Another bottleneck could appear in the manufacture of the disks of silicon, or wafers, from which chips are cut. The supply of wafers measuring 8 inches (200mm) across could be pinched as foundries concentrate on more efficient 12-inch (300mm) wafers.
Some chipmakers have decided to halt the expansion of 8-inch plants, despite the fact that orders are still coming in for the less advanced chips that are still used in a wide range of products from computers to printers.
"TSMC and UMC already decided their expansion schedule for their 12-inch fabs this year, so they should be OK, but if they want to expand beyond this, there could be a problem finding equipment," BNP's Ying said.
"A concern for this year is the added competition from China, especially [Shanghai-based] Semiconductor Manufacturing International Corp [SMIC, 中芯國際集成電路]," Ying said. "This upturn could be difficult as Taiwanese foundries could raise prices before, but they won't be too aggressive on price this time as competition from China has increased."
A report from Deutsche Bank agrees that TSMC and UMC may not be able to raise prices despite running at full capacity.
"Many investors are concerned about the lack of blended ASP [average selling price] increase despite extremely high utilization rates at TSMC," a Jan. 5 report said.
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