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China new fabs to join competition for foundry orders in late 2018

Aug. 14, 2018 – 

As most of the 12-inch wafer foundry fabs built in China in 2016-2017 will kick off commercial run in late 2018, China's combined monthly foundry capacities at 12-inch fabs will surge over 40% to near 700,000 pieces in 2018 from 2017, posing new competition pressure to non-China foundry houses including United Microelectronics, Vanguard Semiconductor International, Globalfoundries and Taiwan Semiconductor Manufacturing Company (TSMC), according to industry sources.

However, it remains to be seen as to whether the new 12-inch and 8-inch foundry fabs in China can effectively win patronage from chipmakers and secure viable operations, the sources said. While poor customer relationship will lead to low capacity utilization, such issues as how to improve yield rates and upgrade foundry technologies, high equipment depreciation cost and difficulty in recuriting high-end engineers will also constitute new variables to affect the survival of the new fabs.

In addition, the lingering silicon wafer supply shortfalls and ever-rising quotes will further affect the performance of the new foundry fabs in China. Taiwan's GlobalWafers, the world's number-three wafer maker, has seen its production capacities for 6-, 8-, and 12-inch wafers fully booked through the end of 2020, with new supply contracts for 2021-2025 showing no leeway for downward price adjustment. Japan's Sumco has recently noted that its silicon wafer quotes will pick up 20% on year in 2018 and rise further in 2029, and the company has also started to sign long-term contracts for wafer supply starting 2021, the sources indicated.

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