In fact, starting from the second quarter of 2022, many media and institutions began to say that they may face the problem of overcapacity of chips in the future. This phenomenon will appear as early as the third quarter and as late as 2023.
The reason is that the current consumer demand is declining, but chip production capacity is still growing, supply exceeds demand, and current chip prices have dropped, so chip overcapacity is inevitable.
Later, some wafer factories said that due to the high inventory of IC manufacturers, some customers would rather pay high liquidated damages or cancel orders, and then the capacity utilization rate declined.
These all indicate that after more than a year of core shortages, large price increases, and supply shortages, the chip industry has entered a downward cycle. The days of silently making money for wafer factories may be over. Next, everyone may have to prepare. It’s winter.
However, SMIC , the leading chip foundry in mainland China, has shown a completely different attitude. It has always stated that it continues to be optimistic about the foundry business, especially the domestic foundry business, and will continue to expand production.
Yesterday, SMIC issued an announcement saying that it will build a 12-inch wafer fab in Tianjin. plans to build a production capacity of 100,000 pieces per month to produce chips from 28 nanometers to 180 nanometers. The total project investment 7.5 billion US dollars (approximately RMB 51.5 billion).
Obviously, SMIC is not worried about overcapacity at all. For SMIC, insufficient production capacity is a big problem.
Why is SMIC so confident? Let’s look at a set of data first. According to the report of Strategy Analytics, the global 28nm wafer foundry scale in 2021 will be about US$7.2 billion, of which TSMC will take 75%, which is about US$5.4 billion, and SMIC will only take 15.1%. It can be seen that How much room for substitution does SMIC have?
Looking at the familiar process of 28nm and above, it accounts for 77% of the global chip foundry scale this year, and is expected to be about 75% and 76% in the next two years.
Obviously, the 28nm process, or the mature process of 28nm and above, will still be the mainstream chip technology in the future. Mainland China is the world's largest chip market, and the current domestic production rate is only about 30%.
means that there is enough room for domestic substitution. Let alone SMIC spend 50 billion to expand production, even if it spends 500 billion to expand production, it will be consumed by the Chinese market. There is no need to worry about overcapacity, only insufficient production capacity. ah.
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