Siltronic CEO says the chip industry is still in a ‘down cycle’

The CEO of the West’s only silicon wafer maker says the semiconductor industry is still in a “transitional year” as manufacturers try to find their way through the end of the transition period. . The decline lasted for many years IN request.

During the pandemic, chipmakers have enjoyed bumper profits as consumers stayed home to shop for electronics and supply shortages. But the end of the pandemic has led to a decline, as manufacturers and retailers face growing stockpiles and consumers stop buying as much as they go back outside.

Chip companies hope the AI ​​boom will boost demand for their products, but the CEO of a major German semiconductor company says the industry needs to wait a little longer for the good times to roll around. return.

“We are still at the end of a downturn cycle,” Michael Heckmeier, CEO of German chip supplier Siltronic, said after the opening of the company’s latest wafer factory in Singapore. “2024 is a year of transition.”

Instead, Heckmeier sees the industry recovering next year. “We are still preparing for the massive growth ahead… driven by megatrends such as artificial intelligence, electric mobility and digitalization.”

Some chip companies, like Nvidia and its suppliers, are have benefited from the AI ​​explosion. Nvidia, GPUs are key to training large language models, reported revenue of 60.9 billion USD in 2023, an increase of 126%.

However, most of the industry warns that demand may be limited this year.

In April, Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, shrink its outlook to 2024, warns that the smartphone and personal computer markets remain weak.

That same month, another contract chipmaker, United Microelectronics Corporation, speak “Demand remains muted” for the auto and industrial segments due to a slower rate of “inventory digestion” than expected.

Another chip win for Singapore

Headquartered in Munich, Siltronic produces silicon wafers used in the chip manufacturing process. The company is the only Western wafer manufacturer.

In April, Siltronic cut its 2024 outlook, citing “further development of weak demand.”

However, on Wednesday, Heckmeier said in opening remarks that the new technologies “underscore the growing demand” for semiconductors and wafers, and that the company was “fully prepared ” to meet demand with its new factory in Singapore.

Siltronic has invested $2.2 billion in a new semiconductor wafer factory, its third in Singapore. This amount is the largest investment in the company’s history. The factory will be able to produce 100,000 wafers per month by the end of this year, and Heckmeier thinks the factory could reach full capacity within five years. Siltronic opened its first factory in Singapore in 1999.

Singapore won several chip-related investments in recent years. GlobalFoundries and UMC – two chip manufacturers that Siltronic cooperates with – have announced plans to invest in Singapore of 4 billion USD and 5 billion USD, respectively. Last week, TSMC-backed chipmaker Vanguard International Semiconductor, announced a $7.8 billion factory as part of a joint venture with NXP Semiconductors of the Netherlands.

Despite fierce global competition for semiconductor investments from countries large and small, Heckmeier decided it was best to place Siltronic’s investment in well-understood territory.

“When you decide on a new investment, you do all kinds of analysis, energy costs, personal costs, overall environmental costs. That ultimately led to the decision not to look for a new location but to add this plant to where we were already here,” he said.

Singapore has been manufacturing semiconductors since 1968 and now has many companies in the supply chain including suppliers, designers and chip manufacturers.

Singapore Deputy Prime Minister Heng Swee Keat said on Wednesday that the semiconductor industry now accounts for nearly a quarter of Singapore’s value added in manufacturing. Manufacturing contributes 20% of Singapore’s GDP

Heng said the Singapore government is committing $28 billion to the country’s R&D ecosystem, with chip research being a “key area of ​​focus”.

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