2025 Price Pressures on Mature Processes; Capacity Up 6%
Recent forecasts from TrendForce suggest that price pressures on mature semiconductor processes will persist into 2025, with an estimated 6% annual capacity growth. Major players in this sector, including UMC, Vanguard International Semiconductor Corporation (VIS), and PSMC, are proactively preparing to meet these challenges. TSMC is also enhancing its mature process offerings, increasing the share of specialized processes to differentiate itself from competitors.
As of October 24, TrendForce's latest survey indicates that visibility for mature process orders remains at about one quarter, with a variable outlook for 2025. The utilization rate for mature processes among the world's top ten foundries is projected to exceed 75% next year.
While the global capacity of the top ten mature process foundries is expected to grow by 6% in 2025, the price trend is likely to be subdued. The market is currently experiencing a polarization in demand, with advanced processes (5nm, 4nm, 3nm) seeing robust demand due to AI server, high-performance computing chip, and new smartphone processor applications, achieving full utilization by the end of 2024. In contrast, mature processes of 28nm and above are only experiencing a moderate recovery, with average utilization in the second half of this year increasing by 5-10 percentage points compared to the first half.
The continued reliance on mature processes for producing essential ICs for various end products, coupled with geopolitical factors affecting supply chains, underscores the importance of regional capacity. This has prompted global expansions in mature processes, with notable plans for capacity increases at TSMC's facilities in Kumamoto, Japan, and mainland China.
TrendForce analysts note that the average utilization rate for mature processes throughout the year is below 80%, and the need for new orders to fill upcoming capacities will keep prices under pressure, making price increases unlikely.
VIS is currently pursuing a cash capital increase and has scheduled an online earnings call for November 5 to provide an updated operational outlook. The company is advancing its first 12-inch facility, alongside ongoing expansions of its 8-inch plants. The total investment for the 12-inch facility is approximately $7.8 billion, with production expected to commence in 2027. Following the successful ramp-up of the first fab, VIS and NXP Semiconductors will consider constructing a second facility.
UMC is seeing the effects of the U.S.-China trade war continue to unfold. While short-term performance in automotive and industrial semiconductors may be weaker, the medium to long-term outlook remains positive. Communication and consumer segments are expected to perform better than in the first half of the year, with UMC's fourth-quarter revenue projected to be similar to the third quarter.
Looking ahead, UMC holds a cautiously optimistic view for 2024, estimating a year-over-year growth in semiconductor output of 4-6%, with foundry services anticipated to grow by 11-13%, while mature processes are expected to remain flat.
Meanwhile, PSMC's CEO, Martin Chu, has commented on a cautious approach from clients regarding overall wafer orders, particularly in the driver IC sector. Despite this, he remains optimistic about PSMC's capabilities to simultaneously produce memory and logic wafers, highlighting ongoing investments in R&D for 2.5D and 3D products that integrate logic chips with memory stacks to meet the AI demands of edge devices.
