There will be an 8.7% jump in IC industry capacity forecast this year, and it comes primarily from the addition of 10 new 300-mm wafer fabs scheduled to open this year.
The news about fresh wafer capacity usually cuts both ways. It brings a wave of excitement with the promise of expanding the semiconductor ecosystem and creating new tech jobs. At the same time, however, it makes people nervous amid the fears of over-capacity.
According to IC Insights’ February 1Q Update to The McClean Report 2022, there is going to be an 8.7% jump in chip industry capacity forecast this year, and it comes primarily from the addition of 10 new 300-mm wafer fabs scheduled to open this year. That includes two new memory fabs of SK Hynix and Winbond as well as the three new fabs of the world’s largest pure-play foundry TSMC, two in Taiwan and one in Nanjing, China.
Figure 1 Fab M16 in Icheon, South Korea will start DRAM production at a 10-nm process. Source: SK Hynix
In 2021, the 300-mm wafer fab count increased by 14, the highest number in a year since 2005, when the same number of fabs opened in a year. Now add 10 new scheduled foundries to open this year, followed by another 13 in 2023 and 10 in 2024, and you can see the big picture. There will be more than 200 300-mm fab lines in operation by 2026, according to the projections made in Knometa’s new Global Wafer Capacity 2022 report.
This unprecedented fab buildup does resonate with the chronic chip shortage and ongoing supply chain issues. However, the semiconductor industry is also known for its cyclical nature and fluctuating demands according to market conditions. Another factor in these worries is that fabs in China are preparing to roar into the semiconductor memory market.
Figure 2 Winbond’s new fab is scheduled to start manufacturing niche DRAMs in September, initially producing 3,500 wafers per month and gradually expanding to 10,000 wafers by December. Source: Winbond
For now, chip demand remains robust. In fact, IC Insights forecasts that semiconductor shipments will increase 9.2% this year, while 10 new wafer fabs are entering service. IC Insights also forecasts that semiconductor demand is expected to help keep the worldwide capacity utilization rate at an elevated level of 93.0% in 2022, which is only a slight decline compared to 93.8% in 2021.
This article was originally published on EDN.
Majeed Ahmad, Editor-in-Chief of EDN and Planet Analog, has covered the electronics design industry for more than two decades.