The profit of Samsung's chip business fell more than 90% last quarter, but the revenue of the wafer manufacturing business that competed with TSMC hit a record high last quarter and last year. The profit also increased last year, reflecting the expansion of advanced manufacturing process capacity and the more scattered customers and application fields.

However, Samsung said that it was hard to escape the pressure of industrial inventory adjustment this quarter, which would make the capacity utilization rate of wafer foundry business begin to decline. The industry was worried that Samsung was afraid to launch the strategy of price reduction and order grabbing, which would be detrimental to TSMC and Liandian.

According to industry analysis, the capacity utilization rate of wafer foundries has generally declined recently, and the capacity utilization rate of Liandian has changed from the previous full load to about 70%, and it is reported that the capacity utilization rate of some production lines of some manufacturers is only 50%, but both TSMC and Liandian have adhered to the price, TSMC has increased the price by 6% this year, and Liandian expects the average product price (ASP) to be flat this quarter.

Under the current situation of "poor terminal demand and hard price of wafer duopoly", if Samsung cuts the price and grabs the order, it is very attractive for IC designers and integrated component (IDM) manufacturers who are facing huge inventory pressure and are unwilling to pay more manufacturing costs. Samsung can not only fill the capacity gap, but also help to increase market share.

Samsung did not provide the relevant data and quotation dynamics of its wafer foundry capacity utilization rate, but only disclosed the industrial inventory adjustment, which led to the decline of the wafer foundry business capacity utilization rate. However, it is still expected that the demand for automotive and high-speed computing will bring recovery in the second half of the year. It will win new customers with the product competitiveness of the second generation of 3 nanometer process, and has established an advanced packaging team to support the needs of the wafer foundry business.

Samsung also updated the latest information on chip manufacturing process. The 3-nanometer process is "stable in yield", and the second-generation 3-nanometer process is "progressing rapidly". It is also developing the 4-nanometer process for automotive applications. This year, it will focus on developing the 2-nanometer process.

Korean media: US-Japan-Taiwan cooperation supports the growth of TSMC

According to South Korean media reports, TSMC recently announced its investment in the United States and Japan to build a factory in order to compete with China in terms of security through the United States and Japan, while widening the gap between the global market share of wafer foundry with Samsung Electronics.

According to the analysis of experts quoted by the South Korean media BusinessKorea, it was mentioned that although the United States and South Korea, Taiwan and Japan promoted the "Chip 4" to restructure the semiconductor supply chain, South Korea has not shown positive action in this regard.

The report said that Taiwan announced that it would cooperate with the United States and Japan in the semiconductor field in 2021. The United States and Japan also established a semiconductor technology alliance last year. Taiwan's TSMC is trying to strengthen its alliance system with the United States and Japan.

Experts analyzed that TSMC, sandwiched between the United States and China, is taking advantage of this geopolitical crisis. By building factories in the United States and Japan, it can ease and spread the risk of being attacked by China. At the same time, with the support of the United States and Japan, it ensures the future of factories and human resources.

Wafer OEM, down 4% in 2023

In the first quarter of 2023, the demand for wafer foundry processes from mature to advanced will continue to be revised, and the wafer cutting of major IC design plants will spread from the first quarter to the second quarter. TrendForce observes that the current performance of the capacity utilization of the wafer foundry plants from the first quarter to the second quarter is not ideal, and some of the manufacturing processes in the second quarter are even lower than that in the first quarter, and there is no obvious sign of backflow of orders. Looking forward to the second half of the year, even for some products with an earlier inventory correction cycle, there may be order replenishment for the year-end festival stocking, but the global political and economic trend is still the largest variable, and the recovery rate of capacity utilization may not be as fast as expected. Therefore, TrendForce estimates that the output value of wafer foundry will decrease by about 4% annually in 2023, with the recession even more severe in 2019.

It is worth mentioning that geopolitical risks promote the continuous transfer of the supply chain, and IC factories are preparing to reduce the production proportion of Chinese factories. The order transfer effect will gradually ferment in the second half of 2023, and it will become more obvious after 2024. The supply and demand situation of wafer foundry will gradually tend to regional development, leading to differences in the capacity utilization rate of wafer foundry in the second half of the year. In addition to customer inventory level and traditional peak season factors, the capacity recovery situation also depends on the supply chain allocation effect.

The 8-inch order transfer is more obvious, and the 12-inch mature process is more robust than the advanced process

In terms of 8-inch, the demand for consumer terminals such as smart phones, laptops and televisions entered the off-season, and the slow destocking further affected product orders such as consumer PMICs and MOSFETs, resulting in a continuous decline in the capacity utilization rate of major 8-inch wafer foundries in the first quarter of 2023. In the near future, the replenishment of 8-inch wafer factory orders will occur sporadically in the second quarter, mainly due to the demand for special industrial computers, and the conversion of the proportion of production between a few customers to the wafer foundry. The contribution to the overall 8-inch capacity utilization rate is still limited. The capacity utilization rate is similar to that in the first quarter, and there is no obvious sign of recovery.

For the 12-inch advanced manufacturing process, the capacity utilization rate of TSMC in the first half of the year is still not ideal, and the improvement range of 7-nanometer capacity utilization rate in the second half of the year is still limited; 5nm is expected to rise to a healthy level, driven by the stock of new products in the peak season. Samsung's capacity utilization rate of advanced manufacturing processes below 8 nm is at a low level throughout the year, mainly due to the transfer of orders from major customers Qualcomm and NVIDIA.

For the 12-inch mature process, due to the active layout of the relatively stable demand for automotive, industrial control, medical treatment, etc., wafer factories such as TSMC, UMC, and Global Foundries maintained a capacity utilization rate of 75% to 85% in the first half of the year, and the 28-nanometer capacity utilization rate was better than the 55/40-nanometer mature process, while the wafer foundries with a high proportion of consumer products fell more, to about 65% to 75%.

8/12 "capacity utilization rate rebounded in the third quarter

Geopolitical risks are likely to continue in the second half of 2023, and end customers will take the lead in initiating supplier inventory in response to the US government bid and continue to transfer the supply chain. At the same time, IC design factories have gradually shifted some orders to non-Chinese wafer factories for production. The orders are mostly 8-inch products. The order transfer measures have gradually increased since the second half of the year. It is expected that the recovery performance of 8-inch capacity utilization of non-Chinese wafer factories such as Liandian and Vanguard will be slightly better than the average in the second half of the year.

On the whole, after a year-long inventory correction period, some end-consumer products are expected to restart the inventory replenishment momentum to prepare for the festive peak season at the end of the year. TrendForce said that the stock momentum will be driven by a small number of special specification products and urgent orders from the second quarter, and the 8/12 and 12 inch capacity utilization rate will increase significantly from the third quarter. However, considering the overall economic situation is still unclear, the overall increase is probably limited, and it is difficult to return to full load in a short time.

More than 20 new plants in the world have been completed year by year

The medium and long-term supply and demand of wafer foundry will gradually tend to diversified capacity layout in each region. According to TrendForce, in recent years, there are more than 20 new wafer factories planned in the world, including 5 in Taiwan, China, 5 in the United States, 6 in Chinese Mainland, 4 in Europe, Japan, South Korea and Singapore. Geopolitics has promoted the awareness of localized production in various countries and regions, and semiconductor resources have gradually become strategic materials in various countries. In addition to considering the commercial and cost structure, wafer foundries also have government subsidy policies in various countries and regions to meet customers' localized production needs, while maintaining a balance between supply and demand. The diversification of future products and pricing strategies are the key to the operation of wafer foundries.