Posted Jan 27, 2022, 7:06 PMUpdated on Jan 27, 2022 at 7:37 PM
Massive investments in the semiconductor industry are producing their first effects. Although the context of a global shortage of electronic components persists, the major manufacturers in the sector were able in 2021 to better meet the demand of their customers thanks to their new facilities. They post record revenues. But these billions of dollars spent around the world are also beginning to raise questions about the viability of these efforts.
Thus, the American microprocessor champion Intel hit its stock market low point over one year on Thursday, January 27 – after a fall of more than 6% in the day’s session – due in particular to concerns about its profitability in the months to come. Like the Taiwanese TSMC and the South Korean Samsung, Pat Gelsinger’s company certainly received record sales in 2021 ($79 billion) and multiplied spending on research and development. But it only anticipates a gross margin rate of 49% for the first quarter of 2022, compared to 55% a year ago.
90 billion dollars invested in 2022
Between the 20 billion dollars devoted to the opening of two factories in Ohio (United States) and the tens of billions expected for a mega-factory in Europe, Intel’s investments are not only intended for him. to increase its production volumes. They also improve the technologies used.
But observers wonder. “Many investors are wondering if semiconductor manufacturers are not preparing for tomorrow’s overcapacity by trying to meet today’s demand”, summarizes without espousing this thesis Stéphane Houri, analyst at Oddo BHF. Clearly, will demand be maintained when manufacturers have not skimped on investments?
According to Semi, the global representative body for semiconductor professionals, no less than 30 new semiconductor factories should start work in 2022. The sector spent 90 billion dollars in 2021 and plans to reach 100 billion this year.
Desiderata of public authorities
On its own, TSMC has planned to inject 100 billion dollars in three years into its “fabs”. Samsung will devote 10 billion dollars a year to it for ten years. These amounts are also driven upwards by the wishes of the public authorities who plead for the creation of high-end production capacities in the United States and Europe, while the bulk of production today comes from Asia. .
On the side of the European chip specialists, the figures are not so staggering but nevertheless impressive. The German Infineon, which has just opened a factory in Dresden, will increase its capital expenditure by 50% compared to 2021, to 2.8 billion dollars in 2022. The Franco-Italian STMicroelectronics will double its investments on the same period, for a total of 3.4 to 3.6 billion dollars in 2022.
Overcapacity in 2023?
Its boss explains that the group’s existing factories are completely saturated and that the demand corresponds to a heavy and long-term transformation among its customers, namely the electronicization and electrification of the industrial and automotive world. “You have to look at things with a magnifying glass. The announcements of major investments by certain major players in the sector do not concern our markets for microcontrollers and sensors for on-board electronics, for which the investments had not been made enough and for which there is not a real deficit of offer”, warns Jean-Marc Chéry.
Elsewhere in the world and in other market segments, there could be breakage. In a note published last September, IDC analysts worried about the appearance of overcapacities in 2023. Not everyone agrees since the boss of Intel considers that the shortage of components will last until in 2024.
But the consequences of an excess supply would lead to a fall in prices. Quoted at the end of last year by the newspaper “Nikkei Asia”, the IDC analyst Mario Morales expects to see some chip manufacturers push back their plans for new factories. Even to cancel them.