By Kate Yuan

(JW Insights) Oct 16 -- The 8-inch utilization rate of China’s leading foundry HHGrace could see a stellar rebound in 2024, reaching 80–90%, thanks to proactive pricing approaches by the Chinese foundry in China’s push for domestic IC substitution and production, according to a report by research firm TrendForce.

TrendForce research indicates that in the first half of 2023 HHGrace benefited from sporadic inventory restocking orders for Driver ICs in the second quarter.

However, for foundry giants Samsung and TSMC, the demands for their foundry services will go down in the second half of the year. In the case of Samsung, its 8-inch production capacity utilization will dip to 50–60%.

Heading into 2024, with the prevailing economic turbulence, the overall semiconductor foundry capacity utilization rate will face challenges in recovery. The 8-inch capacity utilization for 1Q24 is poised to mirror—or potentially dip below—4Q23 figures, revealing a glaring lack of recovery indicators.

However, starting from 2Q24, TrendForce posits that while clarity on end sales remains murky due to overarching economic risks, inventory levels are expected to wane, returning to a healthier equilibrium. The average annual utilization rate for 8-inch wafers in 2024 is pegged around 60–70%.

TSMC grapples with PMIC order pullbacks, predicting an expected drop in 8-inch utilization to below 60% from 4Q23 to 1Q24. UMC and PSMC, in the same span, are gearing up to maintain levels above 50%.

Furthermore, even traditionally resilient Japanese and European IDMs commenced their inventory recalibration in 3Q23, potentially further stalling the recovery timeline for the 8-inch capacity utilization rate.

Samsung has prioritized its 8-inch production for large-sized Driver ICs, CIS, and smartphone PMICs. However, the persistent softness in consumer demand has prompted their clientele toward a more guarded-order strategy. Samsung’s 8-inch utilization rate has languished in 2H23, with expectations set at approximately 50% throughout 2024, according to TrendForce.