According to Taiwan media reports, mature process wafer foundry manufacturers are currently facing a battle to defend 60% capacity utilization. There are rumors that in order to improve production capacity utilization, wafer foundries such as UMC, World Advanced Micro Devices, and Power Semiconductor Manufacturing Co., Ltd. have slashed their mature process wafer foundry quotations in the first quarter of next year. The price reduction range is as high as double-digit percentages, and some project customers have even lowered their prices. It is as high as 15% to 20%. It is hoped that the price will be reduced in exchange for order volume. This price reduction is also the largest drop after the epidemic.
Some chip design industry insiders revealed privately,Wafer foundries told us that business in mature processes is not good and capacity utilization continues to decrease. In order to ensure capacity utilization and market share and maintain a certain production economic scale, “price reduction is a last resort.”
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According to reports, this price reduction will cause the price of mature wafer foundry processes to reach new lows after the epidemic, affecting the gross profit margins and profit trends of related companies.
According to industry insiders,On the table, only TSMC’s prices remain firm, and almost no other manufacturers are spared.
The industry pointed out that even if the PC and smartphone markets have shown signs of recovery in the near future, external factors such as client inflation are still large. In particular, almost all of the inventory has been cleared over the past year. The industry is in shock and is afraid of falling into the quagmire of inventory depletion again. Therefore, The current wafer production strategy is still conservative. At present, only about 30% to 40% of pre-epidemic ordering intensity has been restored. This has forced wafer foundries to be anxious, so they have stepped up price reductions to avoid losing orders to peers who are willing to reduce prices, resulting in capacity utilization. worse.
It is understood that the current demand for wafer production from consumer customers is low, and mature process manufacturers specializing in 8-inch wafer foundries are most affected. This is mainly due to the large number of repeated orders placed by integrated component manufacturers (IDM) and IC design factories, resulting in power management issues. Inventory levels of chips such as ICs, driver ICs and microcontrollers (MCUs) still need to be reduced, and some products have been switched to 12-inch, which has kept the capacity utilization rate of 8-inch wafer foundries at a low level recently.
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The industry pointed out that TSMC has the backing of advanced processes and can be bundled with mature processes for sale. In addition, the OEM prices for mature processes have not risen as sharply as other related companies. Customers are still accepting TSMC’s strategy, so that the prices of TSMC’s mature processes are relatively high. There is support.
UMC
On October 25, the financial report released by UMC showed that in the third quarter of 2023, consolidated revenue was NT$57.07 billion, an increase of 1.4% from the second quarter (NT$56.3 billion), and the same as the third quarter of 2022 (NT$56.3 billion). NT$75.39 billion) decreased by 24.3% year-on-year. The gross profit margin in the third quarter was 35.9%, and the net profit was NT$15.97 billion.
UMC expects,The quarterly capacity utilization rate in the fourth quarter is likely to drop from 67% in the previous quarter to 60% to 63%, which is a single-quarter low in recent years.
Affected by the continued revision of capacity utilization, gross profit margin will drop from 35.9% in the previous quarter to 31% to 33%, returning to the level at the beginning of the epidemic in 2021.
In response to the issue of price reduction, UMC responded that as stated by the FAQ a few days ago, there will indeed be a significant decrease in 8-inch wafer foundry, while there will be no adjustment for 12-inch wafers.
The supply chain revealed that in order to consolidate the momentum of customer orders, UMC has reportedly offered a 5% price discount to large customers this quarter, considering that demand will continue to be weak in the first quarter of next year.In order to attract customers to increase production, the expanded quotation will be reduced to a double-digit percentage.
World advanced
On November 7, World Advanced announced its third quarter financial report. Consolidated revenue for the quarter was NT$10.557 billion, a 7.1% increase from the previous quarter, net profit after tax was NT$1.623 billion, and earnings per share were NT$0.98.
World Advanced General Manager Wei Jishi said at the conference that the original capital expenditure was NT$10 billion. This time it was reduced by NT$1 billion, mainly due to the adjustment of semiconductor inventory and the entry into the off-season. He will continue to carefully evaluate production capacity expansion.Capacity utilization is expected to drop by mid-single digits in the fourth quarter, to between 55-60%.
Information disclosed by the supply chain shows that,The world’s advanced prices are expected to drop by 5% in the second half of the year, and customers with large production volumes are even expected to receive a 10% discount, with prices falling by single digits to double digits in the first quarter of next year.world
Advanced executives have previously mentioned at the press conference that in order to cope with the severe situation of price competition, flexible adjustments will be made in the short term.
