Taiwan dominates the world’s semiconductor manufacturing industry – controlling 48 per cent of the foundry market and 61 per cent of the world’s capacity to build at 16nm or better – according to market intelligence firm TrendForce.
In 2021, Taiwan won 26 per cent of the world’s semiconductor revenue, and accounted for 64 per cent of foundry revenue.
In 2022, Trendforce predicts the global foundry market to increase by 20 per cent, to $128.7 billion, and Taiwan’s share of that revenue will increase two points. Local hero Taiwan Semiconductor Manufacturing Company (TSMC) will increase its share from 53 to 56 per cent and another Taiwanese firm, United Microelectronics Corp (UMC), will be steady at seven per cent while lesser-known local Powerchip Semiconductor (PSMC) will lose a point of revenue share.
The USA and Europe have recently decided to massively subsidize the development of new chip fabrication facilities, but TrendForce forecasts those new efforts won’t make much of a dent in the short term. By 2025 the firm predicts Taiwanese chip shops’ own expansion efforts will mean the island nation still holds 44 per cent of the global foundry market, 47 per cent of the 12-inch wafer capacity, and 58 per cent of capacity for advanced manufacturing processes.
TrendForce opined that Taiwan will retain market share because it takes years to build up a chipmaking ecosystem.
“Semiconductor enclaves do not come together quickly,” the firm wrote. Nor do the supply chains for materials and talent that feed them.
Some planned expansion by Taiwanese chipmakers will see new facilities open in China. But TSMC also plans new fabs in the US, Japan and at home. UMC is expanding existing fabs in Singapore and Taiwan. PSMC and Vanguard are building new fabs in Taiwan as well.
Taiwan’s semiconductor industry has been entrusted to build factories in such diverse locations because it has proved it can “ride the waves” and still produce reliable chips in a tough climate of pandemics and geopolitical turmoil.
Which is not to say Taiwan will have an easy time of it. Expansion in China has already been flagged as creating risks of technological and economic espionage.
“Therefore, Taiwanese foundries still tend to focus on Taiwan for R&D and production expansion,” observed the market intelligence firm.
The sentiment was echoed by TSMC founder Morris Chang last week as he lamented the difficulties associated with growing US chip production.
TSMC has had trouble keeping up with demand, admitted CEO CC Wei on the company’s earning call earlier this month. The chipmaker reported Q1 2022 revenue grew 36 per cent year-on-year to $17.6 billion.
Rivals like Intel are keen to cash in on a chunk of that action, and are working to revitalize their foundries in the US and Europe, reducing reliance on Asian chips.
But as TrendForce pointed out, that takes time – and Taiwan’s chipmakers are ready to roll. ®