According to the Business Times, at the groundbreaking ceremony of the foundry Power Semiconductor’s Tonglu 12-inch wafer fab today (Mar 25th), Chairman Huang Chongren said that since 2020, the foundry price has increased by 30~ 40%, and supply and demand continue to be tight, price increases will continue.

"The capacity in 2022 has been booked by customers, and we are now starting to book for 2023. " Huang Chongren pointed out that the current demand outbreak is not a seasonal factor, but a structural change, including the rapid rise of new demand for automotive, 5G, AIOT and other chips. . The current market demand for mature process chips has exploded, and the short supply will be more serious in the future. It can be determined that the production capacity will be tight until the end of 2022 at least, and the demand in 2023 will continue to be hot.

It is understood that power Semiconductor Manufacturing Co., Ltd. foundry prices have increased by 30-40% since last year . Regarding the future market development trend, Huang Chongren emphasized that "price increases will continue." The industry estimates that the increase in the second quarter will be between 10% and 20% .

Huang Chongren also said that all chips and production capacity are currently in short supply, whether it is driver ICs, power management ICs, storage, MOSFETs, etc., "There are still epidemic factors. When the global economic activity resumes formally in the future, the demand will be even greater. It's unimaginable".

It is reported that the Tongluo plant to be started this time is the ninth plant of Power Semiconductor Manufacturing Co., Ltd. , with a total investment of up to NT$ 278 billion , focusing on mature manufacturing processes from 1x to 50nm. After completion, the total production capacity will reach 100,000 pieces per month , and it is expected to be put into production in phases in 2023. The initial planned production capacity is 25,000 pieces per month, and the full-load annual output value is expected to exceed 60 billion Taiwan dollars.

TSMC's orders are full until the end of 2022

Semiconductor production capacity is in short supply. TSMC, the foundry leader, has already fully loaded its production capacity until the end of the year. After the Chinese New Year, TSMC has begun accepting customer reservations for production capacity in the first half of 2022. With all customers expanding orders, the production capacity has become a spike, advanced manufacturing process and mature The production process is full. According to Taiwan media reports, TSMC will begin accepting customer reservations for production capacity in the second half of 2022 in the second half of the second quarter. It is expected that there will be a boom in capacity spikes and full orders until the end of next year.

However, in order to prevent customers from over-ordering, TSMC’s production capacity in the first half of next year will not be the first to win. Instead, it will allocate capacity based on customers’ past orders and estimates of terminal market demand , which can reduce the length of global chip supply. The material crisis has allowed all electronic products to be mass-produced smoothly; secondly, it can avoid the risk of customers slashing orders if the terminal market is not as expected at that time.

The new crown pneumonia epidemic has accelerated the digital transformation, including notebooks and servers, 5G smart phones, WiFi Netcom devices, automotive electronics and other chips are in short supply, wafer foundries are receiving orders, and TSMC's full capacity this year is fully loaded until the end of the year. TSMC has squeezed out production capacity by increasing capacity utilization and improving production efficiency to meet strong customer demand. However, customer orders continue to flow in, and some of the new production capacity prioritizes the production of automotive chips. All production capacity from now to the end of the year has been The customer's reservation was empty, and TSMC has notified the customer that the production capacity is full, and it can no longer accept the request for additional film production.

The IC design industry pointed out that this year's semiconductor production capacity is in short supply, which has led to global automakers being forced to cut production. Pen power plants and mobile phone manufacturers have also lowered their shipment estimates due to chip shortages. Therefore, chip customers including OEM/ODM factories and system factories require chip supply. Cargo merchants must first ensure production capacity next year.

According to the industry, end customers only want to ensure that the supply of chips in the next 1-3 years is sufficient, regardless of whether the subsequent boom is up or down. Therefore, if chip suppliers cannot ensure the production capacity in the next few years, customers are unwilling or unwilling. Dare to talk about future cooperation plans. Under this circumstance, customers have no restrictions on chip prices and generally accept price increases. They only hope that future production chain operations can ensure that there is no shortage of chips.

Price increase to grab wafer foundry capacity will become a new normal

Recently, a fire broke out on a 12-inch chip production line of Renesas Electronics, further adding to the shortage of automotive chips. Industry insiders pointed out that it will become a new normal for chip suppliers to offer higher prices to win more capacity support from foundries.

According to Digitimes reports, industry sources revealed that this year TSMC’s mature process capacity of 8-inch and 12-inch wafer fabs has been booked out, and even compressed the production of ordinary consumer chips. " Automotive chip and other chip suppliers will have no choice but to voluntarily increase their offer prices and strive for more production capacity in 2022. " Industry insiders added.

In addition to automotive chips, almost all other types of IC products are increasingly in short supply, including power management ICs, display driver ICs, network chips, HPC chips, 5G and AI chips. According to industry insiders, these chips are currently at the lowest inventory level and are expected to maintain a strong demand momentum in the next few years. At least in the first half of 2022, the overall semiconductor production capacity will maintain a high utilization rate.

The report pointed out that, in fact, chip manufacturers and system manufacturers have conducted in-depth negotiations with TSMC on capacity allocation in 2022 or even 2023. Industry insiders said: "Except for heavyweight customers like Apple, they will face a floating pricing system implemented by pure OEM companies, and OEM costs will continue to spiral upward."

In addition, some insiders said that in order to obtain the capacity of TSMC, UMC, Power Semiconductor Manufacturing and other fabs, future chip suppliers must provide their 8-inch and 12-inch wafer manufacturing services at prices higher than those set by foundry.

Faced with the dual pressures on the supply side and the demand side and the high-intensity utilization of production capacity, price increases are almost within expectation. However, as the capacity supply plan is tight, the price increase has no signs of stopping in the short term, and with the news that the contract price will adopt a floating system next year, production costs will further increase. In the case that terminal demand continues to surge, manufacturers need to start from other aspects to minimize the most impact and avoid passing on excessive costs to terminal customers.