Global Semiconductor Foundry Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The Global Semiconductor Foundry market is expected to grow by registering a CAGR of 7. 3% during the period of 2022-2027. Favorable government initiatives and increasing demand for semiconductor chips are among the key factors driving the growth of the market.

New York, Jan. 25, 2022 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Global Semiconductor Foundry Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)" - https://www.reportlinker.com/p06221863/?utm_source=GNW


Key Highlights
The semiconductor foundry sector has witnessed strong revenue growth during recent years owing to the growing demand for smartphones and high-performance computing (HPC) products such as PCs, tablets, game consoles, servers, and 5G base stations.
The global demand for connected cars is increasing at a fast pace, and a prominent share of all the new passenger vehicles produced in recent times comprise connected solutions. Additionally, the demand for vehicles with in-vehicle cellular capabilities is rising at a rapid pace, thereby driving the demand for semiconductor components in the industry.
Foundries are increasingly focusing on adopting automation, ML, and analytics. The benefits offered by these technologies, such as optimizing the production process and increasing the yield without compromising the quality, are driving their demand. With the high production capacities and reducing costs, vendors are expected to take up higher production contracts, resulting in significantly higher supplies, covering the shortage gaps present in various industries.
By geography, Asia-Pacific is expected to command the dominant share of the market owing to the major markets such as South Korea, Taiwan, and China; North America is expected to increase its investment in the foundry business with the United States focusing on expanding its domestic foundry businesses. The trade tensions between China and the United States during the Trump administration are expected to continue under the Biden administration. The recent events in China’s advances in Taiwan’s unification with it are expected to affect the market.
The cost of building state-of-the-art chip foundries has increased exponentially, which puts pressure on the industry. This is where the number of chipmakers was consolidated in recent times. Performance boosts are slowing down, making specialized chips increasingly attractive. The design decisions that help make chips universal may be sub-optimal for some computing tasks.
Despite the effects of the pandemic, the global semiconductor market observed a robust growth in 2020, which continued in 2021 as well. The industry was riddled with a high deficit and increasing demand, which led to a significant supply chain gap that has been primarily attributed to the COVID-19 pandemic. Furthermore, the global shortage of semiconductors led by the COVID-19 pandemic has encouraged players to focus on increasing production capacity. For instance, Semiconductor Manufacturing International Corp (SMIC) has indulged in aggressive plans of doubling its production capacity by 2025 by constructing new chip fabrication plants in different cities, including its announcement in September 2021 to establish a new factory in Shanghai’s free trade zone.
Moreover, governments in countries such as the United States, South Korea, Taiwan, and other major hubs for foundries are also increasingly investing and incentivizing to expand the industry presence of their respective countries. For instance, in May 2021, the South Korean government announced that it plans to invest about USD 451 billion in the forms of tax benefits to boost chipmakers’ competitiveness amid a critical global shortage of key components. Such trends are expected to further propel the respective countries’ position in the global market.

Key Market Trends

Automotive Industry to Drive the Market Growth

Semiconductors are primary parts of automotive electronics components such as ECUs, Infotainment Systems, and Sensors. The automotive industry has been recovering, driven by the increased demand for safer personal transportation. In addition, the growth in electric and autonomous vehicles has been driving the need for semiconductors.
The European Commission seeks to have at least 30 million electric vehicles on the regions’ roads by the end of the decade, i.e., 2030. With the adoption of electric vehicles led by governmental efforts, the demand for semiconductors has also been increasing rapidly for features, such as blind-spot detection, backup camera, and essential connectivity features.
In addition, there has been a rapid growth in the development of autonomous vehicles as well. According to MHI 2020 Industry Report, it is expected that by 2025 the adoption rate of autonomous vehicles is expected to reach 54% compared to just 18% in 2020. The growth in autonomous vehicles has also been creating a demand for semiconductors.
The growth in the development of Advanced Driver Assistance Systems (ADAS) also contributes to the development of autonomous vehicles leading to the growth of the market studied. The Indian Ministry of Road and Highway Transport announced that it has been working toward a mandate that brings ADAS in all cars by 2022.
The vendors, such as Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC), announced that they have been focusing on relocating their production to meet the demand from automakers, such as Volkswagen and Toyota, among others. In addition, the demand coming from companies, such as Qualcomm and Apple, has also been creating delays in the supply of semiconductors. According to a new survey by Automotive News (April 2021), 53% of the respondents suggested that they source their chips from outside the United States, and 55% of the manufacturers have been looking for alternative chip sources outside the country.
Such factors have been leading to the entry of new companies into the market studied. For instance, recently, Intel announced the launch of a new business Intel Foundry Services, to meet the demand for automotive manufacturers. Similarly, in March 2021, Global Foundries announced that it has been planning to invest USD 1.4 billion for capacity expansion in different parts of the world to support automakers cutting output, such as Ford, Volkswagen, and General Motors.

