With COVID-19 continuing to impact the global economy in its second year, the semiconductor market continues to experience uneven shortages and tight supply. The general theme for semiconductors in 2021 was shortages in mature process technology nodes. International Data Corporation (IDC) expects tight semiconductor supply to continue through the first half of 2022 as the industry builds up inventory to normal levels. New COVID-19 surges have slowed manufacturing, but the real concern will be labor shortages.
The automotive market continues to be impacted as chips move upstream, limiting automobile manufacturing and driving OEMs to utilize their semiconductor supply for higher value vehicles, which raised the average selling price of vehicles for 2021. “Automotive semiconductors will continue to be a limiting constraint on the automotive market through the first half of 2022, but barring any unforeseen shutdowns or semiconductor manufacturing issues, supply should gradually improve through the second half of the year,” said Nina Turner, research manager with IDC’s Enabling Technologies and Semiconductor team. “Adding in the time to manufacture the vehicle, this means the automotive market will begin to improve towards the end of 2022 and into 2023 if there are no other supply chain shocks.”
One of the key supply constraints for the semiconductor market was in mature process nodes. While the automotive semiconductor market largely depends on these older processes, many other semiconductors are made on these mature manufacturing process technologies at 40nm and above, such as LCD drivers, power management ICs, power, Auto ICs, and microcontrollers. According to the IDC presentation, Semiconductor Manufacturing and Foundry Market Assessment (IDC #US48619221), and the forthcoming report, Semiconductor Manufacturing and Foundry Services Market and Technology Assessment (IDC #US48779222), IDC estimates that 67% of semiconductors were manufactured at mature process nodes in 2021. Utilizing largely depreciated assets, these semiconductors are sold at lower average selling prices (ASPs) compared to leading edge process nodes, defined as 16nm or below. IDC found that while leading edge manufacturing only makes up 15% of the semiconductor wafer volume, revenue from these semiconductors represents 44% of the total. This disparity helps explain the focus of capital spending on the leading edge for the foundry market and the limited investment in mature process technology manufacturing.
While new fabs and investment announcements are a welcome sign for semiconductor manufacturing capacity over the next five years, this new capacity will not come online in 2022. Companies are slowly adding what capacity they can, but capacity improvement will be incremental this year and accelerate in 2023 and beyond.
“The shortages that began early last year have given way to sustainable ASP increases for most semiconductor suppliers this year, except in memory. Demand remains robust across most system markets but inventory levels by the middle of the year and slower economic activity in the second half could be what ultimately eases the constraints,” said Mario Morales, group vice president, Enabling Technologies and Semiconductors at IDC. “OSAT and material shortages are the new challenge for the semiconductor supply chain, which will require investment over the next couple of years, especially as the ongoing trend toward systems in package accelerates.”
Original Source: Business Press
