8-Inch Wafers: Ten Years Of Short Supply And Another Decade?

"It's hard to compete for production capacity. After our chip demand is sent to the foundry, we have to wait for the schedule. For this reason, we delayed the production of this year's wafers for a period of time, because we can't basically arrange them at the beginning." Recently, an entrepreneur in the field of chip design in Shenzhen told the reporter of 21st century economic report.

In this year, the capacity of China Semiconductor Industry and wafer industry increased by 8 inches. However, the demand for electricity in this industry increased sharply.

In fact, the shortage is not only in the wafer foundry link, a number of industry insiders pointed out to reporters, sealing test also appeared the situation of tight production capacity. Jibang consulting said that semiconductor OEM capacity constraints are expected to continue at least until the first half of 2021.

The problem of insufficient supply is also quickly reflected in the downstream manufacturers, and even some types of chip prices rise, and chips are out of stock for a while, even leading to the risk of production suspension of some automobile enterprises. From the perspective of terminal products, Qiao an, a consulting analyst with trendforce group, told 21st century economic news: "the most in short supply is power management IC and panel driven IC."

Capacity shortage, wafer price rise

At present, the shortage of 8-inch wafers is the most serious problem, and the price of 8-inch wafers also rises accordingly. According to the data of Jibang consulting, the price of 8-inch wafers in 2020 will increase significantly in the fourth quarter, about 5-10%.

Wafer manufacturers directly related to the early feel the trend of rising prices, to which made a different response.

Liandian, an 8-inch core manufacturer, released its latest results on December 8, with a combined revenue of 14.726 billion yuan in November, the highest in the same period of the previous year. The capacity utilization rate of united power reached full load, and the 8-inch wafer foundry capacity was tight and the price was adjusted. In the fourth quarter, the estimated wafer shipment of liandian increased by 1-2% compared with the previous quarter. Moreover, the increase of some foundry prices pushed up the average dollar price of wafers by 1% compared with the previous quarter.

According to the general manager of 5g SEI, next year, the general manager of SEI will see strong orders for the next year, and will continue to see this situation. Due to structural changes in the wafer foundry industry, the capacity of 8-inch wafer plants is seriously insufficient. This year, united power has adjusted the quotation for 8-inch urgent orders and new chips. Next year, the 8-inch foundry price will also rise, while the 12 inch foundry price will remain stable.

CITIC Securities wrote in its December 2 Research Report on Huahong semiconductor that the price of 8-inch wafers in some industries has been raised due to the strong demand for 8-inch mature process and the tight production capacity. Huahong semiconductor's 8-inch wafer plant's capacity utilization rate has reached 102% since 2020q3, and high capacity utilization is expected to enhance the company's profitability.

At the performance conference in October, TSMC president Wei Zhejia stated at the meeting that there would be strong demand for semiconductors next year and the following year, and TSMC did not raise the price of 8-inch wafers.

The shortage of production capacity and price increase are not unique to this year, but have lasted for several years. According to the semiconductor research office of trendforce Jibang consulting, 8-inch production capacity has been hard to obtain since the second half of 2019. Since there are almost no suppliers to produce 8-inch equipment, the price of 8-inch machine is rising rapidly, while the price of 8-inch wafer is relatively low. Therefore, it is generally not cost-effective to expand 8-inch production. However, for example, PMIC (power management chip) and lddi (large-size) However, it is most cost-effective to produce products such as display driver chip in 8-inch factory, and there is no need to move to 12 inch or even advanced process. In the 5g era, the demand for PMIC, especially in smart phones and base stations, grew exponentially, resulting in the limited production capacity in short supply. Although some products had the opportunity to be gradually transferred to 12 inch factories, it was still difficult to relieve the market situation of 8-inch demand shortage in the short term.

The process supported by 8-inch wafer is 90nm, which has been moved up to 65nm to produce low-end chips. However, Jibang also pointed out that the production capacity of the process above 28nm is supported by many demands such as CIS, sddi (small size display driver chip), RF radio frequency, TV chip, WiFi, blue bud, TWS, etc., and with the help of emerging applications such as WiFi 6 and AI memory heterogeneous integration, the production capacity is also increasingly in short supply.

Why is production capacity in short supply?

Gu Wenjun, chief analyst of xinmou research, commented: "production capacity is tight. In short, from the perspective of supply and demand, the demand has increased, but the main reason may still be insufficient supply, especially in China. Eight inches has been tense for a decade, and it's going to be tight for the next ten years. "

Over the years, wafer foundry enterprises continue to expand production capacity, why there has been a lack of capacity? Qiao an, a consultant analyst with trendforce, told reporters: "the expansion of production mainly occurs in 12 inch plants, especially in advanced manufacturing processes; the cost of newly purchased equipment in 8-inch plants is high, and most of them expand production or improve production efficiency in the existing plant space by leasing or purchasing second-hand machines, and the expansion range is relatively limited."

According to reports, at the summit forum of China IC Design 2020 held on December 10, Peng Jin, senior vice president of global sales and marketing of SMIC, said that the shortage of production capacity was mainly due to two reasons. The first reason is that market demand is growing much faster than expected. For example, according to Qualcomm's forecast, the global 5g mobile phone shipment will reach 200 million this year, 550 million next year, and more than 1 billion in 2023. When the mobile phone is upgraded from 4G to 5g, the price of the flagship mobile phone cover increases from $60-75 to $100-150, and the average number of PMIC chips per mobile phone increases from 4-5 to 7-8.

According to Jibang consulting, the epidemic in 2020 will cause many industries to be impacted. However, thanks to the new normal of remote office and teaching, the penetration rate of 5g smart phones and the strong demand for related infrastructure, the global semiconductor industry will rise against the trend. It is estimated that the annual growth rate of global foundry output value will reach 23.8% in 2020, breaking the peak in the past decade.

Peng Jin pointed out that the second reason is that the speed of production expansion is difficult to catch up with the growth of demand. On the one hand, under the influence of the epidemic, the world's major suppliers suspended shipment, and even if the equipment entered the factory, there was no team to install it, which directly led to the delay of capacity expansion progress. On the other hand, market-oriented prices continue to grow, and wafer foundry needs to be more cautious in expanding production.

In addition, the trade friction between China and the United States and the turmoil brought about by the epidemic situation have made downstream manufacturers to "hoard" their goods, and the inventory of the industrial chain has reached a new high. However, the demand from mobile phones, automobiles, PCs, data centers and other aspects is still strong, which also drives the revenue of OEM market higher.

According to Tuo long Industry Research Institute of Jibang consulting, in the fourth quarter, the demand of the wafer foundry market is still strong, and the production capacity of various industries is continuously full, which makes the price rise effect drive the overall revenue upward. It is estimated that in the fourth quarter of 2020, the revenue of the world's top ten foundry manufacturers will exceed US $21.7 billion, with an annual growth of 18%. Among them, TSMC and Samsung account for the top three cities (Samsung), UMC.

At the same time, wafer foundry also continues to increase production capacity. For example, by the end of this year, SMIC's 8-inch production capacity will increase by 30000 pieces per month, and the 12 inch capacity will increase by 20000 pieces per month.

According to the statistics and forecast of IC insights, in 2020, there will be 10 new 12 inch wafer plants in the world entering the mass production stage. The global wafer production capacity will increase by 17.9 million pieces of 8-inch equivalent wafers, and the new production capacity will reach a record high in 2021, reaching 20.8 million pieces of 8-inch equivalent wafers. The new production capacity mainly comes from South Korea's big factories Samsung and SK Hynix, as well as China's Yangtze River storage, Wuhan Xinxin and Huahong Hongli.