Two chip wafers are pictured at the Taiwan Semiconductor Research Institute in Hsinchu on Feb. 11.
IMBALANCE: Chip supply-demand discrepancies are expected to continue into 2024 due to high inflation, COVID-19 and Russia’s invasion of Ukraine, a MIC analyst said
By Lisa Wang / Staff reporter
A global chip supply crunch is expected to ease next year, following a series of capacity expansions by foundry service providers over a three-year period to next year, the Market Intelligence and Consulting Institute （MIC, 產業情報研究所） said on Wednesday.
The world’s foundry services providers led by Taiwan Semiconductor Manufacturing Co （TSMC, 台積電） are to boost capacity by 10 percent this year and 7 percent next year, after experiencing 10 percent annual growth last year, the Taipei-based institute said.
The global output of 8-inch wafers is to increase to 10 million units per month next year, up about 25 percent from fewer than 8 million units in 2020, it forecast.
The imbalance in chip supply and demand became evident last year as the stay-at-home economy, driven by the COVID-19 pandemic, boosted demand for notebook computers, coupled with demand for smartphones and vehicles, MIC senior analyst Cheng Kai-an （鄭凱安） said at a virtual technology forum.
“As global foundry service providers continue expanding capacity, we expect semiconductor supply to become stable gradually in 2023,” Cheng said.
With slowing demand for PCs and consumer electronics this year due to high inflation, and the economic effects from COVID-19 and Russia’s invasion of Ukraine, the supply-demand imbalance could continue into 2024, he said.
Chipmakers should carefully adjust their capacity increases to cope with short-term oversupply, he added.
Chip designers started to feel the pinch of slumping demand for smartphones and consumer electronics in the first half of this year, leading to falling demand for display driver ICs used in smartphones and TVs, Cheng said.
Chip designers are scaling back orders with their foundry partners as a result, but supply of power management ICs and microcontrollers remains insufficient, he said.
In the long term, 5G-related devices, high-performance computing applications and automotive electronics are expected to continue driving semiconductor demand and growth, Cheng said.
Chinese chipmakers are boosting capacity faster than their global peers, benefiting from Chinese government funding, as Beijing seeks to reach 70 percent of chip self-sufficiency by 2025, the institute said.
However, that target is impractical, as China is expected to boost chip supply within the country to 19.4 percent in 2025, from 15.9 percent in 2020, Cheng said, citing data from semiconductor market research firm IC Insights.
Rapid capacity expansion boosted China’s ranking to No. 1 in the world’s foundry industry last year, with a market share of 22.6 percent, the MIC said.
Taiwan was No. 2 with an 18.9 percent share, followed by South Korea with 17.3 percent, MIC data showed.
Local semiconductor companies’ production value is expected to grow 17.5 percent annually to NT$4.37 trillion this year, outpacing the world semiconductor industry’s 10.4 percent growth, the MIC said.