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Semiconductor Foundry Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)
The semiconductor foundry market was valued at USD 104. 74 billion in 2021 and is expected to reach USD 161. 20 billion by 2027, registering a CAGR of 7. 54% during the period 2022 to 2027. Favorable government initiatives and the increasing demand for semiconductor chips are among the key factors driving the growth of the market.
New York, May 03, 2022 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Semiconductor Foundry Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)" - https://www.reportlinker.com/p06106031/?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 comprises 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 reduced costs, vendors are expected to take up higher production contracts, resulting in significantly higher supplies and covering the shortage gaps present in various industries.
The cost of building state-of-the-art chip foundries has increased exponentially, which puts pressure on the industry. 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) indulged in aggressive plans to double 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 form of tax benefits to boost chipmakers’ competitiveness amid a critical global shortage of key components. Such trends are expected to propel the respective countries’ position in the global market.
Key Market Trends
The 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.
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 into all cars by 2022.
However, various automotive manufacturers face hardships in maintaining production schedules due to the lack of semiconductor-based electronics components. Furthermore, the limited capacity expansion of 8-inch semiconductor production has intensified the shortage in the past few years. In the short term, this has led to price increases. This scenario, coupled with a significant decline in demand for commercial and passenger vehicles globally, negatively impacted the revenues from the automotive segment.
For instance, in April 2022, Ford announced that its Flat Rock assembly plant near Detroit would go idle due to the semiconductor shortage. General Motors also announced that it would be idling a major pickup truck manufacturing plant near Fort Wayne, Indiana, for two weeks in April.
Asia Pacific is Expected to Hold a Major Market Share
The 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 semiconductor foundries.
China’s new five-year plan for 2021-25, announced in March 2021, establishes boosting basic research as a critical priority. Central government spending on basic research will increase 11% in 2021, well above the 7% planned for the overall R&D investment and the 6% target for GDP growth. Semiconductors have been designated as one of the seven areas that will be given priority in terms of funding and resources. Firms involved in design develop the nanometer-scale integrated circuits that perform the critical tasks that make electronic devices work, such as computing, storage, connectivity to networks, and power management.
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 the imports and US technologies to satisfy domestic demand. According to the Qichacha, from January 2021 through May 2021, China saw 15,700 new companies involved in everything from designing to manufacturing chips.
China is moving significantly closer to self-reliance in 7nm chip production. China has made breakthroughs in its 7nm chip-making process, reportedly developing tools and know-how for several segments of the manufacturing process amid efforts to reduce reliance on foreign equipment and material vendors.
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, and STMicroelectronics.
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 the 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 5 nm 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
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Read the full report: https://www.reportlinker.com/p06106031/?utm_source=GNW
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