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Fabless customers cut back on chip orders affecting Q4 capacity utilization

via:凤凰网     time:2022/8/17 17:01:47     readed:93

Second and third-tier OEM: Fabless customers are reducing orders, affecting Q4 capacity utilization

DIGITIMES, quoting industry sources, said that many second - and third-tier foundry companies are feeling Fabless customers are scaling back orders, which will further drag down their fab capacity utilization in the fourth quarter of 2022.

The rapid slowdown in demand in the PC, mobile phone, TV and other consumer electronics end markets has prompted brand suppliers, distributors and IC design firms to slow down contract progress significantly from around the middle of the second quarter of 2022, sources said.

Branded PC vendors and their contract manufacturers are already stuck with an inventory glut that could take three to four quarters to fall to appropriate levels. Meanwhile, in mobile phones and TVS, lower end-market demand has also led to inventory adjustments across the industry supply chain.

Many pure wafer foundries are still reporting strong sales and profits in the first half of 2022, sources said, as production plans for their fabs start to ease. Utilization rates at Grid Chip, SMIC and Huahong, as well as in Taiwan, are expected to fall further in the fourth quarter as customers reduce or delay construction.

Lux has previously disclosed breaches of LTA (long-term contracts) by its display drive IC customers, who would rather honour punitive payments than see their inventory build up further in the face of sluggish market demand. The foundry expects 5-10% of its capacity to be affected in the third quarter, and its fab capacity utilization will continue to face further downward pressure in the following two quarters.

VIS, another foundries, also said its fab capacity utilization fell in the third quarter. The 8-inch foundry said on its recent earnings call that VIS is working closely with its customers and equipment vendors to address fluctuations in end-market demand.

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

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