Kiwoom Securities forecasted that the semiconductor supply shortage will peak in the second quarter, with inventory increasing and easing in the second half, but that a complete resolution will not occur until 2023, when new fabs are built.

Kiwoom Securities analyst Kim Ji-san reexamined the semiconductor supply shortage issue through an industry briefing on the 1st.

According to this, the semiconductor supply shortage occurred due to a mismatch in product mixes centered on PMICs amidst the increase in demand for contactless devices and 5G smartphones caused by COVID-19, and structural factors such as a lack of investment in 8-inch fabs and geopolitical uncertainty supported the supply shortage.

In particular, the Malaysian lockdown in the second quarter, water shortages in Taiwan, and the spread of COVID-19 further worsened semiconductor supply.

Smartphones are experiencing a shortage of power semiconductors and driver integrated circuits, and the selling prices of both products rose by more than 20% in the first half of the year. Supply and demand conditions for entry-level APs and RFICs are expected to improve in the second half of the year.

Weak smartphone demand and rising inventory in the Chinese and Indian markets appear to be stabilizing the supply and demand for components.

Demand for laptops remains high due to the prolonged period of working from home and distance learning, and the supply shortage of FC-BGA substrates is notable. Supply and demand for GPUs, audio ICs, and Wi-Fi ICs are also tight.

While contactless home demand is expected to slow in the second half of the year, this will likely be partially offset by contactless corporate demand.

Due to the resurgence of COVID-19 in India and the impact of lockdowns, smartphone demand in the second quarter is estimated to have decreased by approximately 13 million units, and production was disrupted by 20 million units. The largest manufacturers in India have production capacity, followed by Samsung Electronics, Foxconn, Flextronics, and Oppo.

The Malaysian lockdown has caused disruption for semiconductor companies such as NXP, TI, STM, and Renesas, as well as OSAT companies such as ASE and Inari.

The spread of COVID-19 in Taiwan also impacted semiconductor production, particularly packaging and testing processes.

Major foundries, including TSMC, plan to increase their capital expenditures by 50% this year. They are also considering acquiring existing 6-inch fabs and converting them to 8-inch fabs. The supply shortage is expected to be resolved when the new fabs come online in 2023.