Global semiconductor industry outlook

Amid the downturn in the semiconductor market, the world's top ten wafer foundries saw a seasonally adjusted decline of 4.7% in output value in the fourth quarter of last year, according to the latest report from research firm TrendForce. This is the first decline in 14 quarters.

Due to the impact of the traditional off-season and the uncertainty of the overall environment, the revenue decline in this quarter may be even greater. Major wafer foundries such as TSMC, Samsung, UMC, GlobalFoundries, and SMIC will face pressure from customers cutting orders, demanding price reductions, and decreasing utilization rates.

TrendForce pointed out that as wafer foundries are located upstream in the semiconductor industry chain, terminal brand customers have started to correct inventory from the second quarter of 2022, but some of the longer correction cycles have led to a decline in output value for the top ten wafer foundries. In the fourth quarter of last year.

TSMC had a market share of 58.5%, up 2.4 percentage points from the previous quarter.

Samsung and GlobalFoundries saw their market share increase by 0.3 and 0.4 percentage points respectively, and the gap between GlobalFoundries and UMC narrowed to 1 percentage point, while the rest showed a downward trend.

Although there was not much change in the market share ranking of wafer foundries in the fourth quarter of last year, second- and third-tier wafer foundries were greatly impacted by customer inventory correction, resulting in TSMC's market share growing against the trend, and Samsung and GlobalFoundries' market share also increased.

However, due to the impact of the traditional off-season and the uncertainty of the overall environment, the revenue decline of the top ten wafer foundries may be even greater.

TSMC estimates that its revenue in this quarter will be about US$16.7 billion to US$17.5 billion, with an average quarterly decline of 14.2% after conversion.

UMC admits that the current order visibility is low, and this quarter is full of multiple challenges. It is expected that the utilization rate will decrease to nearly 70%, and the gross profit margin and wafer shipments will sharply decline in sync, with the gross profit margin potentially falling to nearly a seven-quarter low.

Wafer foundry company, Vanguard International Semiconductor Corporation, expects its single-quarter revenue to fall to NT$7.9 billion to NT$8.3 billion, with an average quarterly decline of about 15%, hitting a three-year low. The utilization rate is expected to drop by 10 percentage points, and the average unit price and shipment volume will also decline.

Powerchip Semiconductor Corporation also stated that its utilization rate may continue to decline to around 60% this quarter, and its quarterly revenue is expected to decline by about 15%.