source pointed out that the planned increase in the quotation of wafer foundries in the third quarter will be higher than that in the first half of this year, including 8-inch and 12-inch wafers. In addition, TSMC has canceled all price discounts for new orders this year and for orders in 2022, equivalent to price increases. As foundry prices rise further, foundries are expected to post strong revenue and profits in the third quarter.

The person familiar with the matter also pointed out that at present, customers are waiting in line for the capacity of wafer foundries, among which 8-inch wafer foundries are the top priority for customers. However, although TSMC, Liandian, SMIC and other manufacturers have announced plans to expand production mature process, but the new capacity will not be opened immediately.

The Digitimes also said that due to the extreme shortage of wafer foundry capacity, in order to meet the huge demand for orders from customers, wafer foundries have successively expanded their investment and production expansion. Mature process capacity will be opened one after another from 2022 and reach its peak in 2023, when the tight capacity situation is expected to be alleviated. However, as production capacity is gradually opened, the industry may face an oversupply in the future.

Early due to the gradual control of the epidemic, consumer electronics, new energy vehicles and other downstream rapid recovery, and 8-inch fab capacity shortage, resulting in power semiconductors in short supply, industry manufacturers have ushered in a wave of price increases.

According to the Counterpoint research report, some products of the 8-inch wafer foundry have increased by 30% to 40% compared with the second half of last year. The new wave of foundry price increases is expected to further push up the procurement cost and product price of the semiconductor industry chain.

Gartner chief research analyst Kanishka Chauhan said in the latest report that the shortage of semiconductor supply will seriously disrupt the supply chain and will restrict the production of a variety of electronic devices in 2021. Chip foundry is increasing the price of chips, which will also be transmitted to downstream equipment.

Gartner predicts that the global semiconductor supply shortage will continue throughout 2021 and return to normal levels in the second quarter of 2022, while substrate capacity constraints may be extended to the fourth quarter of 2022.

Although the semiconductor market repeated orders have not been able to rest, but from the upstream wafer foundry factory operating outlook, 2021 semiconductor supply chain performance trend will be quarter by quarter upward growth.

In the face of a severe shortage of global mature process capacity, a number of wafer foundries have recently announced expansion to meet customer demand. TSMC announced that it will expand the production of 20000 wafers per month in Nanjing factory. The company said that the shortage of production capacity in the semiconductor industry will continue until next year, and mature processes are more likely to be short until 2022, while TSMC's new production capacity for mature processes will be opened in 2023.

Taiwan United Power has adopted a "co-construction" model with customers to expand its production capacity. The company announced in April that it will expand the production capacity of the Fab 12A P6 plant of Nanke 12-inch Factory through a win-win cooperation model with customers. According to the agreement, the customer will pay a deposit at the agreed price to ensure the long-term production capacity of Liandian P6. It is estimated that the total investment in the capacity expansion plan is about NT $100 billion. Liandian believes that, considering the delivery date and geopolitical factors, and the market will not have a significant increase in production capacity in the past 1 or 2 years, it is expected that the tight production capacity of mature processes will not ease until 2023.

The other two major wafer foundry manufacturers are advanced in the world and have accumulated electricity. The world advanced has bought the plant and facilities of Youda's L3B factory in Zhuke, which can achieve an 8-inch production capacity of 40000 pieces. The delivery is expected to be completed in 2022 and mass production is expected by the end of 2022 at the earliest. Li Jidian built a new 12-inch wafer factory in Tongluo Township, Miaoli County, Taiwan in March this year, with a total production capacity of 100000 wafers/month, which will be put into production in phases from 2023.

Samsung announced in its financial report released in May that it would increase its capital expenditure and invest a total of 171 trillion won (about 977.3 billion yuan) by 2030 to speed up the research and development of advanced process technology for chips and the construction of a new fab. Samsung said that the new wafer production line in Pyeongtaek, South Korea, will be completed in the second half of 2022 and will be used to produce 14nm DRAM chips and 5nm logic chips.

On May 3, Intel announced an investment of US $3.5 billion to upgrade its production line in New Mexico, USA. In March, it announced that it had invested US $20 billion to build two fabs in Arizona. It will continue to expand production in the United States and Europe in the future. Earlier, Intel announced that it would enter the foundry business.

Local manufacturers in mainland China are also facing a shortage of supply. In mainland China, manufacturers such as SMIC and Huahong Semiconductor are pushing for a 12-inch expansion. SMIC announced in March that its Shenzhen fab would go into production in 2022.

In terms of production capacity construction, SMIC plans to expand the production capacity of the mature 12-inch production line by 10000 pieces/month and the mature 8-inch production line by not less than 45000 pieces/month this year. In terms of the follow-up plan for the new factory, SMIC United Nations National Integrated Circuit Industry Investment Fund and Beijing Yizhuang International Investment Development Co., Ltd. established SMIC Capital in December last year. The first phase of the project is scheduled to be completed in 2024. After completion, it will reach a monthly production capacity of about 100000 12-inch wafers.