Foundry Revenue Approaches Records; Chips Tight Until 2022

While the global electronics supply chain experienced a chip shortage, the corresponding shortage of foundry capacities also led various foundries to raise their quotes, resulting in an over 20 percent YoY increase in the total annual revenues of the top 10 foundries for both 2020 and 2021, according to TrendForce’s latest investigations. The top 10 foundries’ annual revenue for 2021 is now expected to surpass US$100 billion. As TSMC leads yet another round of price hikes across the industry, annual foundry revenue for 2022 will likely reach US$117.69 billion, a 13.3 percent YoY increase.

Foundries will gradually kick off production

TrendForce indicates that the combined capex of the top 10 foundries surpassed US$50 billion in 2021, a 43 percent YoY increase. As new fab constructions and equipment move-ins gradually conclude next year, their combined capex for 2022 is expected to undergo a 15 percent YoY increase and fall within the US$50-60 billion range. In addition, now that TSMC has officially announced the establishment of a new fab in Japan, total foundry capex will likely increase further next year. TrendForce expects the foundry industry’s total 8-inch and 12-inch wafer capacities to increase by 6 percent YoY and 14 percent YoY next year, respectively.

foundry, foundriesAlthough the manufacturing costs of 8-inch and 12-inch wafer fabrication equipment are roughly equal, the ASP of 8-inch wafers falls short compared with 12-inch wafers, meaning it is generally less cost-effective for foundries to expand their 8-inch wafer capacities. That is why the increase in 8-inch capacity is also expected to fall short of the increase in 12-inch capacity next year. Regarding 12-inch wafer foundry services, the 1Xnm and more mature nodes, which currently represent the most severe shortage among all manufacturing process technologies, will account for more than 50 percent of the newly added wafer capacities next year. On the other hand, while Chinese foundries, such as Hua Hong Wuxi and Nexchip, account for most of the newly added 12-inch wafer capacities this year, TSMC and UMC will comprise the majority of 12-inch wafer capacity expansions in 2022. These two foundries will primarily focus on expanding the production capacities allocated to the 40nm and 28nm nodes, both of which are currently in extreme shortage. As a result, the ongoing chip shortage will likely be alleviated somewhat in 2022.

Chip shortages will show signs of easing

Application segments such as consumer electronics (such as notebook computers), automotive electronics, and most connected digital appliances are now being impacted by the shortages of peripheral components made with the 28nm and more mature nodes. The undersupply of the said components will probably begin to moderate somewhat in 2H22 if foundries proceed to activate their newly added production capacity. However, just as there will be signs indicating an easing of capacity crunch for the 40nm and 28nm nodes, the tightening of production capacity for 8-inch wafers and 1Xnm nodes is going to be an important development that warrants close attention in 2022.

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