Power Semiconductor
On October 19, the third quarter financial report released by Power Semiconductor showed that due to the decline in both capacity utilization and sales unit price, the main business loss expanded to NT$1.408 billion in the third quarter, and the after-tax net profit also turned into a net loss of NT$1.408 billion. NT$334 million.
Xie Zaiju, general manager of Power Semiconductor Manufacturing Co., Ltd. revealed that there are still headwinds in the market in the third quarter.In order to maintain competitiveness, Power Semiconductor has reduced prices to customers by approximately 4% to 5%.
It is reported that,Power Semiconductor’s capacity utilization rate in the third quarter was only 60%Next, the gross profit margin was also affected by the loss of idle production capacity and has dropped to 9.2%.
However, Xie Zaiju emphasized that it is now felt that the supply chain has dropped to a reasonable level, including mobile phone driver ICs, monitor CIS components, etc. There is market demand, and the visibility is expected to be around the level of a quarter, so he is optimistic about the fourth position of Power Semiconductor Manufacturing Co., Ltd. Quarterly operations are expected to grow by mid-single digits.
“Economic Daily” said that in order to improve production capacity utilization, Power Semiconductor Manufacturing Co., Ltd. will also expand price reduction measures.
SMIC
On November 19, SMIC released its financial report showing that its third quarter revenue was 11.78 billion yuan, a year-on-year decrease of 10.56%, and a month-on-month increase of 6.03%; the net profit attributable to shareholders of listed companies was 678 million yuan, a year-on-year decrease of 78.41%. , down 51.81% month-on-month.
SMIC stated that the quarter-on-quarter revenue growth in the third quarter was mainly due to the company’s overall shipment volume increasing by 9.5% quarter-on-quarter.
but,As total production capacity as the denominator increased to 796,000 pieces, the average capacity utilization rate decreased by 1.2 percentage points to 77.1%.
The sharp year-on-year decline in net profit in the third quarter was mainly due to a year-on-year decrease in wafer sales and a decrease in capacity utilization.
Hua Hong Semiconductor
On November 19, Huahong Semiconductor released its financial report showing that its third-quarter sales revenue was US$568.5 million, down 9.7% year-on-year and 10.0% month-on-month; its gross profit margin was 16.1%, down 21.1 percentage points year-on-year and 11.6 percentage points month-on-month;
Profit attributable to owners of the parent company was US$13.9 million, down 86.6% from US$103.9 million in the same period last year, and down 82.3% from US$78.5 million in the previous quarter.
In terms of capacity utilization, Hua Hong Semiconductor’s capacity utilization rate in the third quarter was 86.8%, which was far lower than the 110.8% in the same period last year and also lower than the 102.7% in the second quarter.
The fourth quarter will be the low point
The 8-inch wafer foundry capacity utilization forecast data recently released by TrendForce also shows that since 2022, the 8-inch wafer foundry capacity utilization rate has continued to decline, and is expected to be one by the fourth quarter of 2023. At the lowest point, the 8-inch wafer foundry capacity utilization rate of most manufacturers, including TSMC, will fall below 60%. Only Huahong maintains a relatively high level of 78%, and SMIC also has 65%.
Obviously, although the 8-inch wafer foundry capacity of SMIC and Hua Hong will continue to decrease in the fourth quarter, it can still be maintained at a relatively high level of around 65%-78%, which also makes it possible that they will not need to further reduce prices significantly. to maintain capacity utilization.
This is also due to the shift in domestic customers starting to make more use of domestic foundry production capacity. This can be seen from the continued increase in the proportion of sales revenue from Mainland China (84.0% and 77.5% respectively) of China Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor.
However, it should be noted that as Taiwan’s mature process wafer factories have successively reduced prices significantly, it will inevitably bring certain competitive pressure to SMIC and Hua Hong Semiconductor’s mature process orders, so it cannot be ruled out that they will follow up. Possibility of small price reductions.
In addition, with the gradual recovery of the market next year and the price reduction strategy of wafer foundries for mature processes, TrendForce predicts that the capacity utilization rate of 8-inch wafer foundries will continue to rise in 2024. By the end of 2024, most wafer foundries will The 8-inch capacity utilization rate of round foundries will reach more than 60% (an increase of 5 to 10 percentage points), TSMC and SMIC will reach more than 70%, and Hua Hong will reach 90%.
Editor in charge: Shang Shangwen Q