The gross profit margin of wafer foundry dropped sharply in the first quarter
After the outbreak of the epidemic, driven by related factors such as changes in the supply and demand of the semiconductor industry, the gross profit margin of wafer foundries has increased significantly, reversing the unreasonable situation that was lower than that of the IC design industry in the past. We must know that in the past, many wafer foundries had a gross profit rate of 20% to 30%. With the slowdown of economic growth in the past few months, the decline in market demand, inflation, high inventory, etc., it is difficult for the gross profit margin of wafer foundries to maintain a high level, and they have begun to decline.
According to DigiTimes, TSMC’s gross profit margin in the first quarter of 2023 is expected to drop from 53% to 55%, while the gross profit margin of UMC is lower than expected and cannot break through the 50% mark. Since the middle of 2022, the supply chain has fallen into a chaotic situation of cutting orders, delaying shipments, bargaining, and canceling long-term contracts. The chain effect has caused the industry to fall into a downward trend. It is estimated that the decline may not stop until the second quarter of 2023.
TSMC’s gross profit margin reached 59.6% in 2022, of which it reached an astonishing 62.2% in the fourth quarter, but it reversed after entering 2023; After UMC’s performance hit a new high in the third quarter of 2022, the capacity utilization rate and performance began to decline in the fourth quarter, and the gross profit margin dropped from 47.4% to 42.9%. It is estimated that in the first quarter of this year, it will drop sharply to between 34% and 36%; the highest point in the world is in the second quarter of 2022, when the gross profit rate reached 49.97%, and entered a downward trend in the second half of the year; PSMC’s gross profit rate exceeded 50% in the first half of last year, and reached 51.15% in the second quarter of 2022. It also declined in the second half of the year and is expected to be only 34.8% in the first quarter of this year.
In addition, the gross profit margin of the industry’s most important foundries, such as SMIC and GlobalFoundries, is expected to drop significantly in the first quarter of 2023. On the other hand, various IC design companies can choose to make a big fortune with a small capital, and they may also have rich business results with a small capital. For example, MediaTek, an IC design company is still full of confidence despite the high inventory level. It is expected that the gross profit margin will still be controlled at around 47.5% in the first quarter of 2023.
At present, TSMC has adjusted its long-term gross profit margin target to 53%, which is already a very high level. It is expected that the gross profit margin of some wafer foundries will return to the level before the COVID-19 epidemic in 2023, which is about 20% to 30%.
