Since the second half of last year, worldwide capacity of 8-inch wafer foundries has been booming. It’ s reported that TSMC, UMC, SMIC, Hua Hong semiconductor, etc. are all experiencing a tight 8-inch capacity. In addition to accelerating the expansion of 8-inch capacity of some major international foundries, this situation has also led to increasing penetration of China mainland’s foundry market.

Rising in price but short of capacity

Driven by the terminal market demand of IoT, automotive electronics, etc., the main international 8-inch foundries are now in full-load condition. It’s reported that TSMC, VIS and SMIC have all been in tight capacity.

In terms of 8-inch capacity, it continues the trend of last year's supply shortage in the first half of 2018. Meanwhile, the rising price makes the 8-inch foundries’ revenue pretty good. The forecast revenue of VIS and Hua Hong in the first half of 2018 is 15.1% and 13.5% respectively. Benefiting from the industrial and automotive market, X-Fab rises 4.6%.

There are various factors causing this situation. In recent years, the IoT market has been gradually mature. Many IC design manufacturers who develop the IoT related products mostly adopt the 8-inch production line for the consideration of process and cost. Emerald Greig, the executive vice-president of Surplus Global in American and Europe, once told the media that the utilization rate of 8-inch in the first quarter of 2018 was likely to remain unchanged. “The utilization rate of 8-inch foundry will continue to be above 90%”, Emerald Greig said.

The declined production of worldwide 8-inch foundry is another factor. With strong demand from customers, 8-inch foundry are all full-loaded and the wafers are in short supply, causing the manufacturing cost rising. However, with the increasing demand for 8-inch foundry, the production of wafers decline which lead to the shortage of capacity.  

Large-scale foundries speed up China’s market

Driven by market demand, the foundries refocus on 8-inch production lines and start to increase capacity. The Chinese mainland market has become a key location for new capacity.

SK hynix has announced a joint venture with Wuxi industrial development corporation, an investment company under the Wuxi municipal government, to build an 8-inch wafer foundry. It’s expected to start in the second half of this year, complete in the second half of 2019 and officially start production in 2020. The new factory will mainly produce analog semiconductors (sensors, power management chips, etc.).SK hynix also plans to move production equipment from its Qingzhou M8 fab to the Wuxi joint venture fab in batches by the end of 2021.

It is clearly aimed at attracting customers outside South Korea. Last year, SK hynix made a major adjustment to its foundry business and set up its subsidiary SK hynix System IC. SK hynix has also said it would accelerate expansion of foundry business with a strategy of "manufacturing in China and research and development in Korea".

Samsung electronics is also strengthening up its 8-inch foundry performance. Recently, Samsung electronics has announced that it will begin to offer mature 8-inch foundry technology solutions and provide MPW wafer service to small and medium sized enterprises. Its 8-inch technology solutions are mainly in the fields of eFlash, display driver IC, fingerprint sensor, RF/IoT, etc." "Samsung can offer one-stop services from design to production, supporting and testing, as well as a flexible cooperation model to help small and medium sized enterprises achieve greater synergies." a relevant personage of business division of Samsung semiconductor says.

In addition, the impact of Samsung entering China's 8-inch mature market through MPW service cannot be ignored. Dakang Mo suggests that " capacity cannot meet needs of orders " will become the development trend of China’s foundry market. "We have limited orders before, which might have cooperation with SMIC or Hua Hong. But now, the entry of Samsung will aggravate the situation of “capacity cannot meet needs of orders” he said.

In recent, UMC has planned to integrate its subsidiary HeJian Technology Co.,Ltd. to list on the Shanghai stock exchange. Part of the funding will be used to expand the capacity of an 8-inch wafer foundry owned by HeJian Technology Co.,Ltd.

Develop special process to complement with 12-inch

Facing the layout of international foundries, domestic foundries are also speeding up the construction of 8-inch production line.

Recently, SMIC Tianjin Fab held the arrival ceremony of the first equipment of P2 Full Flow expansion project, indicating that the expansion work of SMIC Tianjin Fab has entered the phase of move-in. On October 18, 2016, SMIC officially launched SMIC Tianjin capacity expansion project, which was expected to invest 1.5 billion US dollars. After full production, adding to the existing fabs, its capacity will reach 150 thousand pieces every month. Dakang Mo pointed that we should pay more attention to the construction of 8-inch production line as we develop semiconductor manufacturing.

In recent years, domestic foundries have planned to build 12- inch fabs. However, as the IoT becomes the main force to drive the growth of the integrated circuit industry, demand for fragmentation and differentiation is likely to become a mainstream. The construction of a reasonable and orderly wafer manufacturing system in China is of great importance to the relocation of 8-inch foundries.

Thus, how to solve the situation of 8-inch foundry currently?

Xu Wei, the executive vice-president of HHGrace, said that when compared to the advantage of 12-inch advanced technology nodes, the 8-inch has its limitations, such as technology nodes to 90 nanometers end. Therefore, the 8-inch has to take a path of differentiated competition. However, the success of differentiated competition is to develop special process, that is, to develop special technology such as high temperature, high pressure and MEMS based on the general process platform and customer demand at the technical node which is suitable for the 8-inch production line.

Additionally, the chips used in automotive electronics and the IoT, including advanced auxiliary driving system and sensor, vehicle current control IC, Internet of things MCU, etc., have been largely put into production in 8-inch foundries.

Source statement: The data here is from TRI, and article is from Trendforce and Chen Bingxin from China Electronic News. As we reproduce your data and article, you can contact us if you do not want it to appear on this site, and we will remove it.

Translate by: Jia Liu