According to statistics and forecasts from SEMI, global investment in 12-inch fabs is expected to grow by 13% year-on-year this year, setting a new record. Moreover, due to the impact of the epidemic, the global digital transformation process will accelerate, so that investment in 12-inch fabs in 2021 will reach a new high on the basis of this year, with an expected year-on-year growth of 4%. After a slight slowdown in 2022, it will reach a new high of $70 billion in 2023.

If the market really develops as predicted by SEMI, the global semiconductor manufacturing market will usher in a new and exciting part of the development in the next three years.

In terms of the number of wafer foundries, SEMI said that excluding low-probability or rumored fab construction, it is conservatively estimated that at least 38 12-inch wafer foundries will be added between 2020 and 2024, including 11 in Taiwan and 8 in Chinese mainland, accounting for half of the total. It is estimated that the total number of 12-year-old wafer factories will reach 161in 2024, and the monthly production capacity of wafer factories is expected to increase by 1.8 million (wpm) to more than 7 million.

In recent years, although Chinese mainland has seen a lot of bubbles in the construction of its 12-inch fab, the overall growth momentum, especially the market demand for capacity, has been rigid. Under such circumstances, the global share of Chinese mainland production capacity will grow rapidly.

According to statistics, the market share was only 8% in 2015, but it will increase to 20% by 2024, and the monthly production capacity will reach 1.5 million tablets. While non-Chinese companies account for a large part of this growth, Chinese business groups are also accelerating investment, accounting for about 43 per cent of Chinese mainland capacity this year and 50 per cent by 2022 and expected to rise to 60 per cent by 2022, according to SEMI.

Compared with Chinese mainland, Japan's share of global 12-inch wafer capacity continues to decline, accounting for about 19 per cent in 2015 and will fall to 12 per cent in 2024, while the Americas will also fall from 13 per cent in 2015 to 10 per cent in 2024.

SEMI believes that South Korea will be the most potential market, with investment of between US $15 billion and US $19 billion, followed by about US $14 billion to US $17 billion in Taiwan and US $11 billion to US $13 billion in Chinese mainland.

When it comes to specific chip products, the 12-inch fab's largest capital expenditure will still be spent on memory chips (DRAM and 3D NAND). Actual and projected investment is expected to grow steadily at high single digits every year from 2020 to 2023, and the range is expected to expand to 10 per cent in 2024.

In addition, investment in logic chips / MPU and MCU will also increase steadily from 2021 to 2023, with particular attention to power devices. Investment in such products is expected to grow by more than 200% in 2021 and will maintain double-digit growth rates in 2022 and 2023.

What we are talking about above is the market situation and development trend of the global 12-inch fab and its production capacity. At the momentNot only 12-inch, 8-inch fab and production capacity are also very interesting, because the market demand has been unprecedented, no less than the 12-inch market.

In the past, 8-inch wafers were considered to be a backward production line, and more attention was paid to the construction and mass production of 12-inch wafers. However, it is this product that has been "old" for many years than 12-inch wafers, 8-inch wafer production capacity has been obviously insufficient since 2018, and from 2019 and the coming 2020, 8-inch wafer production capacity is still very tight, especially in Chinese mainland region, in the case of many 12-inch production lines launched, it seems that the 8-inch wafer capacity problem has been ignored.

On the whole, whether it is IDM or wafer generation factories, 8-inch wafer production capacity has always been very tight in mainland China, and the capacity utilization rate is quite high.
The main reason for this situation is that the market demand for analog chips has been increasing. Power management, power devices, CMOS image sensors, MEMS sensors, RF transceivers, PA, filters, ADC, DAC and so on are mostly put into production in the 8-inch wafer production line.

SEMI predicts that global 8-inch wafer production will increase by 700000, or 14%, from 2019 to 2022, of which MEMS and sensor-related capacity will increase by about 25%, and power device production is expected to increase by 23%. According to SEMI, about half of the 15 new fabs planned for 2019 will be 8 inches.

Precisely because the market demand is so strong, the demand for 8-inch wafer capacity will continue to increase in the next few years, and in order to meet the demand, new production lines will be launched one after another, which shows that the current production capacity can not fully meet the supply and demand.

