January 27, 2022

VIEWPOINT 2022: Stephen Rothrock, President & CEO, ATREG, Inc.

VIEWPOINT 2022: Stephen Rothrock, President & CEO, ATREG, Inc.
Stephen Rothrock, President & CEO, ATREG, Inc.
Global fab demand to continue to rise in 2022

To mitigate the global chip shortage, semiconductor manufacturers have left no stone unturned to increase capacity. Existing fabs are running at over 100% and tools are constrained. Many 200mm users are buying 300mm fabs to calibrate them back to 90nm, .13, and .18 nodes.

Within five years, the fab buyers' market we knew suddenly morphed into a sellers' market. As a result, a larger than usual number of fabs announced or closed worldwide in 2021 — nine total, marking a new turning point for global fab demand.

When it comes to back-end, only 6% of transactions took place in North America over the last 10 years, representing 32% of all transactions vs. 68% for front-end. Three back-end transactions happened in 2021 — InnoLight purchased Allegro MicroSystems' Thai cleanroom, VIS acquired AUO's Hsinchu, Taiwan fab, and SkyWater Technology Foundry bought the former 200mm BRIDG cleanroom in Osceola, FL.

Taiwanese OSATs are expected to sustain tight capacity supply for packaging services, chip probing, and final test operations through 2022, largely from international IC designers and automotive chip IDMs, with products boosting demand such as automotive CMOS image sensors, automotive MCUs, wireless communication chips, SiC and GaN power chips, and RF modules. Chinese OSATs also saw full capacity utilizations and order visibility through the end of 2021.

We can expect global fab demand to continue to increase and have another unprecedented year in 2022. Many challenges still lie ahead for our industry that must be resolved to overcome the global chip shortage sooner rather than later:

• Supply chain constraints must be addressed, still too many outages and fabs are lacking qualified talent
• Customer / supplier relationships are critical; we must address our geo-political environment to succeed
• An overarching pan-American manufacturing strategy is needed to ensure the U.S. retains its leadership
• We must find balance between Street’s push for financial performance and holding onto our fabs
• New sources of capital are essential to migrate more foundry capability over to the next generation
• We need to learn how to build new fabs faster if we are to build capacity and diminish our dependency on Asia
• Government incentives should be accessible to everyone, including smaller specialty product manufacturers

Stephen Rothrock, President & CEO
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