While the ongoing chip shortage is expected to continue into 2022, it doesn’t appear to be impacting foundries. In fact, as the shortage has led to various foundries raising their quotes and with more capacity expected to come online, foundry revenue will likely reach $117.7 billion next year, a historic high, according to new research from TrendForce
This year, foundries are expected to rise in revenues by 20% year-over-year among the top 10 foundries, surpassing $100 billion. In 2022, growth will continue at a staggering pace at 13.3% year-over-year as these companies kick off production with added capacities in the second half of the year to combat the ongoing chip shortage.
Capital expenditure among the top 10 foundries surpassed $50 billion in 2021, a 43% year-over-year increase as new fab construction and equipment grew as these foundries looked to add capacity to meet the chip shortage challenge. CAPEX is expected to further grow another 15% in 2022 with another $50 billion to $60 billion spent.
With TSMC building fabs in Japan and the U.S., TrendForce said total foundry CAPEX may likely increase further next year.
Supply chain strained
TrendForce said that while the chip shortage is showing signs of easing, certain segments are still constrained. These include consumer electronics, automotive electronics and most connected digital appliances.
Most of the easing of the supply chain is coming in the 40 nm and 28 nm nodes, but production capacity is tightening for 8 inch wafers. This is due partly to a rise in 5G smartphones and electric vehicles, where power management ICs (PMICs) are in increasing demand. PMICs take up the available production capacity of 8 inch wafers and wafer production lines that deploy 0.18 micron nodes and are now expected to operate at fully loaded capacity to the end of 2022. This means the capacity constraints for 8 inch wafers is not expected to wane anytime soon.
Currently, there are only three companies that have access to this advanced process technology: TSMC, Samsung and GlobalFoundries. The reasons for this lies in the costs associated with R&D and capacity expansions that have become higher.
Of these three companies, GF is the only company to conduct marginal capacity expansion for its 1Xnm node in 2022. TSMC and Samsung have no current plans to raise 1Xnm production capacity next year, TrendForce said.
The chips made with 1Xnm nodes include 4G system-on-chips, 5G RF transceivers, Wi-Fi SoCs, TV SoCs, chips for Wi-Fi routers and field programmable gate arrays (FPGAs) and ASICs. With 5G smartphones on the rise, 5G RF transceivers will take up a massive portion of the overall 1Xnm production capacity. Because of this, wafer capacity allocated to other products will be limited at this node.
Learn more about TrendForce’s findings with it Semiconductor Research.