Thursday, May 9, 2019
Taiwan IC designers are now moving to place additional orders with foundry houses and thicken their inventories lest they should suffer insufficient foundry capacity support in the traditional high season starting the third quarter, according to industry sources.
The move indicates that market demand in the second half of 2019 may pick up at a faster pace than expected as IC designers usually serve as a leading indicator for business prospects thanks to higher flexibility in adapting to market conditions, the sources said.
With better-than-expected results in the low season in first-half 2019, IC designers are seeing bright shipment prospects amid expected spec upgrades for AI and 5G applications and replacement demand for terminal devices in the second half of the year, prompting them to increase foundry orders in advance.
Based on their experiences in receiving orders, foundry houses usually rely first on additional orders from IC design houses to boost their capacity utilization rates, then on outsourcing orders from IDMs to achieve full-capacity operations, and finally see fierce competition among clients for foundry capacity support, resulting in extension in foundry lead time, the sources indicated.
Moreover, tight foundry capacity usually starts with the most advanced and the most mature process nodes. The demand for the former can reflect the real growth momentum for innovative terminal products, applications and technologies and the latter can indicate the prospects for general consumer electronics, the sources continued.
TSMC is expected to see its 7nm capacity utilization rate hit 100% in the third quarter of 2019 and whether the entire semiconductor ecosystem will regain strong growth momentum will depend on when 8-inch foundry plants can resume running at full capacity.
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