Dagang NeXchange Bhd's (Dnex) subsidiary SilTerra Malaysia Sdn Bhd is investing RM645 million on an expansion plan that will increase its annual capacity by 20 percent. SilTerra is a 200mm semiconductor wafer foundry.

200mm foundry capacity is fully booked in the first half of 2022, according to Gartner. Beyond that, demand for 200mm foundry capacity will continue to outstrip supply.

During Covid-19, many countries implemented various measures to mitigate the outbreak, such as stay-at-home orders. Many began to work at home or attend school remotely, fueling a buying spree for new PCs, TVs, smartphones, and cars. Demand spiked and caused a wave of chip shortages across several markets.

The supply-demand situation will return to relative normalcy by mid-2022, except for some automotive chips. By mid-2022, though, many chipmakers should have enough 300mm fab capacity to meet demand. But 200mm is a different story.

Starting in the 2000s, many chipmakers migrated from 200mm to 300mm fabs. During this period, 200mm fabs were still in use. But 200mm was a forgotten market until 2015, when the industry saw a surge in demand for chips based on more mature processes. Suddenly, 200mm fab utilization rates at the foundries were hovering at 100%. Capacity shortages appeared. From 2016 to 2021, 200mm capacity was tight. 200mm foundries have been operating at near 100% capacity.

Building new 200mm fabs is an obvious solution. Today, several companies are building new 200mm fabs. In total, the industry has increased 200mm fab capacity by over 300,000 wafers per month (wpm) in 2021, up 5% over 2020.

However, that’s not nearly enough capacity to meet demand. Why is the capacity increased at such a low pace?

The cost of a new 200mm fab ranges anywhere from $450 million for a MEMS facility to $1.3 billion for a power semi plant.

Lack of supplier

Even if you build a new 200mm capacity, chipmakers will run into another problem. It’s difficult to find new 200mm equipment in the marketplace as equipment makers had shifted their focus to 300mm fabs.

In short, supply shortage for 200mm wafer will persist and the new supply is not coming in fast enough. This will bring to a huge demand for the current 200mm foundry. Besides providing a higher average selling price for Silterra, increasing its revenue, the increased utilization rate will also generate positive effects on its bottom line.