According to TheElec, Samsung plans to close one of its 8-inch wafer fabs this year to focus on its more profitable 12-inch wafer fabs, which are used to manufacture advanced chips.
TSMC is also reducing the number of 8-inch wafer fabs, so this can be seen as a global trend in the chip industry.
The 8-inch wafer fab S7 will be shut down
Sources indicate that Samsung will close its 8-inch wafer fab, S7, at its Giheung plant in the second half of this year. The plant currently operates three 8-inch wafer fabs: S6, S7, and S8. S6 and S8 will continue to operate.
The closure of S7 means Samsung's monthly 8-inch wafer production capacity will drop from 250,000 wafers to below 200,000 wafers. It is understood that the S7 fab has a monthly capacity of 50,000 wafers. Customer orders have already begun to shift to other fabs. How Samsung plans to utilize the remaining space at S7 is currently unclear.
Sources also indicate that Samsung's 8-inch wafer fabs are currently operating at approximately 70% capacity.
The South Korean tech giant is currently primarily producing key products such as CMOS image sensors and display driver chips at its 12-inch wafer fabs, leading to a decline in the capacity of its 8-inch fabs. Samsung's R&D personnel are also focusing on development work at the 12-inch wafer fabs. The cost of maintaining the 8-inch wafer fabs is increasingly high.
Maintain three 8-inch wafer fabs
Sources say Samsung has fewer customers than its competitors and is producing fewer chips in batches. This suggests the company may see no need to maintain its three 8-inch wafer fabs given the low capacity utilization.
According to TrendForce, global 8-inch wafer fab capacity is expected to decline by 2.4% this year compared to last year. TSMC has been cutting capacity at its 8-inch wafer fabs since last year, with some expected to close completely next year. TrendForce estimates that Samsung has also been cutting capacity at its 8-inch wafer fabs since last year.
Demand remains strong despite declining supply. Demand for power management ICs used in AI servers is robust, keeping 8-inch wafer fab utilization rates stable. TrendForce states that the average utilization rate for global 8-inch wafer fabs was 75% to 80% last year and is expected to rise to 85% to 90% this year. Some companies plan to raise service prices by 5% to 20%.
Samsung's capacity cuts at its 8-inch wafer fabs may benefit its fellow foundry, DB Hitek.
DB Hitek's wafer fabs are currently operating at full capacity, with a severe order backlog, making it unable to accept new orders. The company specializes in analog processes, such as BCD, and can produce various chips in small batches, including power management ICs and display driver ICs. If Samsung and TSMC cut capacity at their 8-inch wafer fabs, their customer orders are likely to flow to DB Hitek.
Some of DB Hitek's competitors include Taiwan's Vanguard International Semiconductor and United Microelectronics Corporation, as well as China's SMIC and Israel's Tower Semiconductor, all of which are in the 8-inch wafer foundry market. SMIC offers services at highly competitive prices and its order volume is steadily increasing. Key Foundry's capacity utilization rate is only 90%, and its profitability is considered low.
Source: Compiled from thelec
