[Core News] ON Semiconductor lays off staff to optimize manufacturing network, mature process wafer foundry halts decline
1. ON Semiconductor laid off 1,000 employees + merged 9 factories to optimize manufacturing network and reduce costs
According to IT House news, automotive semiconductor leader ON Semiconductor submitted a document to the U.S. SEC, announcing plans to lay off about 1,000 people, merge nine factories, and another 300 employees will adjust their positions.As of the end of 2023, ON Semiconductor has approximately 30,000 full-time employees.
The core purpose of this adjustment is to reduce operating costs, promote its Fab Right strategy, and optimize its manufacturing network. It is expected to be completed in 2025 and will incur US$65-80 million in personnel-related expenses this year and next.
In terms of performance, ON Semiconductor's revenue in the first quarter of 2024 was US$1.8627 billion, down 7.7% month-on-month and 4.9% year-on-year. The current automotive semiconductor market is dragged down by excess customer inventory and weak downstream demand. TSMC also predicts that the automotive field will become one of the worst-performing segments in the chip industry this year.
2. Huahong OEM prices are rumored to have risen by 10%, ending two consecutive years of decline for mature manufacturing processes.
According to a report from China's Taiwan Economic Daily quoted by the Science and Technology Innovation Board Daily, domestic mature process wafer foundry involution has come to an end, and the wave of bargaining for orders has subsided. Hua Hong Semiconductor is rumored to increase its foundry quotation by 10% in the second half, officially ending the trend of mature process foundry prices falling for two consecutive years, marking that the industry is gradually coming out of the correction period.
At the same time, the quotations of wafer foundries such as UMC, World Advanced Micro Devices, and Power Semiconductor Manufacturing Co., Ltd. that focus on mature processes have simultaneously shown a bullish trend, and the industry's prosperity has gradually recovered.
3. Morgan Stanley: The DRAM supply and demand gap will reach 23% in 2025, significantly raising price increase expectations
Morgan Stanley released a research report stating that due to the dual impact of limited new production capacity by DRAM manufacturers and the squeeze on HBM production capacity, DRAM is entering a super cycle of supply and demand imbalance. The standard DRAM supply gap will be as high as 23% in 2025. The shortage will exceed HBM, which is rare in recent years, and prices are expected to continue to rise.
Morgan Stanley simultaneously raised its price increase forecast for the third quarter of this year: DRAM was raised from the original 8% to 13%, and NAND was raised from the original 10% to 20%, with both increases exceeding 60%.
4. U.S. semiconductor construction spending in 2024 is 28 years ahead of the total
According to Kuai Technology citing foreign media reports, driven by the U.S. Chip and Science Act, U.S. computer and electrical manufacturing (core being semiconductors) construction spending in 2024 is expected to reach the level of total spending in the past 28 years.
Currently, Intel, Samsung, Micron and other companies have received huge financial support to build new semiconductor manufacturing plants in the United States; industry forecasts indicate that the United States’ chip manufacturing capacity will triple by 2032, and is expected to produce 30% of the world’s cutting-edge chips.
It is worth noting that despite the huge scale of investment, the construction of US wafer fabs is still facing serious delays - poor supervision and a shortage of skilled workers have delayed the mass production plans of Samsung, TSMC and Intel's new factories for more than a year, making the US one of the countries with the slowest progress in chip manufacturing construction in the world.
5. The growth of the smartphone industry is slowing down and the supply chain is conservative.
IDC's "Global Smartphone Supply Chain Tracking Report" shows that due to weak downstream demand and rising prices of key upstream parts, the global smartphone industry manufacturing scale declined by 8.6% month-on-month in the first quarter of 2024. Although it increased by 10% year-on-year, the industry's growth momentum is insufficient.
IDC predicts that the growth in mobile phone components will continue until the third quarter before slowing down; the current upstream and downstream supply chain attitudes are conservative, and brand manufacturers are restraining price increases by cutting parts purchase orders. It is expected that the price increase of most parts will end in the third quarter, and the scale of the global smartphone industry will maintain slow growth in the second quarter.
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