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The decline in demand for chips in the second half of the year will hit mature processors the hardest

The decline in demand for chips in the second half of the year will hit mature processors the hardest

There are almost no market players left who can dispute the fact that demand for components for PCs and low-cost smartphones is declining.
TrendForce experts expect this trend to be strongest in the mature lithography sector in the second half of the year, but even those using advanced manufacturing processes will be affected by the demand correction.Image source: TSMSAnalytics TrendForce operates equipment utilization rates - an indicator that shows the actual utilization of production lines relative to their design capacity.
During the periods of peak demand for some types of components this value exceeded 100%, but now the market is going to normalize and even to work in the loading mode, which can not be considered optimal from the economic point of view.
In the 200mm wafer and 110nm to 350nm process sectors at least, the second half of the year will see equipment utilization dip to 90-95%, with power electronics, image sensors and display drivers all affected.
90-99% utilization will be typical of product lines producing a broader range of components in the 28nm to 90nm process, including those using 300mm silicon wafers.
The general rule is as follows: the more products are tied to consumer electronics demand, the greater the risk of lower utilization rates in the second half of the year.Source image: TrendForce Chipmakers using 4nm to 19nm lithographic standards will fare relatively well, as their utilization rates will be in the optimal range of 95% to 100%.
The longer production cycle, which smoothes out short-term fluctuations in demand, will also partly contribute to this.
Migration to more advanced lithography will also help keep equipment utilization at a high level, if demand for 7nm products, for example, declines somewhat in the second half of the year, then 5nm and 4nm products will enjoy higher demand at least due to their novelty for consumers.It is important for every manufacturer to maintain optimal equipment utilization, as it helps reduce the unit cost of the products produced.
Fixed costs, which are in any production, it is possible to extend to the maximum number of products.
When the equipment is not utilized fully, the unit cost increases.

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