South Korea's IC Production Slides for the First Time in Years

[Raevenlord]

The economic downturn keeps pushing the PC and related manufacturing markets down, following slumps in demand stemming from increased cost of living, the veritable arms race to technological products during COVID-19, and manufacturer's efforts to increase output to provide enough product to meet said demand. But all that goes up must eventually come down, and now South Korean manufacturers are facing the result of months of decreased consumption, with stock levels increasing ahead of actual product uptake (stocks have reached 67.3% of produced goods and factory shipments have declined 20.4%). This has now led to a 1.7% decline in August's output when compared to the same period last year - the first time the South Korean industry has seen negative growth since 2018.

Samsung and Kioxia both have announced a reduction in production output in the months to come, which should give distribution enough time to clear some of the accumulated inventory. The scales of production typically occur in cycles - ones with excess manufacturing against demand, and other times where the reverse happens. It seems we're now in the descending part of the spectrum, with prices - especially of NAND - being expected to drop in the coming months. It will take a while until the manufacturing reduction makes itself felt in the overall IC pricing landscape. Micron too has announced it's slowing down the production ramp-up of its 232-layer 3D NAND so as not to contribute in excess towards an already over-saturated market.





Luckily for users, this general demand softening will lead to price reductions that aim to increase attractiveness of NAND-based products. It seems that 4Q 2022 will be the best time for users looking to upgrade or add to their storage subsystems, with industry analyst TrendForce expecting a further NAND price slump to the tune of 30% by the end of the year.

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[Space Lynx]

Why don't they contact car companies in America? I hear they still have a chip shortage issue.

 

[R0H1T]

NAND prices are just gonna continue to go down, then with softening demand DRAM could also see a major cyclical downturn. I guess they'll just revert to their usual tactics of collusion accidents
Then raise prices next year, probably after the global economy is in much better shape!

 

[cvaldes]

Why don't they contact car companies in America? I hear they still have a chip shortage issue.

A lot of those automotive chips are made on old process nodes that these South Korea chip giants don’t handle.

My guess is that retooling their foundries for a short term production run will be unprofitable. It’s not like semiconductor foundry equipment is cheap or something you can grab at Best Buy and plug into a power outlet in your warehouse.

 

[GunShot]

I say, let them burn! Unless for work, your family needs, etc., majority of consumers should reach for their marshmallows and aim it at the bright lights until we have stopped laughing at their misfortunes.

 

[DeathtoGnomes]

A lot of those automotive chips are made on old process nodes that these South Korea chip giants don’t handle.

My guess is that retooling their foundries for a short term production run will be unprofitable. It’s not like semiconductor foundry equipment is cheap or something you can grab at Best Buy and plug into a power outlet in your warehouse.

I agree with that guess, except for the plug and play part, if they still have the older equipment and not sold it, a change over can be worth while if, only if, the demand is there.

 

[cvaldes]

I agree with that guess, except for the plug and play part, if they still have the older equipment and not sold it, a change over can be worth while if, only if, the demand is there.

Not sure why they would be inclined to keep it around.

They would either sell it or scrap it. This equipment is pretty big. It’s not like an old Dell Optiplex or food processor they can just toss in a closet.

They would still need to rip out functioning equipment, maybe reconfigure infrastructure, modify clean rooms, etc. over months to make a low margin product for a short time and then do it all over again?

Not likely. Remember that these in-demand automotive chips aren’t $200 CPUs or GPUs. They’re ICs probably built on 28nm or larger nodes with prices counted in cents, not dollars.

 

[Totally]

Not sure why they would be inclined to keep it around.

They would either sell it or scrap it. This equipment is pretty big. It’s not like an old Dell Optiplex or food processor they can just toss in a closet.

They would still need to rip out functioning equipment, maybe reconfigure infrastructure, modify clean rooms, etc. over months to make a low margin product for a short time and then do it all over again?

Not likely. Remember that these in-demand automotive chips aren’t $200 CPUs or GPUs. They’re ICs probably built on 28nm or larger nodes with prices counted in cents, not dollars.

I don't think they bother with any of that don't they just build new fabs and sell off old whenever they switch processes, since it's cheaper than retooling.

 

[cvaldes]

I don't think they bother with any of that don't they just build new fabs and sell off old whenever they switch processes, since it's cheaper than retooling.

Yeah, that’s why I said it was unlikely they would have the old equipment around.

Clearly some people here think these companies just mothball old foundry tools like shoving an old vacuum cleaner or something into a closet in the guest bedroom.

Hell even a restaurant isn’t going to keep their old pizza oven.

 

[hat]

What really baffles me with that is these older processes are supposed to be getting really good yields at this point. What are they on? 45nm? 65, 90, even older? You would think there would be an abundance of simple chips from these older, simpler processes...

 

[cvaldes]

What really baffles me with that is these older processes are supposed to be getting really good yields at this point. What are they on? 45nm? 65, 90, even older? You would think there would be an abundance of simple chips from these older, simpler processes...

Manufacturers need the materials first.

During the peak of the semiconductor shortage wafer and substrate availability were biiiggggg problems.

Auto makers are just as guilty as anyone else in relying on JIT supply chain management for parts. They didn’t stockpile a twelve month supply of ICs. Pity.

While they don’t use automotive ICs, Apple often prepays for components and fronts cash to build out new foundries and major capex projects. Guess whose orders get processed first?

I bet Apple had earmarked a bunch of wafers and substrate as well.

My guess is the pandemic caused many procurement managers to review their processes.

 

[Totally]

What really baffles me with that is these older processes are supposed to be getting really good yields at this point. What are they on? 45nm? 65, 90, even older? You would think there would be an abundance of simple chips from these older, simpler processes...

Yields don't get better as time goes on. It depends almost entirely on how complex, and how much redundancy was built into the design of the chip. Good design = good yields, bad design = poor yields.

 

[R0H1T]

Now if only Apple would price their upgrades more reasonably, but then again they're (arguably) the greediest tech company on the planet!

 

[mb194dc]

Computer hardware and mobile bust for the ages coming.

Only kicker is hoping to still have a job to be able to buy anything!

 

[defaultluser]

so hopefully this meas the ceos of Lg + Samsung are now both prosecutable?