So why does the 8-inch wafer capacity still not meet the application needs? There are many reasons.

First of all, of course, the demand for analog chip applications is strong, especially with the gradual landing of the Internet of things, 5G and new energy vehicles, the demand for power devices (mainly IGBT and MOSFET) is quite strong, which also gives 8-inch wafers more business opportunities.

Secondly, the production capacity and delivery time of 8-inch wafers have been tight all the time. The 8 'line capacity of the major fabs is generally tight, and most of the analog and discrete device markets are controlled by large IDM manufacturers, such as Infineon, TI, etc., but due to limited capacity, these IDM usually outsource orders to foundry.

At the same time, during the transition from 6 inches to 8 inches, some of IDM's main production capacity focused on the 12-inch line, without adding an additional 8-inch line, so 8-inch products had to be outsourced. Therefore, most of the IDM production expansion is lower than the growth rate of demand, and the proportion of outsourcing will be higher and higher, which aggravates the situation that orders from fabs fall short of demand.

In addition, the insufficient supply of related equipment (many equipment factories have stopped producing 8-inch wafer processing equipment, so second-hand 8-inch wafer devices around the world, especially in the Chinese mainland region, are very popular these years), limited production of 8-inch wafers, and so on, are also the reasons for the tight production capacity of the overall market.

Who smells better, 12-inch wafers or 8-inch wafers?

At present, the main wafers are 8-inch and 12-inch wafers. However, in the early years, 6-inch (150mm) wafers once dominated the market. The 6-inch factory began production in 1980, when Intel Corp was mainly driving its development. Before that, 4-inch wafers were the main force in the market. The 8-inch fab began to grow rapidly in 1990, represented by the 64-bit DRAM produced by IBM and Siemens, while the 12-inch fab has been growing steadily since 2000.

In terms of production capacity, 8-inch wafers exceeded 6-inch wafers in 1998 and peaked in 2007. In 2008, 8-inch wafers with 12-inch wafers with more than 8 inches decreased between 2008 and 2009, but still showed a growth trend.

In 1999, the number of 8-inch fabs worldwide was 70, and reached an all-time high of 2007. by the end of 2015, it had dropped to 180. a total of 76 8-inch fabs were closed worldwide between 1995 and 2018, and during the financial crisis of 2008-2009, most 8-inch fabs were closed or converted to 12-inch fabs.

This is mainly because the larger the wafer size, the higher the availability efficiency. The 12-inch wafer has a larger wafer area, which optimizes the efficiency. Compared with the 8-inch wafer, the 12-inch wafer has more than twice the usable area, which is more cost-effective.

In addition to the SEMI statistics and forecasts given above, let's take a look at another set of data. Statistics and forecasts from IC Insights show that the number of 12-inch wafer foundries that can be mass-produced worldwide will increase every year between 2018 and 2021, reaching 123 by 2021, compared with 98 in 2016. Basically all the newly built fabs will be used to produce the urgently needed DRAM, flash memory, or enhance existing foundry capacity.

By the end of 2016, 12-inch wafers contributed 63.6 per cent of global IC fab capacity, and this figure is expected to reach 71.2 per cent by the end of 2021, with an average annual compound growth rate of 8.1 per cent in terms of wafer area over a five-year period.

Between 2008 and 2016, a total of 15 fabs were converted from 8 inches to 12 inches. Compared with the 8-inch wafer, the 12-inch wafer already shows a clear advantage.

However, the closure of 8-inch fabs has slowed since 2016, and market conditions in the past two years seem to have further narrowed the gap between them.Whether it is the demand for production capacity, the construction of new plants, or the demolition or renovation of old plants, the 8-year line seems to be glowing with a second spring.

On the wholeNo matter in terms of the overall surface area or the actual wafer shipments, the 12-inch wafer is the main wafer size used today. In spite of this, the 8-inch fab still has quite a long vitality.IC production capacity of 8-inch wafers is expected to continue to grow by 2021, with an average annual compound growth rate of 1.1 per cent based on the total available wafer area.