Chipmaking equipment suppliers haven't had the greatest start to the calendar year, collectively reporting a sales slump in the opening three months of 2024, according to analyst figures.
Counterpoint Research says revenue for the top five wafer fab equipment manufacturers dropped by 9 percent year-on-year in Q1, which it attributed to delayed customer investments in leading-edge semiconductors.
This was offset to some extent by demand for memory, which is going like gangbusters thanks to the current AI fad.
At the same time, however, global industry association SEMI is forecasting production capacity to expand by 6 percent this year "to keep pace with unremitting growth in demand for chips," growing an additional 7 percent in 2025.
So what is happening? The semiconductor market went through a downturn last year, with revenues sinking by 11 percent due to companies having excess inventories and slowing orders caused by high inflation. Many companies cut back on spending, and it could be that the wafer fab equipment makers are still feeling the effects of that.
Dutch giant ASML saw a 25 percent drop in revenue for the three months ended March 31, for example, but predicted during its last earnings call that this would be a "transition year" with a stronger second half than the first.
According to Counterpoint, the other major chipmaking equipment companies had a similar Q1 experience, with revenues for Applied Materials and Lam Research flat quarter-on-quarter and KLA's revenue down 5 percent. The exception was Tokyo Electron, which enjoyed a revenue bounce of 18 percent due to strong demand from DRAM and NAND makers.
Everyone seems to agree that China is where the growth is. The wafer fab equipment makers' revenue from the Middle Kingdom grew 116 percent year-on-year in Q1, Counterpoint says, with strong demand from mid-critical and mature nodes and increased demand for DRAM.
SEMI predicts that Chinese chipmakers will maintain double-digit capacity growth, with a 15 percent rise to 8.85 million wafers per month (wpm) this year, and a further increase to 10.1 million wpm in 2025.
Market watcher TrendForce says that Chinese foundries have experienced a faster recovery in capacity utilization compared to rivals, owing to trends like domestic substitution of foreign-made chips and policies like "China for China." Some process nodes are already operating at full capacity due to high customer demand, it claims.
There is also a consensus that things are likely to get better this year and next across the semiconductor industry.
"Revenue from memory increased significantly in Q1 2024, indicating the start of a turnaround in this segment and a stronger recovery in H2 2024. Despite short-term market uncertainties, we expect the recovery to continue in Q2 and likely pick up in H2," said Counterpoint senior analyst Ashwath Rao.
SEMI foresees South Korea surpassing the five million wpm mark for the first time in 2024; Japan is expected to see three percent year-on-year growth to 4.7 million wpm; the Americas five percent growth to 3.2 million wpm; Europe & Mideast is calculated to go up by four percent to 2.7 million wpm; and Southeast Asia will rise by four percent to 1.8 million wpm.
A high point is expected to be leading-edge process nodes of 5nm and below, which are expected to see a growth in capacity of 13 percent this year, again driven by demand for AI.
"The proliferation of AI processing, from cloud computing to edge devices, is fueling the race to develop high-performance chips and driving a robust expansion of global semiconductor manufacturing capacity," claimed SEMI president and CEO Ajit Manocha.
Looking ahead, chipmakers including Intel, Samsung, and TSMC are poised to start production of 2nm Gate-All-Around (GAA) chips, boosting total leading-edge capacity by 17 percent in 2025, SEMI predicts.
According to TrendForce, TSMC is already seeing full capacity utilization for its 5nm, 4nm, and 3nm nodes due to strong demand from AI applications, new PC platforms, HPC applications, and high-end smartphones.
Given cost pressures from overseas expansion and rising electricity prices, TSMC plans to increase prices for its advanced processes due to strong demand, TrendForce warns.
However, lingering concerns over inflation and weak recovery in buyer demand may result in inconsistent momentum in replenishing inventory. Many chip foundries might offer price incentives to attract customers and boost capacity utilization.
Counterpoint expects full-year revenue for wafer fab equipment makers to grow at four percent compared to 2023, while the increase for 2025 is expected to be in double digits. Meanwhile, SEMI says that the foundry sector is projected to increase capacity by 11 percent in 2024 and 10 percent in 2025, reaching 12.7 million wafers per month by 2026. ®
https://www.theregister.com//2024/06/20/semiconductor_industry_counterpoint/
Created by Tan KW | Aug 27, 2024
Created by Tan KW | Aug 27, 2024
Created by Tan KW | Aug 27, 2024
Created by Tan KW | Aug 27, 2024
Created by Tan KW | Aug 27, 2024
Created by Tan KW | Aug 27, 2024