Foundry market to fall 6.5% in 2023, says IDC

2022 growth was driven by customers’ long-term agreements (LTAs), higher foundry prices, process shrinkage, and plant expansion.

“The top 10 vendors all reported double-digit revenue growth in 2022,” says IDC’s Galen Zeng, “however  due to changes in market conditions, order revisions had led to a sharp drop in the capacity utilisation of foundries in the last three quarters. It is expected that after the supply chain has experienced more than one year of de-inventory, subsequent order planning will turn from being negative to steady and conservative. Coupled with the AI boom, this will slowly drive a recovery in capacity utilisation of 5%–10%.”

TSMC’s market share increased from 53.1% in 2021 to 55.5% in 2022. Driven by the recent gradual increase in orders for 3/4/5nm wafers, TSMC’s market share is expected to pick up further in 2023.

Chinese foundries had a  market share of 8.2% in in 2022, compared with 7.4% in 2021 but from Q2 onwards the supply chain operations grew increasingly cautious and IC designers reduced orders, including drastic cuts in orders for some consumer ICs and cancellations of LTAs.

In 1H23, the purchase intentions for consumer electronics were low, and market demand showed no significant increase.

Although orders for AI- and HPC-related wafers are abundant, some IC designers’ products will also experience de-stocking and have inventory replenishment in 2H23.