The drop in demand for chips in the second half

The drop in demand for chips in the second half of the year will hit mature technical processes hardest

Hardly any market participant can deny that the demand for components for PCs and inexpensive smartphones has fallen. TrendForce expects this trend to be strongest in the second half of the year in the mature lithography sector, but those using advanced manufacturing processes will also be affected by the demand correction.

    Image source: TSMC

Image source: TSMC

analysts TrendForce work with the degree of utilization of equipment – an indicator reflecting the actual use of production lines in relation to their design capabilities. During periods of peak demand for some types of components, this value exceeded 100%, but now the market is moving towards normalization and even works in a load mode that cannot be considered optimal from an economic point of view. At least in the segment of silicon wafers with a size of 200 mm and technical processes from 110 to 350 nm, the plant utilization rate will drop to 90-95% in the second half of the year and this phenomenon will affect the production of power electronics, image sensors and display drivers.

The loading in the range of 90 to 99% will be inherent to production lines producing a wider range of components for manufacturing processes from 28 to 90 nm inclusive, using silicon wafers with a standard size of 300 mm. In general, the more tied products are to consumer electronics demand, the higher the risk of a fall in core equipment utilization in the second half of the year.

    Image source: TrendForce

Image source: TrendForce

Chip makers using lithographic standards from 4 to 19 nm feel relatively safe because their device duty cycle will be in the optimum range of 95 to 100%. This is made possible in part by a longer production cycle that smoothes out short-term fluctuations in demand. Also, the shift to more advanced lithography will help keep device utilization high, for example, if demand for 7nm products drops slightly in the second half of the year, then it will be 5nm and 4nm products already in high demand because of its novelty.

It is important for any manufacturer to maintain the optimal level of equipment utilization as this can reduce the cost of a production unit. Fixed costs present in any production can be expanded to the maximum number of products. If the equipment is not fully loaded, the unit cost of production increases.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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