The financial crisis is set to continue to depress the foundry industry into Q1 2009. According to one analyst, utilization rates in the foundries are set to drop by a significant amount. Solid State Technologies reports:
Wafer shipments at the world's top two foundries, TSMC and UMC, are set to plunge further than anticipated in 4Q, but the picture for 1Q is even uglier with "historic lows" looming for utilizations, according to an analyst report.
Wafer shipments sunk 30% in 4Q vs. 3Q vs. a historical average of 5%-8% growth, and FBR Research's Mehdi Hosseini says checks indicate they'll keep dropping another 20% in 1Q09, vs. a typical -5% decline, with weak demand seen in "all customers across the board," he writes. Foundry customers are seeing inventories decline, suggesting the sluggish shipments are due to weak end-demand. Look for some eye-popping floors in foundry capacity utilization, he warns -- "reaching 50% and below levels," which will further depress equipment spending.
It is no secret that part of Taiwan's success in the pure play foundry model has been there ability to maintain their high-utilization rates. Declining utilization will definitely affect their competitive advantage over the short term. Silicon foundry's are not cheap to run and any significant decrease in orders and production will greatly impact the cost of production and naturally effect gross margin these companies can expect to earn. This is certainly going to impact their abilities to develop and introduce new technologies into the manufacturing process and may even provide a space for other competitors to gain an edge over these foundries although one should think that the low utilization is spread accross the entire industry and not only affecting TSMC and UMC.
Wafer News: Analyst: Foundries face "historical lows" in utilization
1 comment:
UMC had some really funny corporate speak today. Reporter asks in Chinese, are you laying off workers? No, no layoffs, we're making "precision reductions".
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