Friday, February 21, 2020
The coronavirus outbreak has had an adverse impact on China's foundry industry supply chain, with local foundries particularly 8-inch ones likely to see customer orders shifted to their Taiwan-based counterparts, according to industry sources.
China-based foundries have claimed that production remains normal despite the coronavirus outbreak. However, the epidemic is disrupting the supply chain they involve, with challenges ranging from logistics to staff shortages facing their supply-chain partners, the sources indicated.
SMIC and Huahong, the two major China-based contract chipmakers, also have to slow down their capacity expansions due to the coronavirus outbreak, the sources suggested. With the global 8-inch foundry capacity already being tight, and promising demand for chips requiring 12-inch wafer fabrication services, China-based foundries may see orders shifted away if the outbreak prolongs.
TSMC, UMC and VIS are being identified as the beneficiaries of shifted orders in the wake of epidemic, with their main production bases in Taiwan.
For foundries, expanding 8-inch fab capacity is more difficult than 12-inch one because of shortages of some key equipment.
Taiwan-based VIS, dedicated to providing only 8-inch wafer fabrication services, is capable of ramping up output promptly for robust demand for power semiconductors, fingerprint sensors and other sensor chips for use in 5G related applications, the sources identified.
More fabless firms are already striving for capacity support from VIS, which will see its overall production capacity this year grow over 15% thanks to its acquisition of Globalfoundries' Fab 3E in Singapore. With orders shifted from China, VIS' order visibility may be stretched to over six months, according to the sources.
VIS will hold its quarterly investors meeting on January 21 to provide its outlook this year.
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