According to analysts, the unprecedented feast of chip demand is over. Although driven by the release of Apple's new iPhone in the fall of 2022, the revenue of the top 10 wafer foundries in the world will increase by 6% in the third quarter of 2022, and the total revenue will reach 35.21 billion US dollars, but the situation in the fourth quarter is expected to be unfavorable. optimism. Previously, TrendForce also predicted that the revenue of the world's top 10 wafer foundries will decline in the fourth quarter of 2022 due to weak demand leading to reduced chip sales and increased inventory.

The agency also stated that China's previous zero-clearing policy against the new crown, a weak global economy and high inflation continued to affect global consumer confidence. Therefore, the peak season demand in the second half of 2022 will be mediocre, and the consumption of semiconductor inventories will be slower than expected. This situation has also led to a sharp reduction in foundry orders. The two-year chip demand boom will officially end in the fourth quarter of 2022.

It is worth noting that there is still a problem of tight chip supply in the automotive market. According to a McKinsey report, the auto industry's reliance on 90nm chips will lead to an imbalance between the supply and demand of auto chips for a period of time. But the factors that are unfavorable to chip manufacturers are not necessarily unfavorable to chip purchasers. End-product manufacturers waiting for key components to be shipped will see the semiconductor supply chain that has been tight before starting to loosen.

So far, the grim market forecast has barely affected chipmakers' plans to build new fabs. The passage of the "Chip Act" in the United States has promoted more fabs to invest in the United States. For example, TSMC has added a second fab in Arizona; Samsung has expanded its investment in Texas; Micron announced its investment in New York In addition, the company plans to invest $15 billion in a new factory in Boise, Idaho.
The top 10 wafer foundries account for 90% of the global market share

TSMC, Samsung, UMC, GlobalFoundries, and SMIC lead the growth of the global foundry market in the third quarter of 2022. Calculated in terms of revenue, the total revenue of these five companies accounts for 89.6% of the global foundry market. However, TrendForce also noted that in the third quarter of 2022, downstream customers reduced inventory and new order activity. The specific perance is as follows:

     TSMC is the manufacturer of the main chip for Apple's new iPhone. Due to the strong inventory demand for the new iPhone, TSMC's perance in the third quarter of 2022 has grown significantly, with revenue of US$20.16 billion, an 11.1% increase in revenue from the previous quarter. The factors driving this growth can be attributed to TSMC's chips within and including 7nm process nodes. The revenue of such chips has been rising as a proportion of TSMC's total revenue, reaching 54% in the third quarter of 2022.
     Although Samsung also provides components for the new iPhone series, Samsung's foundry business revenue in the third quarter of 2022 fell slightly by 0.1% from the previous quarter, and due to the sharp weakening of the Korean won, Samsung's market share fell to 15.5%.
     UMC's revenue in the third quarter of 2022 is approximately US$2.48 billion, a quarter-on-quarter increase of 1.3%. UMC's quarterly perance was mainly affected by the boosting factors brought about by the strengthening of the US dollar and new 28nm production capacity.
     GlobalFoundries' quarterly revenue rose 4.1% to about $2.07 billion. This increase was attributed to the quarter-over-quarter increase in wafer shipments, as well as further optimization of wafer ASP (average selling price) and product mix. In addition, GlobalFoundries has maintained a capacity utilization rate of more than 90%.
     SMIC's revenue in the third quarter of 2022 is approximately US$1.91 billion, a slight increase of 0.2% quarter-on-quarter. SMIC's product mix is skewed toward consumer electronics chips, so the company's perance in the third quarter was flat. Nevertheless, SMIC's revenue in the third quarter of 2022 is still climbing, benefiting from the optimization of wafer ASP to offset the impact of the decline in product mix and wafer shipments.

The impact of downstream revision orders on fab foundries

The TrendForce report also said that U.S. export controls have caused SMIC's customers to become more hesitant to increase wafer investment. Against this backdrop, however, SMIC raised its 2022 capex by 32%, to $6.6 billion from the original plan of $5 billion. With this adjustment, SMIC hopes to speed up the progress of equipment procurement for the three new fabs located in Shenzhen, Beijing and Shanghai to minimize the impact of US export controls.

In addition, IC Insights has also revised its 2022 global semiconductor capital expenditure forecast data. The revised data shows that in 2022, global semiconductor capital spending will increase by 19% to $181.7 billion. The revised amount was 24% less than the original forecast of $190.4 billion. Although the agency lowered its capital spending forecast, the revised figures still hit record levels.

According to TrendForce data, looking at the revenue rankings in the third quarter of 2022, the quarterly revenues of Hua Hong Group, which ranks 6th, and Gaota Semiconductor, which ranks 10th, have increased. Quarterly revenue declined.

Among the top 10, Jinghecheng experienced the biggest decline, mainly due to the imbalance between demand and production capacity. Specifically, driver IC suppliers including Novatek, Chichuangbei and Yili Technology have lowered their wafer investment due to increasing inventory pressure, but Jinghe Integration continues to expand production capacity. As a result, Jinghe Integrated’s revenue fell 22.5% quarter-on-quarter to $371 million in the third quarter, and its capacity utilization rate also dropped to 80%-85%.
The fourth quarter of 2022 will see a sharper decline in revenue

Previously, TrendForce predicted that foundry orders for consumer electronics chips would drop sharply in the fourth quarter of 2022. Most of the world's top ten wafer foundries will experience slower growth or lower revenue. However, TSMC's revenue in the fourth quarter of 2022 may be flat quarter-on-quarter.

In the fourth quarter of 2022, in terms of wafer foundry capacity utilization:

     UMC focuses on adjusting the product structure and allocates more production capacity to automotive chips and industrial chips. However, due to the decline in orders for consumer electronics chips, its capacity utilization rate will still drop by 10 percentage points;
     GlobalFoundries was unable to maintain a high capacity utilization rate because it did not obtain enough long-term agreements for 8-inch wafer foundries;
     Declining capacity utilization at Huali Micro's 55nm node, which produces MCUs, Wi-Fi chips and CMOS image sensors for consumer electronics;
     Due to the correction of orders related to CMOS image sensors, DDI and other logic chips, the capacity utilization rate of PSMC’s 8-inch and 12-inch wafers fell to 60%-65% and 70%-75% respectively; the world’s advanced capacity utilization rate dropped to around 70%.