With the world's two largest pure-play foundries reporting that their fabs are underused, and with wafer pricing expected to remain weak in 2003, semiconductor buyers might be looking forward to favorable chip prices.
Don't get too comfy. There's going to be a lot of pressure on 0.13-micron capacity--maybe not right away, but there are signs pointing to a possible shortage in this technology before the year is out.
For one thing, the urgency to reach 90nm seems to have subsided for all but a few suppliers whose devices--microprocessors, SoCs, programmable logic--
need the highest levels of performance or integration. Several semiconductor executives speaking at the recent DesignCon 2003 conference said full-scale deployment of the next-generation process technology will be delayed until at least 2005.
Cost, design, and manufacturing challenges associated with the 90nm processing node--coupled with the shift to 300mm wafers--will hold many folks at existing technologies such as 0.13 micron for several years to come.
In fact, after struggling to work out yield problems related to the use of new processing materials, chipmakers are still learning how to use 0.13 micron.
That's partly why so much 0.13-micron capacity sits idle today. Taiwan Semiconductor Manufacturing said the technology represented just 8% of its revenue in the fourth quarter; for rival United Microelectronics, it was 6%.
Some analysts speculate that TSMC has begun to cut prices of 0.13-micron wafers to lure customers away from rival Chinese foundries, which have flooded the market with 0.18-micron capacity.
As customers migrate to 0.13 micron, wafer prices will firm, and as capacity gets tight, prices will rise.
By continuing to throttle back new capacity investments and by taking older fabs offline, Taiwan's foundries have the power to significantly alter the supply and demand picture.
Analysts think leading-edge technologies could experience spot shortages starting this year. Semico Research forecasts a deficit of 0.13-micron capacity by early 2004. And despite a forecasted 25% increase in sub-0.2-micron capacity, industrywide utilization rates in these geometries will rise from 93% in 2002 to 94% in 2003, Semico predicts.
Also, the Semiconductor Industry Association reported that leading-edge utilization has reached near-sellout levels. Any higher and pricing power will swing back to the chipmakers, said SIA president George Scalise in a press conference last week.
If foundries delay capacity additions for another quarter or two, you can bet wafer tags will rise again.
E-mail comments to Crista Souza at email@example.com.