Semiconductor Foundry Market Size, Share Analysis, By Technology Node (3nm, 4-10nm, 14-28nm, and 28-130nm), By End Market (Communications, Computing, Consumer, Automotive, Industrial, and Others), and Regional Forecast, 2024-2032

The global semiconductor foundry market size was valued at USD 128.11 billion in 2023 and is projected to grow from USD 148.45 billion in 2024 to USD 258.27 billion by 2032, exhibiting a CAGR of 7.2% during the forecast period. Asia Pacific dominated the semiconductor foundry industry with a market share of 85.94% in 2023.

A semiconductor foundry, also known as a foundry or fab, is a specialized company that manufactures semiconductor devices, such as integrated circuits (ICs), for other companies. These other companies, known as fabless semiconductor companies, design integrated circuits (ICs) but do not have the facilities to produce them. The semiconductor foundry provides the manufacturing services and infrastructure to fabricate the chips according to the fabless company's specifications. It offers a range of services, from the production of wafers to the complete assembly and testing of semiconductor devices. They develop and maintain advanced process technologies that define the methods and specifications for creating semiconductor devices at various scales, such as 7nm, 5nm, and 3nm technology nodes.

The market is driven by advancements in artificial intelligence, machine learning, 5G, and the Internet of Things (IoT). Foundries invest heavily in research and development to develop and offer advanced process nodes such as 7nm, 5nm, 3nm, and 2nm, meeting the needs of these high-tech applications. For instance, companies such as TSMC and Intel have announced to accelerate their 2nm production process plans in the 2026 and 2024 fiscal years, respectively.

Moreover, the COVID-19 pandemic significantly impacted the global market for semiconductor foundry, causing disruptions and growth. The initial phase had supply chain interruptions, leading to manufacturing delays and shortages. However, the pandemic accelerated digital transformation and remote work, driving enormous demand for electronics and semiconductor devices. This surge strained production capacity, leading to a global chip shortage.

LATEST TRENDS

Increasing Need for High-Performance Chips in EVs and ADAS to Drive the Demand for Semiconductor Foundry Services

The shift toward electric vehicles (EVs) is accelerating due to environmental concerns and government regulations aimed at reducing carbon emissions. EVs require sophisticated semiconductor components for various systems, including battery management, power electronics, motor control, and onboard charging. These components often require advanced semiconductor fabrication processes, driving demand for semiconductor foundry services. Moreover, the rapid growth of EV manufacturers, such as Tesla, Rivian, Ford, and General Motors, has spiked demand for advanced semiconductors. These vehicles require a multitude of chips for battery management systems, power electronics, infotainment, and Advanced Driver Assistance Systems (ADAS) features. As a result, foundries are scaling up production capabilities to cater to these needs.

Furthermore, ADAS systems rely heavily on sensors, cameras, radar, and other electronic components to provide real-time data and assist drivers in navigating the road safely. Semiconductor foundries play a crucial role in manufacturing the high-performance chips needed for these ADAS applications. For instance, in 2021, TSMC invested USD 2.8 billion in expanding its capacity to produce automotive chips. In addition, in 2022, GlobalFoundries partnered with Bosch to develop a next-generation millimeter wave (mmWave) automotive radar system-on-chip (SoC) for EVs and ADAS applications.

SEMICONDUCTOR FOUNDRY MARKET DRIVING FACTORS

Growing Integration of Advanced Technologies Across Industries to Create Demand for Advanced Semiconductor Chips

The artificial intelligence (AI) and Internet of things (IoT) markets are experiencing rapid growth as these technologies become increasingly integrated into various daily life aspects, including smart homes, wearables, industrial automation, healthcare, and autonomous vehicles. This growth translates into expanding opportunities for semiconductor foundries to supply diverse semiconductor solutions needed to power AI and IoT devices. AI applications, such as machine learning and deep learning, require specialized hardware accelerators such as GPUs (Graphics Processing Units), TPUs (Tensor Processing Units), and NPUs (Neural Processing Units) to perform complex computations efficiently. In addition, the IoT ecosystem consists of billions of interconnected devices gathering and exchanging data over the Internet. These devices require semiconductor solutions for wireless connectivity, sensor interfaces, power management, and security features.

