Driven crazy by being out of stock?Customers require fabs to compete for production capacity

The 8-inch foundry production capacity is in short supply, and the quotations continue to rise. It is reported that the client has taken the initiative to request the foundry to bid for production capacity, including TSMC, UMC, World, Power semiconductor and other four major Taiwanese manufacturers. Supporting measures allow customers to reserve production capacity through online auctions, and allocate them in the form of “unlimited price increase” and “higher price”.

At the end of last year, the wafer foundry industry appeared in the “first in history” bidding for production capacity, which was initiated by a single manufacturer at that time. The difference this time is that the IC design side has actively proposed capacity bidding requirements to the foundry, and the number of manufacturers offering capacity bidding has increased from one to four, that is, all major 8-inch foundries in Taiwan have participated. , Highlighting that the bidding tide is expanding.

Regarding related news, TSMC and World Advanced Technologies said yesterday (3) that they would not comment on market rumors. UMC and Power Semiconductor Manufacturing Co., Ltd. also did not comment on this, only saying that it will be determined in accordance with market supply and demand. The foundry industry who did not want to be named privately revealed that there is indeed a phenomenon of bidding for capacity, but it is not the manufacturer’s own initiative, but the client wants to have such a mechanism.

As for the price increase, the industry privately disclosed that it is “20%, 30%, or even 50% higher than the current market conditions (the quoted price has been increased).” The bidding capacity is not in the industry’s expectations. As customers actively bid at higher than market conditions, the relevant industry players will make better profits than the company originally expected.

According to industry insiders, the electronics industry uses competitive bidding to grab stocks. The most famous one is the passive component shortage boom from 2017 to 2018. At that time, many manufacturers were unable to meet the needs of all customers. The buyer bids for the source of material, and the higher bidder wins. The expansion of the 8-inch foundry capacity bidding wave still requires the client to actively request it, highlighting that this wave of capacity supply is severely tight, and the fab is simply “unsatisfied”, and only then will the customer come forward to “own Joe”.

It is understood that the IC design houses participating in the bidding cover various fields such as PC, consumer electronics, power management, communications, and Netcom. Under the requirements of fairness from the customer base, Waichuan adopts an online auction method to open up production capacity to allow downstream customers to make reservations. Some car customers have also joined the auction.

With so many customers competing for bids, there is no limit to the amount of bid increase, and the “highest price will win.” In particular, recently 8-inch wafer foundries have actively used a de-bottlenecking method to gradually increase the production capacity of about 1,000 pieces in batches. As soon as these new capacities are opened, it is rumored that major automotive electronics manufacturers voluntarily increase their prices. Let the potential increase in quotations have more room for imagination.

Supply chain analysis shows that the current purchasing atmosphere for automotive electronics is different from the past. Last year, the epidemic led to a significant reduction in automotive electronics chip factory inventories, and there were also suspension strikes, which led to supply chain chaos at the beginning of this year. Nowadays, many automotive integrated components ( IDM) In order to solve the problem in the second half of the second quarter, factories are more willing to participate in bidding to obtain inventory in addition to existing purchases.

 

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