According to industry sources, backend packaging and testing houses continue to see steady growth in automotive chip orders, despite weakness in orders for consumer electronics chips. While demand for consumer electronics ICs is expected to be weak in Q3, the recovery could begin as early as Q4 2022 or Q1 2023.
The outlook for semiconductors in the third quarter remains uncertain, with IC packaging and testing vendors measuring the volume of power MOSFETs, display driver ICs (DDI), entry-level and mid-range microcontroller units (MCU), and power management ICs (PMICs). ) significantly decrease. The high season in the second half is expected to be weak.
Automotive and network communication ICs remain relatively stable. In addition, the peripheral netcom and power-related chips in Apple’s supply chain are expected to enjoy a base peak season.
Sources said fewer long-term agreements (LTA) have been signed for consumer chips, with most for automotive and high-performance computing (HPC). Leading IDMs are more willing to sign contracts with outsourced semiconductor assembly and testing suppliers (OSAT). This also includes burn-in test ovens for high-end HPC, netcom and automotive ICs, as well as OLED DDI test machines.
ASE has a large number of automotive MCU packaging and test orders released by IDMs. King Yuan Electronics (KYEC), Ardentec, Sigurd Microelectronics and Powertech Technology (PTI) subsidiary TeraPower Technology all have backend orders for auto chips through the end of the year.
Sigurd recorded a one-month performance in June. Netcom and automotive chips rose for Sigurd, while memory and consumer chips remained flat and mobile phones, PCs and graphics cards fell.
The scale of automotive chips is still relatively small compared to consumer electronics chips, which represent 7-8% of ASE Group’s business. Netcom and HPC customers account for a significant portion, which may temporarily help stabilize operations. More pressure is expected to come on packaging and utilization testing of netcom consumer electronics chips. However, some packaging substrates, such as lead frames, have moved from the consumer electronics sector to automotive IC orders. Lead frames are still scarce in certain areas.
Backend and material suppliers with a higher share of IDM customers will see growth in the third quarter. This includes ASE Group and Ardentec, which primarily acquired outsourced orders from Texas Instruments (TI), Infineon Technologies, Onsemi, NXP Semiconductors and Renesas Electronics, industry sources said.
The first wave of pull-in orders from Apple’s supply chain for seasonal new products remains predictable. While the growth won’t be explosive, it’s less uncertain than for Androids. The ASE Group is expected to benefit from Apple in the third quarter with system-in-package (SiP) for wireless communications chips, PMICs and core chips for wearable devices, the sources said.
While there is still a foundation for consumer electronics and IT products, destocking will take time. Supply shortages over the past two years have caused foundry prices to rise, leading chip makers to adopt price-raising strategies of their own to cope with increased cost structures. These short-term gains are likely to end in the second half.