Moreover, AI and IoT applications span a wide range of use cases and industries, each with unique requirements for performance, power consumption, form factor, and cost. Semiconductor foundries collaborate closely with fabless companies and system integrators to develop customized chip solutions that meet these diverse needs, leveraging their expertise in process technology, design methodologies, and manufacturing capabilities. For instance,

• May 2024: Wipro and Intel Foundry collaborated to meet the rising need for AI chip production amid the global rush to create generative AI-driven products. This partnership seeks to expedite chip design advancements within the semiconductor and high-tech sectors.

RESTRAINING FACTORS

High Capital Expenditure to Create Barriers for New and Existing Players, Hampering the Market Growth

Building and maintaining semiconductor fabrication facilities requires substantial equipment, infrastructure, and research and development (R&D) investments. This high capital expenditure can be a barrier to entry for new players and may limit capacity expansion for existing foundries. As per Semiconductor Intelligence, LLC, the CapEx of semiconductor foundries is down to USD 45.1 billion in 2024 from USD 48.0 billion in 2023.

In addition, the semiconductor industry is vulnerable to supply chain disruptions, such as geopolitical tensions, natural disasters, and unexpected demand fluctuations. These disturbances can lead to manufacturing delays, shortages, and increased production costs, impacting the profitability and reliability of foundries.

SEGMENTATION OF SEMICONDUCTOR FOUNDRY MARKET

By Technology Node Analysis

Cost Efficiency and Power Performance of 4-10nm Technology Nodes to Create Segmental Growth

Based on technology node, the market is divided into 3nm, 4-10nm, 14-28nm, and 28-130nm.

The 4-10nm segment holds the largest global semiconductor foundry market share due to its maturity and widespread adoption across various industries. This node offers a balance between performance, power efficiency, and cost-effectiveness, making it appropriate for a wide range of applications, including consumer electronics, automotive, and industrial devices.

On the other hand, the 3nm segment is expected to grow with the highest CAGR during the forecast period due to its emergence as the next frontier in semiconductor manufacturing. This node offers further performance and power efficiency advancements compared to the 4-10nm nodes, enabling the development of more powerful and energy-efficient chips for next-generation applications such as AI, 5G, IoT, and automotive. Companies such as TSMC, Samsung, and GlobalFoundries are developing, expanding, and investing in 3nm advanced nodes.

By End Market Analysis

Growing Demand for Advanced Chips in Smartphones and Networking to Fuel Communications Segment Expansion

By end market, the market for semiconductor foundry is categorized into communications, computing, consumer, automotive, industrial, and others.

The communications segment holds the largest global market share owing to the pervasive demand for semiconductor components in telecommunications infrastructure, networking equipment, smartphones, and other communication devices. This sector benefits from continuous upgrades and expansions to meet the growing demand for data transmission, wireless connectivity, and internet services.

• January 2024: Intel Corporation and United Microelectronics Corporation (UMC) joined forces to create a 12-nanometer semiconductor process platform, targeting fast-growing markets such as mobile, communication infrastructure, and networking.

On the contrary, the computing segment is forecasted to grow with the highest CAGR during the study period due to various factors, such as the proliferation of cloud computing, data centers, artificial intelligence (AI), and high-performance computing (HPC). These segments drive the need for increasingly powerful and efficient semiconductor solutions to process and analyze vast amounts of data.

REGIONAL ANALYSIS OF THE SEMICONDUCTOR FOUNDRY MARKET

The global market scope is classified across regions, including the Americas, Europe & Middle East & Africa (EMEA), and Asia Pacific.

Asia Pacific accounts for the largest global market size and share. The region, particularly Taiwan, South Korea, and China has emerged as a manufacturing hub for the semiconductor industry. These countries benefit from established foundries such as TSMC, Samsung Foundry, and SMIC, which have significant market shares and expertise in semiconductor fabrication. In April 2024, TSMC, a Taiwanese chip manufacturer, announced the construction of its third semiconductor fabrication plant in Phoenix, Arizona, U.S. TSMC Arizona, in collaboration with the U.S. Department of Commerce, has entered a memorandum of terms, potentially acquiring up to USD 6.6 billion in direct funding through the CHIPS and Science Act.

