A decline of at least 4% is assumed in the market analysis. This will be triggered by declining demand from the leading IC houses and disrupted supply chains due to export restrictions imposed by the US Department of Commerce. According to TrendForce, the larger design houses have cut their wafer orders for the first quarter of 2023 and are likely to do so to an even greater extent in the second quarter.
Foundries are therefore expecting lower capacity utilization of their fabs. Only in the second half of the year could the order volumes of some chip types, which are currently undergoing an inventory correction on the part of customers, increase again. However, the economic development of the global economy is the biggest variable. TrendForce is therefore forecasting a general decline for 2023. Something similar happened in 2019.
In its latest analysis from January 19, 2023, TrendForce also points to geopolitical risks as the cause of the foundry slump. IC design houses are having to reduce the volume of their production in China - which will have an impact this year and next. This is changing the established global supply chains and positions of manufacturers. The distortions in the segment of older 8″ wafers are currently significantly greater than in the advanced 12″ (300 mm) wafers.
The actual reason for the falling demand for chips is the seasonal and inflation-driven reluctance of consumers to buy smartphones, notebooks and TVs. This affects consumer-grade PMICs and MOSFETs. The leading contract manufacturer TSMC is facing a "less than ideal" order situation. According to TrendForce, this could improve over the course of the year as deliveries of its 7 nm chips increase. At Samsung, on the other hand, capacity utilization for the ≤8 nm process nodes is likely to remain low over the course of the year, according to TrendForce. Customers such as Qualcomm and Nvidia have shifted their chip orders to other manufacturers.
For 12″ wafers with common (larger structures), TrendForce estimates an average foundry capacity utilization of between 75% and 85% in the first half of the year. These include TSMC, UMC and GlobalFoundries. They are expanding into more stable user segments such as automotive electronics, industrial equipment and medical technology. This is why the older process nodes such as 28 nm are showing higher capacity utilization. TrendForce anticipates a general improvement in the situation from the third quarter of 2023 thanks to rising demand and the realignment of supply chains. The planned establishment of more than 20 new foundries worldwide plays a role here. All of this points to a new era with widespread regionalization of the foundries: Taiwan with three, USA with five, China with six, Europe with four, and another four in South Korea, Japan, and Singapore.
