Demand for IT Sets Using 8-inch Chips Picking up
The author is an analyst of NH Investment & Securities. He can be reached at hwdoh@nhqv.com. -- Ed.
With the global eight-inch foundry utilization rate reaching 100%, some companies are hiking unit prices by 10~20%. While demand is rising rapidly, supply growth is being limited by uneven supply of eight-inch foundry equipment.
Some eight-inch foundry companies hike unit prices
According to Taiwanese media, the utilization rate of eight-inch foundry companies such as TSMC, UMC, and VIS has recently touched nearly 100%. Reflecting tight supply and strong demand, such firms have hiked wafer unit prices by 10~20%. Since 2Q20, the Covid-19 situation has been improving to some extent, and demand for IT sets utilizing eight-inch semiconductors has been picking up. Along with a strengthening in smartphone panel shipments, demand for chips such as display driver ICs (DDIs) has expanded. Also on the increase is demand for AI computing semiconductors for use in IoT devices.
Recently, demand has accelerated rapidly for analog semiconductors that measure temperature, heart rate, and light. We note that analog semiconductors mainly depend on eight-inch foundries. Currently, eight-inch capacity expansion is limited compared to demand growth, and most semiconductor equipment makers have stopped producing eight-inch equipment. In order for semiconductor companies to increase eight-inch capacity, the purchase of used equipment would likely be necessary.
Strong eight-inch market conditions also apply to domestic players such as SEC, SK Hynix, and DB HiTek
Last week, SMIC (one of China’s major foundry companies) announced its 2Q20 results, with sales and OP climbing to US$938mn (+4% q-q) and US$65mn (+37% q-q), respectively. Of note, both sales and OP achieved quarterly highs in 2Q20. SMIC has presented 3Q20 sales growth guidance of +1~3% q-q and raised its 2020 capex guidance from US$4.3bn to US$6.7bn.
The strong global eight-inch foundry market is valid for domestic companies such as Samsung Electronics (SEC), SK Hynix, and DB HiTek as well. With the capacity utilization rates for DDI and PMIC manufactured by DB HiTek reaching 100%, the company is gradually boosting capacity via process efficiency optimization in order to resolve supply shortage issues. Meanwhile, SK Hynix System IC is relocating its M8 equipment from its Cheongju fab to its Chinese fab in order to target the Chinese foundry market.