In Q2 2023, the electronics sector observed some fascinating shifts. As per TrendForce, the sudden spike in orders for TV components, coupled with a burgeoning mobile repair market pushing the demand for TDDI, resulted in a number of urgent orders within the supply chain. While these unexpected orders served as essential buffers for the 2Q capacity and revenue of semiconductor foundries, it’s speculated that this surge might be temporary and unlikely to continue into Q3.
Demand for standard consumer products, including smartphones, PCs, and laptops, remains weak, resulting in a decline in the use of high-end manufacturing processes. Established sectors like the automotive and industrial control sectors are also in the phase of inventory adjustment. As a result, the top 10 global semiconductor foundries saw a decline in revenue by about 1.1% for the quarter, settling at $26.2 billion.
Of note, Nexchip, due to the increased demand for LDDI and TDDI components, rejoined the top ten rankings. Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) experienced a limited downturn of 6.4%, reporting a revenue of $15.66 billion for 2Q. However, TSMC anticipates a positive shift in 3Q23, driven by the latest iPhone production cycle and the introduction of the revolutionary 3nm process. This move is expected to rejuvenate their financial figures.
Samsung’s foundry division witnessed a robust revenue increase in 2Q with $3.23 billion, marking a 17.3% growth from the previous quarter. However, with the economic downturn affecting the demand for Android devices, PCs, and laptops in Q3, their growth might be curtailed. On the other hand, GlobalFoundries experienced a slight revenue increase of 0.2% in Q2, amounting to $1.85 billion. Their strategy of securing long-term contracts in specialised sectors, such as US aerospace, defence, and healthcare, is anticipated to keep them stable in Q3.
United Microelectronics Corp. (UMC) benefitted greatly from emergency TV and Wi-Fi SoC orders, registering a 2.8% revenue growth in 2Q. However, a gloomy economic outlook for Q3 suggests potential setbacks for the firm. The ‘Made in China’ initiative has buoyed the Semiconductor Manufacturing International Corp. (SMIC), resulting in a 6.7% QoQ growth in revenue in 2Q, predominantly driven by domestic chip substitutions.
Interestingly, the quarter also witnessed a reshuffling in the foundries ranked between sixth to tenth places, with Nexchip returning to the tenth position. Its Q2 revenue surged dramatically by 65.4% QoQ, thanks to emergency orders and the launch of products using the 55nm process.
Despite the challenges, projections for Q3 indicate moderate growth, albeit less aggressive than in previous years. Demand for premium chips and high-end HPC AI chips is anticipated to further augment the sector. TrendForce believes that the top ten semiconductor foundries will likely experience a revenue uptick in Q3, followed by consistent growth in subsequent quarters.
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