In 2023, the global foundry industry will face the slowest quarterly growth since Q4 2022. According to market researcher Omdia, as shown in Figure 1, the quarterly growth of the foundry industry in Q1 2023 is expected to be the slowest since Q4 2022. Due to the inventory adjustment, the quarterly growth rate of the foundry industry in Q1 2023 is -13.4%, and roughly speaking, except for special products such as X-Fab from Horse and Hua Hong Semiconductor from China, the quarterly growth rate of the rest of the companies is in a recessionary situation. After the epidemic, the pure foundry industry's revenue continues to slow down and is expected to show single-digit negative growth in Q2 2023 as well. Due to the slowdown in demand for consumer electronics, PC/NB, and many other applications, foundry capacity utilization continued to decline in Q1 2023 and is expected to bottom out in Q2. In the next 1~3 years, foundries in the market will focus on technology differentiation to avoid the high cost of advanced technology development dragging down the overall profitability. The mature process and advanced process will have very different growth scenarios. In the mature process, due to customer product configuration and similar process nodes of the foundry's cost reduction pressure, the impact of weak demand for consumer electronics, etc., it is expected that there will be a double-digit negative revenue growth close to 20% in 2023; in the advanced process, with TSMC 3nm technology in early 2023 to enter mass production, the world's advanced technology will be able to achieve the same level of growth. In terms of advanced manufacturing processes, with TSMC's 3nm technology entering mass production in early 2023, the world's advanced technology will continue to flourish, and revenue growth is expected to be 4~6% in 2023. As TSMC's overall operating costs rise, we cannot rule out seeing price increases in 2024 as demand for advanced processes continues to grow.

Chart 1 Foundry Quarterly Revenue and Growth Rate

Source: Omdia