In addition, Asia Pacific countries boast well-developed semiconductor supply chains, encompassing raw materials, equipment suppliers, and logistics networks. This integration facilitates efficient production and delivery of semiconductor products, enhancing the region's competitiveness in the global market.

Americas is expected to grow with the highest CAGR during the forecast period owing to its increasing demand for semiconductor solutions in emerging applications such as autonomous vehicles, 5G infrastructure, and data centers. These applications require advanced semiconductor technologies, boosting the region's demand for semiconductor foundry services. American semiconductor companies and foundries continuously invest in R&D, technology development, and manufacturing capabilities to maintain competitiveness and address evolving market needs. These investments drive the semiconductor foundry market growth and innovation in the market. For instance,

• In February 2024, the White House allocated USD 5.0 billion toward chip research and development (R&D) initiatives as part of the CHIPS and Science Act. The funding aimed to bolster domestic semiconductor manufacturing and innovation, reducing reliance on foreign suppliers amid global chip shortages.

The market in Europe & Middle East & Africa (MEA) is known for its steady growth. Europe and the MEA region is witnessing increasing demand for semiconductor solutions driven by various industries such as automotive, telecommunications, and consumer electronics. There is a growing push by governments in the regions to bolster domestic semiconductor manufacturing capabilities. The European Chips Act was launched in 2023 with the aim of investing USD 48.0 billion in order to increase Europe's share of global chip production to 20% by 2030. Thus, strategic investments, government support, and collaborations with global partners can drive regional growth and innovation.

COMPETITIVE LANDSCAPE

Strategic Partnerships and Collaborations to Boost Market Presence of Key Players

The key players are entering strategic partnerships and collaborating with other significant market leaders to expand their portfolio and provide enhanced low-code and no-code tools to fulfill their customers’ application requirements. In addition, through collaboration, the companies gain expertise and expand their business by reaching a mass customer base. The major companies provide innovative solutions for industries and users to handle the growing expectations for sustaining customers.

List of Top Semiconductor Foundry Companies:

• Samsung (South Korea)


• GlobalFoundries Inc. (U.S.)


• Vanguard International Semiconductor Corporation (Taiwan)


• United Microelectronics Corporation (Taiwan)


• Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan)


• PSMC Co., Ltd (South Korea)


• Semiconductor Manufacturing International Corporation (China)


• Nexchip Semiconductor Corp (China)


• Tower Semiconductor Ltd. (Israel)


• Hua Hong Semiconductor Limited (China)

DEVELOPMENTS IN THE SEMICONDUCTOR FOUNDRY MARKET:

• March 2024: India's semiconductor fabrication facility in Assam by Tata Electronics Pvt. Ltd is scheduled to commence production by 2026. The initiative aims to boost domestic technology capabilities and foster innovation. The facility will begin with the production of semiconductor chips starting at 28nm.


• February 2024: Intel Foundry introduced a new roadmap, highlighting specialized node advancements, Intel 14A process technology, and Intel Foundry Advanced System Assembly and Test (ASAT) capabilities, empowering customers to achieve their AI goals.


• February 2024: Wipro collaborated with Intel Foundry to drive chip innovation, leveraging combined expertise for technological advancements in semiconductor solutions, enhancing competitiveness and market positioning.


• February 2024: HCL Technologies and Intel Foundry extended their collaboration to enhance semiconductor innovation. This expansion aims to leverage both companies' expertise for mutual business growth and technological advancement.


• January 2024: Valens Semiconductor and Intel Foundry Services unveiled strategic collaboration for next-gen A-PHY product development, leveraging combined expertise to drive innovation and meet evolving market demands.

REPORT COVERAGE

The report provides a competitive landscape of the market overview and focuses on key aspects such as market players, product/service types, and leading applications of the product. Besides this, it offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the growth of the market for semiconductor foundry in recent years.

REPORT SCOPE & SEGMENTATION