Semiconductor-focused market research company TrendForce has published an interesting report featuring observations about a "wave of order cancellations" facing chip foundries. The spectre of recession has been looming for some months, so this isn't a great surprise, but TrendForce shares some information about the actual chip foundry cancellations it is seeing now, and what it expects to see happen as we journey to the New Year.
So far this year, chip foundries have managed cancellations by adjusting and reallocating their output, says the source. The first wave of cancellations largely affected semiconductor products such as large-size Driver IC and TDDI (touch screen controllers), but that allowed reallocation of resources to ease shortages of other components. More recently cancellations have begun to roll in for PMIC (Power Management IC), CIS (CMOS Image Sensor), certain MCU (Micro Control Unit) and SoC (System on Chip) orders. Some of these were previously in short supply.
So, foundries previously managed to keep facilities running at full utilization through smartly managing its output. Now, as the option to pivot to products in short supply ends, they are starting to feel the impact, and cancellations have continued to accelerate.
No Evidence of PC CPU and GPU Order Cancellations
TrendForce predicts the wave of cancellations could hit the PC market in H2, warning that "not even the advanced 7/6nm processes are immune" to these order cancellations.
Specifically, with regard to foundries advanced processes, like 7/6nm, TrendForce reckons we will only see a marginal decline in capacity utilization. Such production lines will run at 95~99% capacity in H2 this year, it reckons. Product mix reallocation will help stem losses and maintain capacity utilization.
For the most advanced processes, TrendForce still sees a positive outlook. It reports that "5/4nm processes will remain near full load, driven by several new products."
If we weigh up the above, it isn't too worrisome for PC enthusiasts looking forward to the latest and greatest new components in H2 2022. Yes, some foundries might be running lines that are underutilized, but it seems like the most advanced processes still have full order books.
The above H2 2022 predictions give us hope that new CPU and GPU orders aren't being scaled back at this time, for example. With the crypto crash there have been worries about the likes of AMD and Nvidia cutting next gen GPU orders, as they are expecting fewer buyers, and perhaps lower average selling prices. But with TrendForce still seeing the most advanced processes still fully booked, there is no evidence of Radeon RX 7000 GPU family, of Ryzen 7000 CPU family, or of GeForce RTX 40 GPU family production cuts.