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© Jakub Jirsak Dreamstime.com Analysis | August 24, 2020

Foundry revenue projected to grow by 14% YoY in 3Q20

Downstream foundry clients are currently exhibiting strong demand due to upcoming year-end shopping festivities in Europe and North America and the National Day long weekend and Singles’ Day sales promotions in China, according to TrendForce’s latest investigations.

The strong momentum from downstream clients has in turn brought about a stable growth in foundries’ capacities and wafer input orders, with total foundry revenue projected to growth by 14% YoY in 3Q20. While TSMC’s 3Q20 revenue benefits from 5nm mass production, GlobalFoundries posts greatest YoY decrease in the top 10 TSMC’s revenue is projected to grow by 21% YoY in 3Q20, with its 7nm process technology contributing to most of the foundry’s revenue performance. More specifically, TSMC is able to maintain maximum capacity utilization rate at its 7nm production lines thanks to strong demand from continued 5G infrastructure build-out and CPU/GPU demand from high-performance computing applications and WFH arrangements. TSMC will begin including revenue from its 5nm process technology into its quarterly revenue calculations in 3Q20. The foundry is currently aiming to have revenue from its 5nm process technology account for 8% of its total yearly revenue. TrendForce thus projects TSMC to derive 16% of its 3Q20 revenue from its 5nm process technology. Samsung has adjusted the wafer input levels for its in-house Exynos APs due to declining sales of its flagship S20 series smartphones. However, wafer input orders from Samsung’s foundry clients in fear of chip shortages managed to galvanize a growth in Samsung’s foundry businesses despite the shortfall in Exynos wafer inputs. As such, Samsung’s foundry business is expected to undergo an increase in quarterly revenue by about 4% in 3Q20. On the other hand, GlobalFoundries registered lower than expected revenue performance in 3Q20, reaching a 3% decrease YoY, due to its sale of 8-inch and 12-inch fabs in 2019 and declining demand for automotive chips. UMC’s price hike drives up its 3Q20 revenue, while PSMC’s 26% YoY growth takes the crown Owing to increased wafer input demand for large-sized panel DDI and PMIC, UMC’s 8-inch capacity is expected to remain in short supply until 2021. By raising prices on some of its foundry services, UMC will likely improve its overall revenue in 3Q20, which is projected to reach a 23% increase YoY. Products manufactured with legacy process technologies (above 14nm, 28nm) account for more than 90% SMIC’s revenue. As SMIC’s 3Q19 revenue was a relatively low base period for comparison, its revenue is expected to increase by 16% YoY in 3Q20. It should be pointed out, however, that after the grace period of chip shipment to Huawei expires on September 15, 2020, SMIC’s 14nm orders may be affected and therefore remain to be seen. Retaining its focus on RF-SOI and SiGe development, TowerJazz’s 8-inch capacity utilization rate is estimated to hover around the 70% mark. As the foundry continues to expand its 12-inch capacity, TowerJazz’s revenue is projected to grow by about 3% YoY in 3Q20. PSMC is continuing to expand its foundry business and see increased wafer input demand for DDI, TDDI, CIS, PMIC, and power discretes (MOSFET and IGBT). By raising its capacity utilization rate and the price of its foundry services, PSMC is likely to register a 26% YoY revenue growth in 3Q20, the highest percentage among the top 10 foundries. While VIS scores revenue growth courtesy of its maximum 8-inch capacity utilization rate, Hua Hong lowers prices in response to impact from the COVID-19 pandemic The addition of its newly acquired Singapore fab has resulted in increased shipment for VIS. Furthermore, VIS’ 8-inch production lines are currently reaching maximum capacity utilization rate due to the considerable growth in large-sized DDI and PMIC demand. The foundry’s revenue growth is projected to reach 21% YoY in 3Q20. On the other hand, Hua Hong’s product mix has traditionally been dominated by consumer electronics, which account for more than 60% of said product mix. In particular, entry-level and mid-range smartphone chips occupy most of this product category. Whereas the pandemic led to subpar performances for these products, Hua Hong has now decided to lower its ASP and raise production capacity in response. The foundry’s revenue is projected to decline by 1% YoY in 3Q20. Thanks to significant increases in CIS and DDI demand, DB HiTek’s production lines are currently at maximum capacity utilization rates. At the moment, the foundry is not ruling out the possibility of a price hike, which is projected to raise its revenue in 3Q20 by a minor 2% YoY. TrendForce indicates that, on the whole, despite the growth in downstream client demand, it remains vital for foundries and related companies to keep a close eye on whether these downstream clients are able to destock their inventories after the massive stock-up effort. Only by paying close attention to industry dynamics can companies deliver appropriate strategies in a timely manner in the foundry market.
RankFoundry3Q20E3Q19YoYM/S
1TSMC11,3509,40021%53.9%
2Samsung3,6653,5314%17.4%
3GlobalFoundries1,4841,524-3%7.0%
4UMC1,4821,21023%7%
5SMIC94881616%4.5%
6TowerJazz3203123%1.5%
7PSC28923026%1.4%
8VIS27622921%1.3%
9Hua Hong236239-1%1.1%
10DB HiTek1911872%0.9%
Top 10 Total20,24117,67814%96.1%
Samsung’s revenues include revenues from its System LSI unit and its foundry businesses GlobalFoundries’ revenue include generated by the chip manufacturing unit that it acquired from IBM PSMC’s revenue includes its foundry revenue only Hua Hong’s revenue includes figures from its publicly disclosed revenue only.
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November 27 2020 3:37 pm V18.13.10-1