Taiwan-based OSATs have expressed caution about demand prospects even after the Lunar New Year holiday in 2023, according to industry sources.
Sources said that companies are encouraging employees to use their annual leaves to extend their vacation time this Lunar New Year. Some companies have also implemented a hiring freeze. Sources expect to see a significant drop in output in the first quarter of 2023 after Lunar New Year.
Compared with international companies, Taiwan-based OSATs said the situation in the Taiwanese supply chain is not nearly as severe.
Industry sources pointed out that the Taiwan IC supply chain benefitted from the order surge resulting from the pandemic in 2020-2021 and the growing competition between the US and China. In fact, OSATs worked overtime during the Lunar New Year holiday in the last two years to keep up with demand. Such overtime will not be required in 2023.
OSATs expect supply and demand adjustments in the memory sector to take some time to recover; however, demand for some logic ICs could recover in first-quarter 2023. Most consumer ICs will have to wait until the end of the second quarter to recover, sources added.
Market observers pointed out that logic and memory IC design companies have reduced wafer starts at wafer foundries.
Demand for automotive chips is expected to remain stable.
Sources noted a wave of urgent orders for medium and large-size panels for applications such as TVs, but mobile phone panel driver ICs have yet to recover.
Backend packaging and testing demand from PC and notebook CPU/GPUs has decreased along with falling 7nm utilization rates at wafer fabs. Sources said only packaging and testing demand for some high-end server chips remains stable.
In regard to mobile phone SoCs, OSATs do not expect to see replacement demand orders until second-quarter 2023 at the earliest.
Industry sources said that some OSATs have already reduced costs to protect utilization rates. OSATs added that customers are already negotiating foundry fees for 2023. It is generally expected that the semiconductor supply chain will return to a normal price negotiation range.
Article translated by Eifeh Strom
