[Peace&Chips] Foundry Market Expected to Grow Nearly 20% Starting Next Year

Taiwan TSMC Expects Q4 Earnings Improvement
Samsung Electronics' Non-Memory Sales Also Rising

Foundry Market Expected to Grow 18% Next Year
Production Capacity Expansion Focused on Advanced Processes Anticipated

As we move into the second half of the year, hopeful news continues to come from the semiconductor industry. In South Korea, led by Samsung Electronics and SK Hynix, the pace of memory performance improvement is accelerating, and the overall semiconductor market is showing a similar trend. The Semiconductor Industry Association (SIA) in the United States recently announced that the global semiconductor market size for the third quarter reached $134.7 billion, a 6.3% increase from the previous quarter. Although this is a 4.5% decrease compared to the same period last year, it is clearly an improvement over the first half of the year.

The foundry market is showing the same trend. Industry leader Taiwan's TSMC projected in its third-quarter earnings report last month that fourth-quarter revenue would be between $18.8 billion and $19.6 billion. This could be the highest quarterly revenue this year. If TSMC records $19.6 billion in revenue, it would come close to last year's fourth-quarter revenue of $19.93 billion. TSMC expects that while there will be ongoing inventory adjustments by customers in the fourth quarter, increased demand for advanced processes will support its performance.

Samsung Electronics Pyeongtaek Campus / [Photo by Samsung Electronics]

Samsung Electronics also expects the situation to improve in the fourth quarter. The company anticipates increased performance as market inventory decreases and customer demand rises. Jung Ki-bong, Vice President of Samsung Electronics' Foundry Business Division, said during the third-quarter conference call, "We are sensing signs of demand gradually stabilizing and improving due to the recovery of consumer sentiment, easing inflation, and new product launches by major customers in PCs and mobile devices."

In fact, the securities industry forecasts that Samsung Electronics' non-memory business sales, including the Foundry Business Division and the System LSI Business Division (semiconductor design), will reach the 6 trillion won range in the fourth quarter. Specifically, Hana Securities projected 6.1 trillion won, IBK Investment & Securities 6.762 trillion won, and Kiwoom Securities 6.105 trillion won. They all share the common outlook that the situation will improve compared to the third quarter, which recorded sales in the 5 trillion won range.

Foundry Market Outlook Released by Market Research Firm IDC / [Image Source=IDC 'Semiconductor Market Outlook' Report Excerpt]

The foundry industry is even more optimistic about next year and the year after. While the second half of this year is seen as a period to anticipate performance improvement, a full-scale performance rebound is expected to occur starting next year. Market research firm IDC forecasts that the foundry market size will surge 18.2% to $124.5 billion next year compared to this year, and in 2025, the market could grow further by 19.7% to reach $149 billion.

In particular, as demand for applications requiring advanced semiconductors such as artificial intelligence (AI) increases, the production capacity of foundry companies manufacturing related products is expected to rapidly expand. The Semiconductor Equipment and Materials International (SEMI) predicts that the annual growth rate of 12-inch (300mm) foundry production capacity for high-value-added products will reach 13% through 2026. Samsung Electronics has also announced plans to increase foundry capital expenditures (CAPEX) focusing on advanced processes.

Editor's NoteSemiconductors, often called the rice of modern industry. Although it's a term we hear every day, it can be hard to explain. Peace & Chips will make the complex concepts and overall trends of the semiconductor industry easy to digest. Just bring your spoon.

This content was produced with the assistance of AI translation services.