Taiwan's semiconductor industry production value is still expected to enjoy single-digit growth in 2023, with TSMC being a major growth driver, according to semiconductor analysts.
DIGITIMES Research semiconductor analyst Eric Chen said TSMC will be the major force behind the foundry industry's anticipated 6% growth in 2023, while other foundry makers are likely to face price downward adjustment pressure due to weakening demand and sliding utilization rate.
"2023 will be a tough year for the semiconductor industry due to macroeconomic slowdown and weakening end-product demand as consumer electronics companies need time to readjust their inventories," said Chen, whose report on the semiconductor industry outlook is due to be published next week.
The Market Intelligence Center (MIC) of Taiwan's government think tank Institute for Information Industry (III) recently forecast that the entire semiconductor industry in Taiwan is still expected to grow by 1.7% in 2023, despite the downturn in the business cycle across the globe.
MIC predicts the global semiconductor market value to inch up 0.5% in 2023 to US$608.6 billion. Over-supply of memory and inventory adjustment will continue in the first half of 2023, and thus impact the overall performance of the global semiconductor industry.
The semiconductor industry had two consecutive years of extraordinary prosperity due to the chip crunch as a result of supply chain disruptions during the pandemic. Chip makers in Taiwan demonstrated their resilience in times of uncertainty as they optimized their supply chain capacity to meet the over-subscribed demand.
According to the statistics released by the Ministry of Economic Affairs (MOEA), wafer foundry manufacturers in Taiwan grew more than 20% in 2020 and 2021, and their production value in the first seven months of 2022 reached NT$1.4 trillion (US$44.3 billion), up 39.9% year-on-year. MOEA attributed the outstanding growth to the price hikes spurred by strong demand from 5G, Internet of Things (IoT), high-performance computing, and automotive applications for chips made with both mature and advanced processes.
MOEA expects the semiconductor industry to maintain growth for the entire year of 2022, as it anticipates the demand from automotive and HPC applications to offset the decline of that in the consumer electronics sector.
MIC forecasts a 15.8% growth for Taiwan's semiconductor industry output value in 2022, and there is still a gap between supply and demand in automotive MCUs and industrial power management ICs, but the chip crunch has been largely relieved.
MIC warned that semiconductor companies may start to cut capital expenditures due to sliding utilization rates amidst a rapid downturn in demand. The protection effect of the long-term agreement (LTA) will wane in the second half of 2023.
Eric Chen of DIGITIMES Research expects the chip crunch to be solved completely in 2023 and cites macroeconomic uncertainties such as inflation and economic recession as factors that will impact demand for automotive chips, which should be monitored closely.