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While the global electronics supply chain experienced a chip shortage, the corresponding shortage of foundry capacities also led various foundries to raise their quotes, resulting in an over 20% YoY increase in the total annual revenues of the top 10 foundries for both 2020 and 2021, according to TrendForce's latest investigations. The top 10 foundries' annual revenue for 2021 is now expected to surpass US$100 billion. As TSMC leads yet another round of price hikes across the industry, annual foundry revenue for 2022 will likely reach US$117.69 billion, a 13.3% YoY increase.
TrendForce indicates that the combined CAPEX of the top 10 foundries surpassed US$50 billion in 2021, a 43% YoY increase. As new fab constructions and equipment move-ins gradually conclude next year, their combined CAPEX for 2022 is expected to undergo a 15% YoY increase and fall within the US$50-60 billion range. In addition, now that TSMC has officially announced the establishment of a new fab in Japan, total foundry CAPEX will likely increase further next year. TrendForce expects the foundry industry's total 8-inch and 12-inch wafer capacities to increase by 6% YoY and 14% YoY next year, respectively.
Although the manufacturing costs of 8-inch and 12-inch wafer fabrication equipment are roughly equal, the ASP of 8-inch wafers falls short compared with 12-inch wafers, meaning it is generally less cost-effective for foundries to expand their 8-inch wafer capacities. That is why the increase in 8-inch capacity is also expected to fall short of the increase in 12-inch capacity next year. Regarding 12-inch wafer foundry services, the 1Xnm and more mature nodes, which currently represent the most severe shortage among all manufacturing process technologies, will account for more than 50% of the newly added wafer capacities next year. On the other hand, while Chinese foundries, such as Hua Hong Wuxi and Nexchip, account for most of the newly added 12-inch wafer capacities this year, TSMC and UMC will comprise the majority of 12-inch wafer capacity expansions in 2022. These two foundries will primarily focus on expanding the production capacities allocated to the 40 nm and 28 nm nodes, both of which are currently in extreme shortage. As a result, the ongoing chip shortage will likely be alleviated somewhat in 2022.
Chip shortages will show signs of easing, but component gaps will continue to impact the production of some end products
Application segments such as consumer electronics (such as notebook computers), automotive electronics, and most connected digital appliances are now being impacted by the shortages of peripheral components made with the 28 nm and more mature nodes. The undersupply of the said components will probably begin to moderate somewhat in 2H22 if foundries proceed to activate their newly added production capacity. However, just as there will be signs indicating an easing of capacity crunch for the 40 nm and 28 nm nodes, the tightening of production capacity for 8-inch wafers and 1Xnm nodes is going to be an important development that warrants close attention in 2022.
Regarding 8-inch wafer foundry services, the overall production capacity growth has been limited while the demand related to PMICs has increased multiple folds. The growth of this particular application has to do with the increasing market penetration of 5G smartphones and electric vehicles. Under this circumstance, PMICs continue to take up the available production capacity of 8-inch wafers, and wafer production lines that deploy ≦0.18µm nodes are now expected to operate at fully-loaded capacity to the end of 2022. Hence, the capacity crunch for 8-inch wafers will not ease in the short term.
As for 1Xnm nodes, the number of foundries that are offering these more advanced process technologies is gradually shrinking. The reason is that following the migration to FinFET in the general development of semiconductor manufacturing, the costs associated with R&D and capacity expansions have risen higher and higher. TSMC, Samsung, and GlobalFoundries are now the only three foundries in the world that possess 1Xnm technologies. Also, GlobalFoundries is the only one among these three to undertake a marginal capacity expansion for its 1Xnm node next year. The other two currently have no plan to raise 1Xnm production capacity in 2022.
In the aspect of demand, the kinds of chips that are made with 1Xnm nodes include the following: 4G SoCs, 5G RF transceivers, and Wi-Fi SoCs equipped in smartphones, as well as TV SoCs, chips for Wi-Fi routers, and FPGAs/ASICs. Due to the increasing market penetration of 5G smartphones, 5G RF transceivers will take up a massive portion of the overall 1Xnm production capacity. This will, in turn, significantly limit the available wafer capacity allocated to other products. Furthermore, demand has been rising over the years for smartphones that are equipped with 1Xnm Wi-Fi SoCs and Wi-Fi routers that contain 1Xnm chips. The supply of these components is already very limited at this moment and will get tighter in 2022 because the overall 1Xnm production capacity will not be raised by a significant amount.
In sum, there are several takeaways from this focus on the potential developments in the foundry market next year. First, the major foundries have now announced capacity expansions with the emphasis on addressing the capacity crunch for the 40 nm and 28 nm nodes. Their newly added production capacity is expected to enter operation next year, following two consecutive years of chip shortages. This will bring some relief to the undersupply situation, which is already very severe at this moment. However, the actual chip output contribution from the newly added production capacity will mainly take place no earlier than 2H22, or during the middle of the traditional peak season. With stock-up activities across the supply chain expected to reach a higher level of intensity at that time because of preparations for holiday sales, the easing of the capacity crunch in the foundry market will not be especially noticeable.
Second, it is worth pointing out that even though supply will loosen slightly for some 40/28 nm chips, the lack of production capacity for 0.1Xµm chips on 8-inch wafers and 1Xnm chips on 12-inch wafers will likely remain a serious bottleneck in the supply chain. Currently, production capacity is already quite insufficient for 0.1Xµm 8-inch wafers and 1Xnm 12-inch wafers. Next year, the related capacity growth is also expected to be fairly limited. In sum, TrendForce believes that the foundry market will continue to experience some tightness in production capacity during 2022. Although the undersupply situation will moderate for some components, the persistent issue of component gaps will also continue to adversely affect the production of certain end products.
