Uncertainty in the market and harsh conditions imposed by foundries, sources say IC design companies are facing a dilemma – yqqlm

IC design companies are negotiating with wafer foundries about the film launch time from the end of 2022 to early 2023. Some companies pointed out that although the price pressure of downstream customers is increasing, the production capacity of upstream foundries is still tight.And in addition to the planned price increase next year, the design company is also required to shorten the payment cycle, which doubles the pressure on the latter.

The DIGITIMES report pointed out that during the peak period of the shortage of chip production capacity last year, the biggest difficulty for IC design companies was that they did not know who to find production capacity.Should you place an order cautiously or continue to seize as much capacity as possible.

Although the consumer electronics market continues to be weak in the second half of the year, there are still many factors to be considered in terms of production capacity, including the introduction of new technology products and seizing more market share. At present, there will be an oversupply of related chips in the market such as TVs, mobile phones, and notebook computers. Orders in 2023 will begin to decrease. Since the end of last year, the demand for large-size DDIs has also been weak. Therefore, it is expected that the production capacity of 8-inch related processes will be Released in 2023.

While supply and demand for most mature 12-inch processes remain uncertain, 90nm and 55nm are increasingly used for sensors, high-speed transmission and integrated solutions. Popular chips that are in short supply such as OLED DDI and WiFi 6/6E use 4nm and 28nm processes, and other chips using these processes face a dilemma: if they give up fighting for more capacity, other in-demand chips will quickly grab it. However, in addition to the above two major chips, if the production capacity continues to be retained, it may bring huge inventory pressure.

Not only is it difficult for the industry to determine future demand, but it is also difficult to decide whether the introduction of new high-end products and technologies will be delayed due to the general economic situation, the sources said.

Some IC design companies believe that the demand for some applications has loosened, but the overall semiconductor market supply is still tight, which makes upstream foundries impose more stringent conditions and reduces the space for design companies to flexibly adjust production capacity. Against this backdrop, most industries are likely to revise their product lines in the face of significantly weaker demand, which will also curb the urgency of adding new capacity. However, overall capacity demand continues to grow.

For design companies, ensuring they have enough capacity is just one of the key challenges,In addition, they must be able to flexibly adjust shipments and continue to develop new technologies to maintain revenue growth momentum.

Without production capacity, some design companies with poor anti-risk capabilities may even lose the ability to adjust. And those market leaders who are strengthening the layout of diversified products and increasing shipments in the non-consumer market still have room to make internal adjustments and negotiate with upstream suppliers, which means that they can continue to seize production capacity, and it will be more difficult for small and medium-sized enterprises to Find a balance between grabbing new capacity and maintaining healthy inventory levels.