The utilization of chip production lines for mature technical processes

The utilization of chip production lines for mature technical processes will fall to 50-60%

To assess the profitability of semiconductor component production, conveyor utilization is an important indicator that determines the company’s profit margin and the need for further capacity expansion. At companies that process silicon wafers of the standard size 200 mm, experts say TrendForceWe can expect a decrease in the load in this half-year.

    Image source: Huawei Technologies

Image source: Huawei Technologies

Companies using silicon wafers with a larger standard size of 300 mm work with advanced technological processes, while the fate of companies specializing in wafers with a diameter of 200 mm remains the production of mass-produced and low-cost semiconductor components using more sophisticated lithography . The pandemic has severely tested this sector of the semiconductor industry. Firstly, the demand for laptops and PCs skyrocketed, which required various types of smaller electronic components manufactured by these companies. Then the car manufacturers no longer had enough chips of this class. Until recently, the latter could not stop filling their warehouses “just in case” with the necessary semiconductor components, in excess of the norm set years ago before the pandemic.

According to TrendForce representatives, some market participants have somewhat overdone it in this sense, and therefore in the second half of the year in the segment of services for contract manufacturing of chips with 200 mm silicon wafers there will be a general decrease in conveyor utilization up to 50-60%. From an economic perspective, this level cannot be described as optimal for contract manufacturers. This trend will continue in the first quarter of next year, however, the dynamics of conveyor loading from the second quarter will largely depend on macroeconomic processes and the ability of customers to believe in a recovery in demand for electronics. According to TrendForce experts, the average occupancy rate at the end of the entire year will not exceed 60-70%.

The “pendulum” of stress levels, as TrendForce analysts explain, swings back and forth for several reasons, not just the consequences of the pandemic as such. Firstly, some companies with their own production placed some of their orders externally during the shortage, and are now bundling them on the assembly line again. Secondly, Chinese contract manufacturers are experiencing increasing demand from their compatriots due to the impact of sanctions imposed by the US and its allies. This could increase the funding utilization of Chinese companies such as SMIC or HuaHong Group to an enviable 80-90%, while outside China such a level will remain unattainable for a long time. According to reports, Samsung Electronics will be affected by the trend of Chinese customers to cooperate with domestic contract chipmakers in the 200mm wafer segment. According to TrendForce analysts, the utilization of conveyor belts in this direction will not exceed 50% by the end of next year.

About the author

Dylan Harris

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

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