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Foundry Supply in a Pickle Amid Surging Demand Due to Pandemic and Restrictions

2020/10/19 | By CENS

Industry experts expect to see challenging times ahead for production in the foundry sector, forecasting that the current situation will not let up in the short-term and warns of unbalanced supply-demand next year.

During the pre-pandemic era, IC design firms say clients usually made urgent orders to avoid having to manage inventory. Yet, considering limited foundry production volume, clients are making orders ahead of time to ensure steady stock, even up to March and April next year.

These firms also said that the regular delivery date has also been pushed back due to the demand surge caused by the pandemic and the U.S. restrictions on SMIC. Standard deliveries take around two months, but at present, delivery dates require approximately four months. Despite the wait, firms would rather make the orders and wait instead of experiencing an inventory shortage. This is caused by the difficulties of expanding production for 8-inch foundries and interference from the U.S.'s interference and restrictions on SMIC. Experts say they don't expect to see the supply-demand reconfigure itself soon; supply issues could persist well into the entire upper half of 2021.

A top executive of an IC designing firm, who chose to remain anonymous, said foundries can choose to release the standard quotas for next year. While this particular IC firm picked up orders that other customers canceled and thus could receive a higher supply than other clients, the executive admitted that sales growth forecasted for next year would still be pessimistic. The executive suggested two methods to ease supplying woes: the first being clients picking up abandoned orders, while the second is dispersing orders across foundry makers to ease up pressure on one manufacturer.