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Contract chipmakers’ profits this year will be much higher than last year
Analyst firm TrendForce has shared another forecast for contract semiconductor manufacturing enterprises. The demand for printing chips in the IV quarter of 2021 remains high, the production capacity is fully loaded, and the lack of advanced capacities even led to an increase in prices for lithographic services and, as a result, to an increase in the total quarterly revenue of the industry.
The top 10 contract manufacturers are expected to have revenues of $ 21.7 billion in Q4 2021, up 18% year-on-year, with TSMC, Samsung and UMC respectively occupying the three largest market shares.
With strong demand for 5G smartphone processors and HPC chips, TSMC has seen continuous revenue growth driven by 7nm process technology. The company is also starting to profit from 5nm norms in Q3 2021, and it is growing steadily. The recovery in demand for 16-45 nm process technology, along with full utilization of advanced capacities, is expected to help TSMC set a new record for quarterly revenue in the 4th quarter of 2021, which will increase by 21% compared to the same period in 2021.
Samsung Expands 5nm Power to Meet Growing Demand for Smartphone SoCs and HPC Chips, and Accelerates Deployment of Ultra-High Ultraviolet (EUV) Lithography. Moreover, the development of SoCs for smartphones made using 4nm process technology and further development of the packaging technology for 2.5D chips will drive Samsung’s profit growth, increasing revenue in Q4 2021 by about 25% compared to last year.
The constant flow of customer orders for chips for various areas such as the Internet of Things has led to the maximum utilization of the capacities of UMC factories for processing 200-mm wafers, which is why the company has increased prices for its 200-mm silicon wafers. UMC’s revenue from 28nm and finer regulations is expected to grow 60% yoy, while total revenue will increase 13%.
At the same time, the fall of the once mighty GlobalFoundries continues: the company sold part of its production capacity, does not increase existing production and is gradually reducing its staff. While this will result in GlobalFoundries’ Q4 revenue declining by 4% compared to 2021, the company is expected to maintain a certain level of production utilization due to the huge demand for RF chips caused by the development of the global 5G infrastructure, and due to increased customer interest in biomedical sensor chips, which are manufactured using special and relatively old technological processes.
Business for the Chinese SMIC is also not sugar. The company has ceased all deliveries on the orders of HiSilicon, a subsidiary of Huawei since September 14. But at the expense of other clients, SMIC will have about two to three quarters of the 14nm capacity utilization. In addition, following the US Department of Commerce’s imposition of sanctions on SMIC, its non-Chinese customers may also withdraw orders. Due to the aforementioned factors, SMIC’s revenue in Q4 is expected to decline by 11% compared to Q3, although it will grow by 15% compared to the same period last year.
TrendForce indicates that overall chip contract industry revenue will continue to grow as demand for certain products is exploding. However, companies still need to pay close attention to the U.S.-China relationship and how the COVID-19 quarantine measures will affect the industry in the future.