The global foundry industry is expected to see its combined revenues return to growth in 2024, but chip demand is still estimated to be influenced by uncertainties in the consumer electronics industry, according to DIGITIMES Research's latest 20-plus page report, covering the foundry industry's latest deployment, next-generation node and technology roadmaps and capacity expansion and revenue data.
The global foundry industry saw its revenues perform brilliantly in 2022, uplifting nearly 30% to break US$140 billion thanks to a chip supply-demand imbalance and the fact that customers are signing long-term agreements (LTA) to secure their supply, but the amount in 2023 is expected to shrink more than 10% on year because of factors including the global economy has continued to weaken, the consumer electronics industry is taking longer to correct its inventory than expected, chip demand remains sluggish, and geopolitical influences stay fierce.
The COVID-19 pandemic seriously disrupted global semiconductor supply and demand. The smartphone, notebook/PC, and automotive supply chains all started competing for foundry capacity and are overbooking or signing LTAs to ensure their supply is secured. However, this also worsened the shortage of foundry capacity and led to continuously rising foundry quotes. As a result, global foundry revenues went up close to 20% in 2020 and maintained over 20% growth for the two years afterward, the report's numbers show.
The European and North American markets' struggling with inflation and the Ukraine-Russia war, the global consumer electronics supply chain's operation in China sustaining the impact of the COVID-19 lockdowns, weakening consumer spending accelerating the pace of the global consumer electronics market to fall into a downturn and pressure from high consumer electronics product inventory at channels had all led to a serious consumer electronics chip demand shrinkage, resulting in vendors' decreasing orders to the upstream foundry industry.
In the meantime, geopolitical tensions also posed concerns for the global foundry industry. The US united Japan and the Netherlands to jointly impose export controls over semiconductor manufacturing equipment and prohibited non-Chinese semiconductor companies from making further investments in China is also creating an impact on foundry orders, technology development, and deployment strategy and this should put strong pressure on the worldwide foundry industry with revenues estimated to see a high single-digit decline on year in 2023.
Apart from the influence of weakening chip demand on the global foundry industry, DIGITIMES Research believes five topics will have a major influence on the global foundry industry development in 2023. First is the EU's attitude on US-China tech war and its effect on the benefits of US's policies on containing China in the semiconductor area.
Second, how the alliance of the US, Japan, and the Netherlands pushing export control of semiconductor manufacturing equipment to China will lead to changes in the global semiconductor industry. Third, geopolitical pressure will continue to be placed on foreign firms' investments in China's semiconductor sector. Fourth, China's non-advanced process technologies are also under the US' control. Last, Japan is set to become a new destination for mid-to-long-term foundry investments with the distributed-production ecosystem becoming the trend.