Is a Correction on the Horizon for Chinese Semiconductors?
Restocking demand for semiconductor logic is lessening substantially. While production of 300mm and 200mm wafers is still running at full capacity, it seems to have eased somewhat. Foundries have begun to change their outlook for prices, which were all bullish last year.
Like 2021, there is still a gap between actual demand and semiconductor procurement in 2022. Chinese smartphone makers have moved quickly to lower their 2022 production plans, while PC makers have also reduced their year-over-year growth plans, owing to weaker demand for low-end PCs. Data centers in China have also revised their investment plans across the board. Customers are hesitating to adopt 3nm chips owing to excessive foundry pricing. Because of quality issues at a prominent manufacturer, plant shutdowns may drive only modest price hikes.
Foundries have also trimmed their outlook for inventory demand. Production of smartphone CMOS Image Sensors (CIS) and CIS-bonded logic is being scaled back as Chinese smartphone makers reduce output. Delays for critical new CPUs could delay the ramp-up in server DDR5 demand to 2023.
Nevertheless, few signs of a similar correction in Application Processor demand have been observed. 3D NAND, memory on logic stacking is set for mass production from 2024. On the technology front, introducing technology for stacking NAND memory cells atop peripheral logic could boost wafer demand. This shift would increase demand for wafers for use with peripheral logic, and Chinese DRAM investment plans include new fabrication sites in Beijing and Chengdu.
