Capacity utilization above 100%?!

[jms_embedded]

What does "capacity utilization" mean at a fab? This news article sounds suspicious to me: https://www.businesswire.com/news/h...sed-ASP-and-Persistent-Demand-Says-TrendForce

Owing to persistently high demand for PMIC, TDDI, Wi-Fi, and OLED driver IC products, UMC, ranked third on the top 10 list, operated at a capacity utilization rate surpassing 100%, and its output severely lagged behind client demand.

and

Not only is HH Fab7’s production capacity of 48K wspm currently fully loaded, but HuaHong Group’s 8-inch fabs have all been operating at a capacity utilization rate of more than 100%.

(taken directly from a TrendForce news item: https://www.trendforce.com/presscenter/news/20210831-10914.html)

What are they measuring, and how is above 100% even possible?

 

[Xebec]

Would like to know the answer too, but guessing - it could be the fab is rated for X capacity and the makers are doing things to boost production above that. Deferring maintenance or running machines at speed higher than rated.

 

[Arthur Hanson]

TSM has for years figured out how to run equipment above the 100% rated capacity. This is one of the reasons I started investing in TSM many years agol

 

[jms_embedded]

TSM has for years figured out how to run equipment above the 100% rated capacity.

Cite source?

 

[Xebec]

TSM has for years figured out how to run equipment above the 100% rated capacity. This is one of the reasons I started investing in TSM many years agol

OK So it just sounds like run it at a faster speed than intended? I remember from a few Tesla interviews, Elon said that a lot of robotics have recommended speeds but very often the manufacturers haven't really figured out the safest maximum speed so they were able to reliably run some (but not all) robotic equipment at substantially higher speeds than rated.

 

[fansink]

TSMC’s production utilization capacity was running at 100% in 2020, up from 2019, and before the global chip shortage. I think one can safely say that TSMC’s 2021 production utilization capacity will be at a minimum 100%, and likely above 100%.

Source TSMC 2020 Annual Report, Section 5.1.4

https://investor.tsmc.com/sites/ir/annual-report/2020/2020Annual Report_E_ .pdf

 

[fansink]

Additionally, if you consider TSMC’s Chief Executive Officer C.C. Wei a reliable source, Wei wrote that the company’s fabs have been “running at over 100% utilization over the past 12 months”

https://www.bloomberg.com/news/arti...100-billion-over-three-years-to-grow-capacity

 

[Arthur Hanson]

OK So it just sounds like run it at a faster speed than intended? I remember from a few Tesla interviews, Elon said that a lot of robotics have recommended speeds but very often the manufacturers haven't really figured out the safest maximum speed so they were able to reliably run some (but not all) robotic equipment at substantially higher speeds than rated.

Over the decade-plus that I have owned TSM stock, they have reported many times they have been able to run equipment at over 100% of their ratings. If I remember correctly, it may have been as much as 5% over for short periods. This and TSM's consistently higher yields in a shorter time frame the competition is but one of the many reasons TSM is the top fab.

 

[Daniel Nenni]

Would like to know the answer too, but guessing - it could be the fab is rated for X capacity and the makers are doing things to boost production above that. Deferring maintenance or running machines at speed higher than rated.

Both is the answer you are looking for. It is not sustainable though so the extra capacity that is coming online will save the day.

 

[jms_embedded]

How exactly is "100% capacity" defined, anyway? I've been reading a little about "capacity planning" and things like the cycle time vs. throughput curves, and most of the papers mention operation at 80-85% of theoretical maximum capacity (where cycle time is infinite) to keep cycle time at reasonable levels. For example: https://www.fabtime.com/cycle-time-tutorial.php

 

[AAPL]

Planned production capacity can be exceeded by reducing planned maintenance.

 

[Daniel Nenni]

Planned production capacity can be exceeded by reducing planned maintenance.

Also, planned production is a conservative number so exceeding it is not too difficult. So going at 100% is going 100% of planned production, not necessarily 100% of the fab limitations.