Shulou(Shulou.com)11/24 Report--

CTOnews.com November 13 news, the demand for contract manufacturers began to decline. The processes in some factories do not reach 100% utilization. This is contrary to what happened when all pre-orders for 2022 were completed at the beginning of this year. As the memory semiconductor market stagnates, it is predicted that even the contract manufacturing market, which is responsible for the ecosystem of system semiconductors, is beginning to be affected.

With the rising prices of raw materials for contract manufacturing processes, the market will inevitably face a decline in earnings.

The number of foundry process orders for semiconductor fabless, a design-only wafer-free semiconductor company, is falling sharply. Some of these companies have reached the point where "six-month advance orders" cannot be sustained. A person from the 8-inch contract manufacturing industry said: "We have not been able to guarantee all six-month pre-orders to ensure the usual contract manufacturing process." a reduction in demand next year is inevitable. Another person said, "some processes are not running at 100% utilization. We are dealing with existing customer orders; however, new orders are significantly reduced."

Some representative contract factories in South Korea include Samsung Electronics, DB HiTek and Key Foundry. SK Hynix Systems IC moved to Wuxi, China, and focused on the orders of fabless in China. CTOnews.com learned that SK Hynix had received orders for at least six months to a maximum of one year at the beginning of this year. It is experiencing the bottleneck effect that production capacity can not keep up with demand.

The prosperity of the contract manufacturing industry did not last for half a year. This is because the downstream industries of semiconductors, major systems such as smartphones and personal computers, have been hit by the global recession. The outlook for contract manufactured products (sets) has deteriorated and will be equipped with additional semiconductor products such as power management semiconductors (PMIC), display driver chips (DDI), and radio frequency (RF) chips. Bottlenecks in demand for automotive semiconductors, such as microcontroller units (MCU), which have been playing a key role in the healthy finished car market, are also being addressed.

The contract manufacturing industry expects that the decline in demand will not be reflected in this year's earnings because there is enough volume to complete existing orders. The industry has also benefited from the results of high exchange rates. From next year, however, a recession is inevitable because the cost of raw materials for contract manufacturing is rising while demand is falling. "the purchase prices of raw materials such as silicon wafers, various materials and industrial gases have increased by 10% every quarter," said an industry official. "

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