Korean Semiconductor Industry Adapts: Equipment Pauses on the Rise

Since the latter half of 2022, the global semiconductor sector has faced a period of economic challenges. Amidst a subdued market demand scenario, reports emerged indicating that prominent semiconductor foundry, TSMC, temporarily halted a portion of its EUV (Extreme Ultraviolet) photolithography equipment due to these circumstances. This scenario has unfolded due to the existing utilization rates, which are currently operating at just half their full capacity. As a result, certain players within South Korea's semiconductor foundry domain also found themselves compelled to undertake similar decisions, involving the temporary suspension of specific photolithography equipment.

As reported by South Korean media, DB Hitek, a notable semiconductor foundry within the nation, currently operates at a capacity utilization rate of 73.83%. This figure stands in stark contrast to the 97.68% rate registered during the equivalent period in the preceding year, showcasing a substantial decline of over 23%. It's worth noting, however, that even this reduced rate is relatively high given the current circumstances. Other industry participants, including Samsung Semiconductor and Key Foundry, find themselves in a more challenged position with even lower utilization rates, leading to their adoption of temporary suspensions for select photolithography equipment.

It's important to clarify that the term "temporary suspension" does not signify a complete cessation of equipment operations. Rather, it denotes a strategic operational approach wherein machinery continues functioning without active product fabrication. This approach minimizes the complexities associated with a complete power-off, which would subsequently demand intricate recalibrations and adjustments during reactivation, a process fraught with unanticipated risks.

In the present landscape, in addition to implementing temporary suspensions to curtail daily operational expenses, South Korean foundries are also aligning with the trend initiated by industry peers such as TSMC, UMC, and GlobalFoundries. This involves the adoption of strategic price adjustments to foster customer interest. Notably, some foundries have revisited pricing structures for established 8-inch wafer fabrication services, resulting in price reductions of up to 10%. In select cases, the reduction magnitude has been even more pronounced, reaching up to 20%. These tactical maneuvers are geared towards enhancing customer acquisition prospects and fortifying overall revenue streams.