The demand for Semiconductor foundry workers began to decline. Some factories have processes that do not reach 100% utilization. This is the opposite of what was set out earlier this year when all pre-orders for 2022 were completed.
With the stagnation of the memory semiconductor market, it is predicted that even the foundry market, which is responsible for the system semiconductor ecosystem, is beginning to suffer. With rising raw material prices for foundry processes, the market will inevitably face declining earnings.
The number of foundry process orders for semiconductor fabless (fabless semiconductor companies that only engage in design) is falling sharply. Some of these companies have reached the point where “six months of pre-orders” cannot last.
A person from the 8-inch foundry industry said: “We can’t guarantee all the six-month pre-orders to ensure the customary foundry process. The reduction in demand next year is inevitable.” Another said, “Some processes are not running at 100% utilization. We are responding to existing customer orders; however, new orders are significantly lower.”
Some representative foundries in South Korea include Samsung Electronics, DB HiTek, and Key Foundry. SK Hynix System IC moved to Wuxi, China, and focused on orders from fabless companies in China. SK Hynix had received orders for at least 6 months to a maximum of 1 year at the beginning of this year. It is experiencing a bottleneck effect where production capacity cannot keep up with demand.
The boom in the foundry industry did not last for half a year. This is because the downstream industries of major system semiconductors such as smartphones and personal computers have been hit by the global recession.
The outlook has deteriorated for foundry finished products (kits) that will feature additional semiconductor products such as power management semiconductors (PMICs), display driver chips (DDIs), and radio frequency (RF) chips. Bottlenecks in automotive semiconductor demand are also being addressed, such as microcontroller units (MCUs), which have always played a key role in a healthy finished vehicle market.
The foundry industry does not expect the drop in demand to be reflected in this year’s earnings because there is sufficient volume to fulfill existing orders. The industry has also benefited from the results of high exchange rates.
From next year, however, a recession is inevitable, as the cost of raw materials required for foundry processes is rising while demand is falling. “Purchasing prices for raw materials such as silicon wafers, various materials, and industrial gases are increasing by 10% quarterly,” an industry source said.