Asia Pacific is Expected to Hold a Major Market Share

Asia Pacific region has the most prominent share of semiconductor foundries globally, with the region having the presence of major companies such as TSMC, Samsung Electronics, etc. Taiwan, South Korea, Japan, and China are major countries in the region having a significant market share.
China has a very ambitious semiconductor agenda. Backed by USD 150 billion in funding, the country is developing its domestic IC industry and plans to make more of its chips. Greater China, which encompasses Hong Kong, China, and Taiwan, is a geopolitical hotspot. The US-China trade war is compounding tensions in an area where all the leading process technology is located, forcing many Chinese companies to invest in their semiconductor foundries.
The number of newly registered chip-related companies in China more than tripled in the first five months of the year from the same period in 2020 in a new sign that China is sparing no effort in its pursuit of self-sufficiency in semiconductors, for which the country relies heavily on imports and US technologies to satisfy domestic demand. According to Qichacha, from January through May 2021, China saw 15,700 new companies involved in everything from designing to manufacturing chips.
Japan aims to attract overseas companies through financial incentives to secure its own chip supplies and address the global shortage. Japan imports significant of its semiconductors from overseas and wants to build a supply chain of this technology at home. In June 2021, Japan signed off on a JPY 37 billion semiconductor research project to develop chip technology in the country with TSMC. About 20 Japanese companies, including Hitachi High-Tech Corp., will work with TSMC in the project, with the Japanese government paying just over half of the cost.
South Korea announced to go all out to bolster its critical semiconductor industry, with the government announcing a plan by companies to invest KRW 510 trillion and beefed-up tax benefits to boost chipmakers’ competitiveness amid an acute global shortage of the critical components. Semiconductors are already Korea’s largest export. However, most of that is memory products, NAND Flash, and DRAM memory. The new plan aims to boost the advanced logic chip foundry capacity.

Competitive Landscape

The semiconductor foundry market is consolidated due to a major share of the market being occupied by top players. Moreover, due to the high setup cost of the semiconductor foundry, new players are finding it difficult to enter the market. Some of the key players include Taiwan Semiconductor Manufacturing Company (TSMC) Limited, Global Foundries, United Microelectronics Corporation (UMC), Semiconductor Manufacturing International Corporation (SMIC), Samsung Group, Dongbu HiTek, STMicroelectronics, among others.

January 2022 - VIS completed the acquisition of AUO’s Fab L3B building and facilities. These acquisitions will enable it to increase its production capacities, and the company is aiming to achieve an approximate monthly production capacity of 40,000 8-inch wafers. This allows the company to cater to the constantly increasing mid-term and long-term demand for semiconductors.
December 2021 - TSMC introduced N4X process technology tuned for the demanding workload of high-performance computing (HPC) products. The N4X is the first of TSMC’s HPC-focused technology products to represent the ultimate performance and maximum clock frequency of the 5nm family. With these HPC features, the N4X can deliver up to 15% better performance than the N5 and up to 4% better than the 1.2 volts faster N4P. TSMC expects the N4X to enter risk production by the first half of 2023.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support
Read the full report: https://www.reportlinker.com/p06221863/?utm_source=GNW

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