The semiconductor equipment industry is once again facing the dilemma of extended lead times up to 18-30 months, according to TrendForce. Before this latest equipment lead time delay, the annual growth rate of 12-inch equivalent (including 12-inch and 8-inch) capacity supplied by global foundries in 2022 and 2023 was estimated to be 13% and 10%, respectively. Current observations indicate that this delay of semiconductor equipment has a relatively marginal impact on expansion plans in 2022 with the bulk of repercussions arriving in 2023, affecting TSMC, UMC, PSMC, Vanguard, SMIC, and GlobalFoundries, and encompassing mature and advanced processes.

Overall expansion plans will be delayed for approximately two to nine months, with annual capacity growth expected to fall to 8% for the year.

he lead time of semiconductor equipment prior to the pandemic was approximately three to six months, according to TrendForce. Since 2020, strict pandemic induced border controls implemented by countries worldwide have impeded logistics. However, during the same period, IDMs and foundries benefited from strong terminal demand and actively expanded production. Thus, lead times on semiconductor equipment were obliged to lengthen to 12-18 months. Induced by the Russian-Ukrainian war, logistic gridlock, and insufficient production capacity of semiconductor industrial control chips, production of semiconductor equipment will begin feeling the impact of raw material and chip shortages by 2022. Excluding EUV lithography equipment with a fixed annual output, the lead time of remaining machinery will be extended to 18-30 months, among which the shortage of DUV lithography equipment is the most serious, followed by CVD/PVD deposition and etching.

It is worth mentioning that the Russian-Ukrainian war and rising inflation have affected the acquisition of various raw materials, as well as the continuing impact of the pandemic on manpower, both of which have led to delays in semiconductor fab construction. This phenomenon and equipment delivery delays simultaneously affect each foundry’s expansion plans in 2023 and beyond. However, since the beginning of this year, the boon of the stay-at-home economy has evaporated and the demand for consumer electronic products such as TVs, smartphones, and PCs has continued weaken, resulting in high inventory held by terminal brands. According to TrendForce investigations, foundries will still rely on product mix adjustment and the reallocation of resources to products still in short supply to maintain capacity utilization rates at close to 95% of full load.

From 2H22 to 2023, high inflationary pressure may continue to depress global consumer demand. However, from the supply side, the process of wafer foundry expansion is affected by factors such as equipment delivery delays and plant construction delays. These delays will cause the annual growth rate of global wafer foundry capacity to shrink to 8% in 2023. TrendForce believes a prolonged expansion process has eliminated some concerns regarding oversupply in 2023 brought about by the current market conditions categorized by weak consumer demand. Nevertheless, a shortage of some undersupplied materials may continue. At this time, it is necessary to rely on the diversified planning of the wafer foundry for each terminal application and each product process to balance uneven distribution of mismatched material resources.

By: DocMemory
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