Article by: TrendForce
The semiconductor equipment industry is once again faced with the dilemma of extended lead times of up to 18-30 months.
The semiconductor equipment industry is once again faced with the dilemma of extended lead times of up to 18 to 30 months, according to TrendForce. Prior to this latest equipment delivery deadline, the annual growth rate of 12-inch equivalent capacity (including 12-inch and 8-inch) supplied by global foundries in 2022 and 2023 was estimated at 13% and 10%, respectively. Current observations indicate that this delay in semiconductor equipment is having a relatively marginal impact on expansion plans in 2022, with the bulk of the impact arriving in 2023, affecting TSMC, UMC, PSMC, Vanguard, SMIC and GlobalFoundries, and encompassing mature and advanced processes.
Overall expansion plans will be delayed by approximately two to nine months, with annual capacity growth expected to fall to 8% for the year.
The lead time for semiconductor equipment before the pandemic was about three to six months, according to TrendForce. Since 2020, strict pandemic-induced border controls put in place by countries around the world have hampered logistics. However, during the same period, IDMs and foundries benefited from strong terminal demand and actively expanded production. Thus, delivery times for semiconductor equipment have been forced to lengthen to 12-18 months. Driven by the Russian-Ukrainian war, logistical bottlenecks and insufficient production capacity of semiconductor industrial control chips, production of semiconductor equipment will begin to feel the impact of shortages of raw materials and chips by 2022. Excluding EUV lithography equipment with fixed annual output, the delivery time of the remaining machines will be extended to 18-30 months, among which the shortage of DUV lithography equipment is the most serious, followed by CVD/PVD deposition and etching.
It should be mentioned that the Russian-Ukrainian war and rising inflation have affected the acquisition of various raw materials, as well as the continued impact of the pandemic on the workforce, both of which have led to delays in the construction of semiconductor factories. This phenomenon and equipment delivery delays simultaneously affect each foundry’s expansion plans in 2023 and beyond. However, since the start of this year, the boon to the stay-at-home economy has evaporated and demand for consumer electronics such as TVs, smartphones and PCs has continued to weaken, driving inventories high held by terminal brands. According to TrendForce surveys, foundries will still rely on product mix adjustment and reallocation of resources to products still in short supply to keep capacity utilization rates near 95% of full load.
From 2H22 to 2023, strong inflationary pressures could continue to depress global consumer demand. However, on the supply side, the wafer foundry expansion process is affected by factors such as equipment delivery delays and plant construction delays. These delays will cause the annual growth rate of global wafer foundry capacity to decline to 8% in 2023. TrendForce believes that a prolonged expansion process has eliminated some concerns about oversupply in 2023 caused by current conditions. market, characterized by weak consumer demand. Nonetheless, a shortage of some undersupplied materials may continue. At present, it is necessary to rely on the diversified planning of the wafer foundry for each terminal application and each product process to balance the uneven distribution of incompatible material resources.