The production value in Taiwan’s semiconductor industry this year is expected to soar 31.8 percent from last year to NT$3.6 trillion (US$129 billion), outpacing 10.1 percent growth in the global semiconductor industry, market researcher the Market Intelligence and Consulting Institute said yesterday.

The Taipei-based researcher attributed the strong outlook for the local semiconductor industry to demand for chips used in notebook computers amid a COVID-19 pandemic-induced stay-at-home economy, as well as emerging applications from 5G and artificial intelligence to automotive electronics.

Production in the foundry segment, a pillar of Taiwan’s semiconductor industry, is to expand 20 percent annually to NT$1.9 trillion, driven by higher chip prices as demand continues to outstrip supply, the institute said.

Chipmakers would increase prices, passing on increases in manufacturing costs, it said.

“Semiconductor shortages have become a new global norm,” said Cheng Kai-an, a senior industry analyst at the institute.

“It has become a new business model for foundry companies to ink long-term supply agreements and collect prepayments,” Cheng said in a statement. “Foundry companies are raising prices to reflect higher costs and to boost gross margin. Hiking chip prices will also help avert overbooking, which could lead to supply-demand imbalance.”

For suppliers of DRAM and flash memory chips, prices are to peak in the second half of this year, leaving little room for further upticks, he said.

Taiwan Semiconductor Manufacturing Co (TSMC), the world’s biggest foundry service provider, said that it expects its revenue to expand more than 20 percent this year from last year.

TSMC has reportedly raised prices by 10 to 20 percent for new orders.

Local chip testing and packaging service providers are to increase product value by 25 percent this year from last year, benefiting from strong demand, price increases and supply constraints, the institute said.

On top of that, some local companies are to receive orders transferred from peers, as some plants were forced to halt production due to COVID-19 restrictions in Malaysia, the market researcher said.

Chip designers, led by MediaTek Inc (???), are expected to report growth of 33 percent year-on-year this year to cross the NT$1 trillion mark for the first time, to NT$1.1 trillion, it said.

Demand is rising for a wide range of chips, helping to propel revenue growth, Cheng said.

However, supply of microcontroller units, power management ICs and radio frequency ICs might remain tight due to a capacity squeeze at foundries, he said.

The institute said that it expects a global chip crunch to continue next year and in 2023, as it takes time for chipmakers to ramp up new production and for governments to build local supply chains.

Over the next three years, the compound annual growth rate of production value in Taiwan’s foundry sector is expected to be 10.5 percent, it said.

Chip designers and memorychip makers are expected to grow 7.9 percent and 7.5 percent respectively, while chip testers and packagers would expand 7.2 percent, it said.

By: DocMemory
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