According to TrendForce, foundries have maintained a high level of capacity utilisation in 1H20 in spite of disruptions caused by the COVID-19 pandemic.
The node capacities of mainstream process technologies used for DDI production are showing a tight supply situation that is unlikely to be alleviated even in 2H20. There is a high possibility for foundry capacities allocated for DDI production to be compressed by other applications in 2H20, in turn potentially resulting in a price hike for DDIs.
TrendForce’s observations find that, as foundries continue to scale down their 6-inch wafer capacities, client demand has been increasingly focused on 8-inch production capacities. In addition, the surging demand for emerging applications, including 5G applications, PMIC, fingerprint recognition, and CMOS sensors, has led to an increasingly tight supply situation for foundries’ 8-inch production capacity. Since wafer input for these emerging applications is much more profitable than for DDI, foundries generally prioritize the allocation of their limited production capacity for the former instead of the latter. The production capacity allocated to DDI is thus expected to become more and more compressed as a result.
Additionally, as 8-inch production capacities are unlikely to be increased in the future, their tight supply may become a long-term structural issue, further compressing the production capacity of DDI and putting pressure on IC prices to go into an uptrend. In other words, the size of DDI clients’ wafer input orders and the relationship between foundries and DDI clients are both key factors determining whether DDI manufacturers can obtain a consistent supply of wafer capacity at their respective foundries.
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