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Home page > News> Multiple foundries: Fabless customers scaling back chip orders

Multiple foundries: Fabless customers scaling back chip orders

Published : 2022-08-17 19:45 | Views : 122

According to industry sources cited by DIGITIMES, many second- and third-tier foundries are sensing a scaling back of orders from Fabless customers, which will further drag down their fab capacity utilization in the fourth quarter of 2022.


The rapid slowdown in demand for PCs, mobile phones, TVs and other consumer electronics end markets has prompted branded suppliers, distributors and IC design houses to significantly slow down their contract progress from around the middle of the second quarter of 2022, the sources said.

Branded PC suppliers and their contract manufacturers are already struggling with excess inventory, which could take three to four quarters to come down to appropriate levels. Meanwhile, in the mobile phone and TV sectors, declining end market demand has also led to inventory adjustments across the industry supply chain.


Many pure-play foundries are still reporting strong sales and profit performance in the first half of 2022, and their fab production plans are starting to ease, sources said. Lattice, SMIC and Hua Hong Semiconductor, as well as Taiwan's LSC utilisation in China, are expected to fall further in the fourth quarter as customers reduce or delay start-ups.


LSC previously disclosed LTA (Long Term Agreement) violations by its display driver IC customers who preferred to honour punitive payments rather than see their inventories grow further amidst low market demand. The foundry expects that 5-10% of its capacity will be affected in the third quarter and that its fab capacity utilisation will continue to be under pressure to fall further in the next two quarters.


Another foundry, VIS, has also reported lower fab capacity utilisation in the third quarter. In its recent earnings call, the 8-inch foundry said that VIS is working closely with its customers and equipment suppliers to address fluctuations in end market demand.


On the other hand, both TSMC and UMC expect their fabs to remain fully utilised in the third quarter.


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