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© On Semiconductor - for illustrative purposes Analysis | October 07, 2021

When will this chip squeeze end? In 2H22 says TrendForce

A continued high demand and not enough capacity has seen the continuation of a very persistent chip shortage. But the question is, when can we expect this to end? Well, market intelligence provider TrendForce says it wont happen until the second half of 2022.

As TrendForce points out in a recent blogpost, the chip shortage entails a shortage of production capacity for not only 12-inch wafers fabricated with mature process technologies but also 8-inch wafers in particular. In reality the shortage of 8-inch wafer production capacity began to simmer in 2H19 already, and did so due to structural changes in the semiconductor industry, with 5G smartphones and power management IC's used in new energy vehicles as two examples of such demand. At the same time, the consumption of semiconductor production capacity has also increased multiplicatively in recent years as a result of the aforementioned structural changes; And TrendForce expects demand for semiconductor capacity from emerging applications to continue rising in the coming years. The shortage has led to foundries such as TSMC, UMC and SMIC increasing their investments in mature process technologies. TrendForce expects the industry’s total 8-inch wafer capacity to grow at a 3-5% CAGR from 2019 to 2023, while 12-inch wafer capacity is expected to grow at an 11-13% CAGR across the same period. "It should be pointed out that production capacities allocated to the 0.18-0.11µm process nodes (for 8-inch wafer fabrication) and 55nm-12nm nodes (for 12-inch wafer fabrication) represent the most severe shortage among all process nodes. Hence, certain foundries are expected to gradually install additional production capacities for mature process technologies in 2H22-1H23. These installations will likely help address the ongoing chip shortage," TrendForce writes in the blog post. In addition, several foundries are focusing on expanding their 28nm manufacturing capacity, primarily because transistor architecture below the 20nm node requires a transition to FinFET architecture, which is relatively costly. And as TrendForce states, the 28nm node represents the sweet spot in terms of cost/benefit and is widely used for manufacturing such mainstream products as notebook Wi-Fi chips, smartphone OLED driver ICs, automotive MCUs, and image signal processors. Also, chips used for IoT applications, including smart home appliances and set-top boxes, as well as other products currently manufactured at the 40nm node will likely be migrated to 28nm manufacturing, meaning the demand for 28nm capacity will continue to grow going forward.
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October 14 2021 5:14 pm V18.25.1-2