Pure-play foundries are focusing on fulfilling chip orders coming from the car industry in the third quarter of 2021, allocating more of their available capacities to orders for automotive ICs, according to industry sources.

The automotive sector is in recovery from the COVID-19 pandemic. With the auto sales outlook promising, foundries have shifted their focus to orders for automotive chips, shipments for which have been ramping up, the sources said.

The overall automotive IC supply will still lag behind demand in the third quarter, despite substantial improvement in the chip shortages, the sources noted.

On the other hand, end-market sales of communications, computer and consumer electronics devices started slowing down in the latter part of the second quarter, the sources indicated. Fabless IC firms engaged in the mass-market sectors have experienced cutbacks in customer orders, raising concerns among market observers about excess chip inventories in the supply chain.

Fabless chipmakers specializing in mass-market applications will continue to deal with rising foundry costs in the second half of 2021, and whether to pass on higher production costs to customers will be crucial to maintain their profitability, the sources said.

By DIGITIMES