Wafer shipments still down, but chipmakers are looking up
AI runs on chips, remember
Despite yet another dip in wafer shipments, major chip shops are predicting a resurgence in the latter half of 2023.
According to SEMI's latest report, wafer shipments slid 10.1 percent in Q2 to 3.3 billion square inches. That's down from the 3.7 billion rolled out this time last year.
The story remains largely unchanged from the past few quarters, as Anna-Riikka Vuorikari-Antikainen, chair of SEMI Silicon Manufacturing Group, noted in the release. "The semiconductor industry continues to work through excess inventory in various market segments, necessitating that fabs operate below full capacity. As a result, silicon wafer shipments are lagging their 2022 peak."
As we've previously reported, wafer shipments enjoyed strong sequential growth over the past few years, spurred on by the post-COVID semiconductor shortage. But after reaching a high of 3.74 billion square inches shipped in Q3 2022, SEMI reports shipments began to decline. Memory vendors like Samsung, SK hynix, and Micron – many of which had been warning of high inventories for several quarters – were among the first and hardest hit.
While still down double digits year over year, the industry association reports shipments inched upward 2 percent compared to Q1, offering the first tentative signs of recovery and a modicum of credibility to chipmakers' claims of a rebound in the second half of 2023.
"Second-quarter wafer shipments held steady quarter on quarter with 300mm showing quarterly growth among all wafer sizes," Vuorikari-Antikainen explained.
We'll need to see a few more quarters of sequential growth before we can say there's a definitive trend, but that's not stopped foundry operators and chip shops from playing off dismal earnings with optimistic forecasts.
Among these voices is SK hynix CFO Kim Woo-Hyun, who claimed the memory segment was finally on the mend. Its savior? Demand for memory-packed AI systems, naturally.
"From the second quarter, the market saw strong demand for high-density, high-performance memory and AI servers," Woo-Hyun said, according to an earnings call transcript for the company's second quarter results. "AI servers use at least 8x more memory compared to traditional servers for faster computational processing and adopt high-performance memory products such as HBM."
But while SK's execs remain positive, the chipmaker still posted a net loss of 2.98 trillion won ($2.34 billion) during Q2 while revenues declined 47 percent year over year to 7.3 trillion won ($5.73 billion).
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TSMC is also eyeing a near-term recovery. Despite a 13.7 percent dip in year-over-year revenues, VP and CFO Wendell Huang last week predicted an upturn in the semiconductor giant's revenues during the third quarter.
While SK hynix is counting on AI adoption to lift its fortunes, TSMC is betting on adoption of its 3nm process tech, which entered production late last year, and which is expected to underpin Apple's next-gen iDevices and M-series silicon.
TSMC is confident enough that it's pushing ahead with major capex investments in fab capacity. This week, it revealed it's building a $2.87 billion chip-on-wafer-on-substrate (CoWoS) advanced packaging facility in northern Taiwan to meet demand for AI chips.
The chip titan also has a pair of fab projects underway in the US, though it recently ran into some trouble with staffing, and in Europe it's said to be in the final stages of negotiations to build a fab in Germany.
Samsung today reported a 95 percent crash in operating profit to ₩600 billon Korean won ($4.7m), in part caused by the collapse in demand for memory chips.
"Global demand is expected to gradually recover in the second half of the year which should lead to an improvement in earnings driven by the component business. However, continued macroeconomic risks could prove to be a challenge in such recovery in demand," the company said.
Intel, which is due to deliver its latest earnings later today, previously offered optimistic outlook for the latter half of the year. But, at least in the short term, things aren't looking great.
Intel advised at the end of Q1 that revenues were likely to fall by at least 18 percent to $12.5 billion in the second quarter. Though that technically would be an improvement from the 30+ percent declines it has seen in recent quarters. ®