View at TechPowerUp Main Site
TrendForce indicates that the combined CAPEX of the top 10 foundries surpassed US$50 billion in 2021, a 43% YoY increase. As new fab constructions and equipment move-ins gradually conclude next year, their combined CAPEX for 2022 is expected to undergo a 15% YoY increase and fall within the US$50-60 billion range. In addition, now that TSMC has officially announced the establishment of a new fab in Japan, total foundry CAPEX will likely increase further next year. TrendForce expects the foundry industry's total 8-inch and 12-inch wafer capacities to increase by 6% YoY and 14% YoY next year, respectively.
Although the manufacturing costs of 8-inch and 12-inch wafer fabrication equipment are roughly equal, the ASP of 8-inch wafers falls short compared with 12-inch wafers, meaning it is generally less cost-effective for foundries to expand their 8-inch wafer capacities. That is why the increase in 8-inch capacity is also expected to fall short of the increase in 12-inch capacity next year. Regarding 12-inch wafer foundry services, the 1Xnm and more mature nodes, which currently represent the most severe shortage among all manufacturing process technologies, will account for more than 50% of the newly added wafer capacities next year. On the other hand, while Chinese foundries, such as Hua Hong Wuxi and Nexchip, account for most of the newly added 12-inch wafer capacities this year, TSMC and UMC will comprise the majority of 12-inch wafer capacity expansions in 2022. These two foundries will primarily focus on expanding the production capacities allocated to the 40 nm and 28 nm nodes, both of which are currently in extreme shortage. As a result, the ongoing chip shortage will likely be alleviated somewhat in 2022.
Chip shortages will show signs of easing, but component gaps will continue to impact the production of some end products
Application segments such as consumer electronics (such as notebook computers), automotive electronics, and most connected digital appliances are now being impacted by the shortages of peripheral components made with the 28 nm and more mature nodes. The undersupply of the said components will probably begin to moderate somewhat in 2H22 if foundries proceed to activate their newly added production capacity. However, just as there will be signs indicating an easing of capacity crunch for the 40 nm and 28 nm nodes, the tightening of production capacity for 8-inch wafers and 1Xnm nodes is going to be an important development that warrants close attention in 2022.
Regarding 8-inch wafer foundry services, the overall production capacity growth has been limited while the demand related to PMICs has increased multiple folds. The growth of this particular application has to do with the increasing market penetration of 5G smartphones and electric vehicles. Under this circumstance, PMICs continue to take up the available production capacity of 8-inch wafers, and wafer production lines that deploy ≦0.18µm nodes are now expected to operate at fully-loaded capacity to the end of 2022. Hence, the capacity crunch for 8-inch wafers will not ease in the short term.
As for 1Xnm nodes, the number of foundries that are offering these more advanced process technologies is gradually shrinking. The reason is that following the migration to FinFET in the general development of semiconductor manufacturing, the costs associated with R&D and capacity expansions have risen higher and higher. TSMC, Samsung, and GlobalFoundries are now the only three foundries in the world that possess 1Xnm technologies. Also, GlobalFoundries is the only one among these three to undertake a marginal capacity expansion for its 1Xnm node next year. The other two currently have no plan to raise 1Xnm production capacity in 2022.
In the aspect of demand, the kinds of chips that are made with 1Xnm nodes include the following: 4G SoCs, 5G RF transceivers, and Wi-Fi SoCs equipped in smartphones, as well as TV SoCs, chips for Wi-Fi routers, and FPGAs/ASICs. Due to the increasing market penetration of 5G smartphones, 5G RF transceivers will take up a massive portion of the overall 1Xnm production capacity. This will, in turn, significantly limit the available wafer capacity allocated to other products. Furthermore, demand has been rising over the years for smartphones that are equipped with 1Xnm Wi-Fi SoCs and Wi-Fi routers that contain 1Xnm chips. The supply of these components is already very limited at this moment and will get tighter in 2022 because the overall 1Xnm production capacity will not be raised by a significant amount.
In sum, there are several takeaways from this focus on the potential developments in the foundry market next year. First, the major foundries have now announced capacity expansions with the emphasis on addressing the capacity crunch for the 40 nm and 28 nm nodes. Their newly added production capacity is expected to enter operation next year, following two consecutive years of chip shortages. This will bring some relief to the undersupply situation, which is already very severe at this moment. However, the actual chip output contribution from the newly added production capacity will mainly take place no earlier than 2H22, or during the middle of the traditional peak season. With stock-up activities across the supply chain expected to reach a higher level of intensity at that time because of preparations for holiday sales, the easing of the capacity crunch in the foundry market will not be especially noticeable.
Second, it is worth pointing out that even though supply will loosen slightly for some 40/28 nm chips, the lack of production capacity for 0.1Xµm chips on 8-inch wafers and 1Xnm chips on 12-inch wafers will likely remain a serious bottleneck in the supply chain. Currently, production capacity is already quite insufficient for 0.1Xµm 8-inch wafers and 1Xnm 12-inch wafers. Next year, the related capacity growth is also expected to be fairly limited. In sum, TrendForce believes that the foundry market will continue to experience some tightness in production capacity during 2022. Although the undersupply situation will moderate for some components, the persistent issue of component gaps will also continue to adversely affect the production of certain end products.
View at TechPowerUp Main Site
