Market Intelligence
December 16, 2020

Wafer Shortage to Continue in Q1 2021 as IC Market Impact Grows

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The 8-inch (200mm) wafer shortage, which was first reported in Q3 2019, continues to disrupt the semiconductor market – and is expected to continue into Q1 2021. 

Currently, 8-inch wafer production capacity is at 99%. There are three primary factors leading to this: (1) increased end-product demand, (2) uneven supply of foundry equipment and (3) the ongoing US-China trade tensions.  

With 5G and automotive industries growing rapidly, so is the IC market and, consequently, the need for wafersAs a result, the 8-inch wafer shortage is causing semiconductor manufacturers to stretch lead times and increase prices. For example, Richtek’s lead times have increased to 26 weeks on a wide range of its semiconductors, and analog semiconductor prices are expected to increase by as much as 20% in 2021.  

Production capacity has been limited by uneven supply of 8-inch foundry equipment. The existing machinery is older, and there’s limited options to refurbish older machinery. In response, wafer manufacturers are looking to new production technology instead of increasing output. The shift in focus to newer equipment is also limiting the production capacity beyond 8-inch wafers, including 6-inch and 12-inch wafers. 

Finally, regional availability is exacerbating the shortage as China-US tension continuesChina has been pushing to grow its local IC brands, thus leading the country’s manufacturers to buy up wafers. However, the US government’s restrictions on China’s biggest chipmaker, SMIC, is making it difficult to gain access to manufacturing equipment – further causing wafer supply hoarding.   

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