IC Insights, a research institute, released a report saying that the volatility of the integrated circuit industry is reflected in the large fluctuations in wafer production each year.
For example, over the past five years, annual growth in wafer starts has ranged from -4.7% in 2019 to 19.0% in 2021. Wafer capacity in the industry also fluctuates with market conditions, but the changes are usually not as dramatic as wafer starts. Annual growth in wafer capacity over the past five years has ranged from 4.0% in 2016 to 8.5% in 2021.
Historically, the IC industry experienced a net loss of wafer capacity in 2002, for the first time in history. Seven years later, in 2009, the IC industry saw an even greater net loss of wafer capacity. The total IC industry capacity fell by a record 6% that year, due to 29% and 40% capital expenditure cuts in 2008 and 2009, as well as a severe downturn in the IC market in 2008-2009, which resulted in a large number of ≤200mm wafer capacity shutdowns.
In 2021, wafer production capacity will increase by 8.5%, and it is expected to increase by 8.7% in 2022, with new wafer starts reaching a record high. According to the report, the integrated circuit industry capacity will increase by 8.7% in 2022, mainly from the planned addition of 10 300mm wafer fabs this year (3 fewer than those added in 2021).
Among them, the largest capacity growth is expected to come from the large new memory factories of SK Hynix and Winbond Electronics, as well as the three new factories of TSMC (two in Taiwan, China, and one in mainland China).
Other new 300mm fabs include China Resources Microelectronics’ power semiconductor fab; Silan Microelectronics’ power discrete and sensor fab; TI’s RFAB2 analog device fab; ST/Tower’s mixed-signal, power, RF, and foundry fabs; and SMIC’s new foundry.
Even with inflationary pressures, ongoing supply chain issues, and other economic difficulties, demand in the IC market remains strong. IC Insights forecasts that IC shipments will grow 9.2% this year. Despite the opening of 10 new fabs, strong demand is expected to help global capacity utilization remain high at 93.0% in 2022, down only slightly from 93.8% in 2021.