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Semiconductor-starved industries will see a 9.2 percent increase in chip unit shipments this year, according to IC Insights. Wafer capacity is expected to grow by 8.7 percent in 2022 – an all time high in wafer starts added.
The volatile nature of the IC industry is reflected by large swings in annual wafer starts. Over the past five years, for example, annual wafer start growth rates have ranged from -4.7 percent in 2019 to 19.0 percent growth in 2021, IC Insights reports. The industry’s installed wafer capacity also fluctuates according to market conditions, but the changes are not usually as dramatic as they are for wafer starts. The annual wafer capacity growth rates over the past five years have ranged from 4.0 percent in 2016 to 8.5 percent in 2021.
In 2021, wafer capacity grew 8.5 percent and it is expected to jump 8.7 percent in 2022. The 8.7 percent jump will come primarily from the addition of 10 new 300mm wafer fabs that are scheduled to open this year (three less than were added in 2021). IC Insights predicts the biggest increases in capacity will come from the large new memory fabs of SK Hynix and Winbond as well as the three new fabs (two in Taiwan; one in China) from TSMC, the world’s largest pure-play foundry. Other new 300mm fabs include CR Micro’s fab for power semiconductors; Silan’s fab for power discretes and sensors; TI’s RFAB2 facility for analog devices; ST/Tower’s fab for mixed-signal, power, RF, and foundry; and SMIC’s new fab for foundry operations.
Historically, there was a net loss of wafer capacity in the IC industry in 2002—the first time in history that this happened. Seven years later in 2009, the IC industry registered an even greater net loss of wafer capacity. The record-setting 6 percent decline in total IC industry capacity in 2009 was caused by capital spending cutbacks of 29 percent in 2008 and 40 percent in 2009, as well as by a large amount of ≤200mm wafer capacity that was taken off-line in response to the severe 2008-2009 IC market downturn.
The wafer-capacity decline in 2002 was driven in part by a component glut in 2000-2001. Optimism about the dotcom market drove over-ordering of chips and other electronics. When the bubble burst there were more than $10 billion worth of semiconductor excess in the supply chain that was written down or written off. Chip companies became very conservative about capacity in subsequent years.
There’s always the danger of excess, but IC Insights forecasts chip demand will remain robust despite inflationary pressures, ongoing supply chain issues, and other economic difficulties. Even with 10 new wafer fabs entering service, solid unit demand is expected to help keep the worldwide capacity utilization rate at an elevated level of 93.0 percent in 2022, which is only a slight decline compared to 93.8 percent 2021.
Checks and balances have been added to the supply chain to forestall double- and triple-ordering. The effectiveness of those measures may be tested once the global shortage of semiconductors eases.
