Since 2022, the demand for semiconductors has shown signs of decline, but the capacity expansion momentum of OEM seems unstoppable. Therefore, some people are worried that there may be overcapacity in the global OEM market in 2024. According to the electronic times, sources said that the new production capacity of OEM and international IDM will be launched successively from 2023, and the output will peak from 2024 to 2025. They warned that if demand grew less than expected, it could lead to overcapacity.
The global chip shortage is triggered by the strong demand for home applications brought about by the epidemic and the continuous trade tension between the United States and China, prompting the United States, China, the European Union and Japan to strengthen the local semiconductor supply chain. The source said that inviting TSMC to establish wafer factories in these areas may be one of the fastest ways to build its own production capacity, adding that it is reported that even Singapore and India are inviting TSMC to establish wafer factories to produce chips with nodes of 7Nm to 28nm.
Due to its important geopolitical position, TSMC has been under great pressure to establish wafer factories in the United States and Japan, despite the high construction expenses there. Its new 5-3nm wafer factory in Arizona, USA, plans to start mass production in 2024, while its 12 inch wafer factory in Kumamoto, Japan is currently under construction in cooperation with Sony and Denso. It plans to commercialize the production of 12-16nm and 22-28nm chips by the end of 2024, with a monthly production capacity of 55000 chips.
However, TSMC found that the construction costs of wafer factories in the United States and Japan increased significantly due to increased global inflation. Sources said that in addition, many EU countries have begun to cooperate with Intel, and IDM headquartered in Japan has also started capacity expansion, which makes TSMC still in the evaluation stage in terms of European customers inviting it to establish manufacturing business in Germany.
In addition to establishing new wafer factories in the United States and Japan and expanding production capacity in manufacturing bases in Chinese Mainland, TSMC is also building wafer factories in Taiwan, China at full speed, including 7-28nm wafer factories in southern Kaohsiung, and 2-3nm wafer factories in southern Taiwan Science and Technology Park, Hsinchu Science and Technology Park and Central Taiwan Science and technology park.
The source said that since the output of new capacity will peak in 2024-2025, TSMC will have to reconsider any new capacity expansion projects other than the capacity expansion projects already under way. They believe that if the company further improves its production capacity in the future, it will not only face the increased risk of idle production capacity, but also face huge pressure on construction and equipment costs.
At the same time, Intel and SMIC respectively shoulder the mission of strengthening the self-sufficiency of semiconductors in the United States and Chinese Mainland, and are striving to expand production capacity. Intel is actively building new wafer factories in the United States and receiving a lot of government subsidies. At the same time, it is expanding production capacity in Europe, cooperating with semiconductor companies in Japan and India, and acquiring the Israeli foundry tower. SMIC's capacity expansion is also in full swing in factories in Shenzhen, Shanghai and Beijing.
The source added that the chip demand of HPC, IOT, automobile, network and application continued to grow strongly, but the total capacity expansion scale of OEM and IDM was larger than expected, which constituted a major variable whether the global manufacturing capacity would still be in shortage in 2023 and beyond. (proofread / Aaron)