2021 saw ups and downs in the semiconductor market, while the industry's boom continued to rise, with sales hitting a record high. Forecast to 2022, the global semiconductor market size will continue to expand, is expected to exceed $ 600 billion.
Throughout the year, the development of the semiconductor industry, the erratic epidemic, natural disasters, and other multiple factors intertwined, the semiconductor market gradually fell into the dilemma of supply and demand imbalance. The post-epidemic era house economy triggered a short-term surge in demand in the downstream consumer electronics market, and in the medium to long term, the trend of industrial intelligence is irreversible, new energy vehicles, intelligent manufacturing, 5G communications, and other new areas gradually become a new growth driver for semiconductor demand. Downstream market demand is strong to further intensify the imbalance between supply and demand, upstream fabs also responded positively, have increased production capacity investment, lack of core, expansion, the price increase has become the main theme of the semiconductor market in 2021.
Foundry investment and expansion boom
Even if the semiconductor market development trend continues to rise, the chip shortage in the semiconductor industry has still caused many adverse effects. Take the automotive market as an example, AFS data show that due to the shortage of automotive chips, the global production of cars is expected to be reduced by 11.31 million units in 2021. In this case, the industry's attitude is also gradually cautious and conservative, predicting that the chip shortage problem will remain difficult to alleviate in the short term, and will reach a tight balance only in the second half of 2022 at the earliest.
In the production capacity is tight, the limit of strong demand-pull, the fab is actively responding to the market and customer demand, increase capital investment and capacity construction. From the SEMI (Semiconductor Industry International Association) data, 2020 to 2024, the world will build or expand 60 new 12-inch wafer fab, the same period will have 25 8-inch wafer fab into mass production.
From the point of view of equipment spending, SEMI data show that the global front-end fab equipment spending in 2022 is expected to exceed $ 98 billion, an increase of 10% year on year. IC Insights is also expected to surge 34% in global semiconductor capital expenditure in 2021, while foundry spending occupies more than one-third of global semiconductor capital expenditure.
Major foundries continue to run the race to the bottom
In April 2021, TSMC President Wei Zhejia said that TSMC will invest $100 billion in the next three years to expand its wafer manufacturing capacity and research and development of leading technologies. To expand production capacity, TSMC has also previously planned to increase monthly production capacity of 7nm process to 140,000 pieces and 5nm process to 120,000 pieces. in May 2020, TSMC invested $12 billion to build a 12-inch wafer fab in the United States, which will produce 5nm process chips when it goes into production in 2024. Last year, TSMC also announced plans for 28nm in Nanjing and 7nm/28nm expansion in Taiwan, and 28nm in Japan and a new plant in Germany are also being planned and advanced. In addition, TSMC is also actively promoting the construction of 3nm and below fabs to prepare for advanced process mass production plans.
For the expansion of production capacity, Samsung is also not willing to lag behind. Last November, Samsung finally finalized the 5nm process-based 12-inch fab will be located in Texas, the United States, with an investment of about $ 17 billion, is expected to start construction in 2022 and begin production in 2024. On top of 133 trillion won in 2019, Samsung continues to add 38 trillion won in mid-2021 to expand its chip foundry capacity. South Korea's Pyeongtaek 5nm expansion line also starts production in June 2021, with a monthly capacity of 20,000 wafers.
UMC's capital expenditures amount to US$2.3 billion in 2021 and are expected to rise to US$3 billion in 2022, with investments focused on 28nm and 22nm capacity expansions at the P5 and P6 fabs of the Namco Fab 12A. The P6 fab is expected to start construction in 2022 and mass production in 2023.
In addition, Ge-sin, SMIC, Huahong Group, Powerchip, World Advanced, etc. are increasing capacity construction. sEMI statistics report shows that the total capacity of 12-inch fab is expected to grow 48%, the total capacity of 8-inch fab is expected to grow 18%. sEMI President and CEO Ajit Manocha said that if these fabs in 2024 to release capacity, then 2030 semiconductor market size will exceed one trillion dollars.
Lack of chip to alleviate the inflection point will come, be wary of overcapacity
In the global trend of large-scale expansion of fabs, there have been concerns about overcapacity. On the one hand, combined with the historical experience of the global semiconductor market, the growth rate of long-term cyclical fluctuations. And the current challenge of tight capacity in the semiconductor market is mainly a structural imbalance between supply and demand in the short term. On the other hand, the new production capacity from the start to production takes a long time, the fastest capacity release also needs to 2022, the current new production capacity in a short period of time and can not alleviate the chip shortage problem. Overall, around 2023 to 2025, most of the wafer fabs expanded in the past two years will begin production. The industry expects that semiconductor supply and demand will reach a tight balance at the end of 2022, and the chip shortage is expected to be eased in 2023. This means that, after the slowdown in demand, large-scale capacity increases will raise the possibility of excess semiconductor capacity.
