In a rapidly evolving technological landscape, Asia is set to surpass the United States in semiconductor production capacity by the end of 2024, according to the latest World Fab Forecast released by SEMI, the global semiconductor industry association. Let's delve into the key findings and what this means for the global semiconductor industry.

SEMI

SEMI, known as Semiconductor Equipment and Materials International, is a global industry association that represents companies involved in the manufacturing supply chain of semiconductors, photovoltaics (solar), micro-electromechanical systems (MEMS), solid-state lighting (LEDs), and related technologies. SEMI provides a platform for collaboration and information exchange among companies, fostering innovation and addressing common challenges within the semiconductor and electronics manufacturing industries.

The association plays a crucial role in organizing events, conferences, and exhibitions, bringing together professionals, researchers, and companies from the semiconductor ecosystem. SEMI also publishes market research reports and industry forecasts, providing valuable insights into market trends, technology advancements, and the overall health of the semiconductor industry.

Additionally, SEMI actively engages in advocacy efforts, working to address policy issues and promote initiatives that support the growth and competitiveness of the semiconductor industry on a global scale. Overall, SEMI serves as a vital resource for companies and professionals involved in the dynamic and rapidly evolving field of semiconductor manufacturing.

Asia's Dominance and Growth: Over 80% of the world's fab capacity is concentrated in Asia, with China leading the charge. The World Fab Forecast predicts China's share of global capacity to rise from 26% to 27% in 2024, outpacing both the United States (below 10%) and Europe (under 9%). This comes as no surprise as Asia continues to be the hub of semiconductor manufacturing.

Record-Breaking Capacity: The worldwide fab capacity is expected to reach a new high, exceeding 30 million wafers per month in 2024, a 6.4% increase from the previous year. SEMI estimates the commencement of operations at 42 new fabs this year, producing wafers ranging from 300mm to 100mm in diameter.

Driving Forces Behind Capacity Growth: The surge in capacity is driven by advancements in leading-edge logic (such as Intel) and foundry (like TSMC) applications, emphasizing high-performance computing, AI, and power semiconductors for electric vehicles. Notably, the production of silicon carbide power semiconductors is transitioning to larger wafers, a move from 150mm to 200mm.

Regional Breakdown: China leads the pack with an anticipated 13% increase in capacity, reaching 8.6 million wafers per month. Other notable capacity increases include Taiwan (4.2%), South Korea (5.4%), Japan (2%), America (6%), and Europe/Middle East (3.6%).

Semiconductor Giants: TSMC and other semiconductor foundries are projected to contribute nearly a third of total capacity by the end of 2024, followed by Intel and other integrated circuit producers, discrete semiconductors, DRAM, NAND flash memory, and analog devices.

Challenges for the U.S. and EU: Despite political efforts to boost domestic chip supply chains, the U.S. and EU face slow growth. SEMI's president, Ajit Manocha, attributes this to the delayed implementation of the Biden administration's CHIPS Act subsidy, which was announced in December 2023.

Future Prospects and Risks: While fab construction plans by major players suggest significant increases in U.S. capacity starting in 2025, challenges such as labor shortages and disputes with unions delay some projects. In Germany, semiconductor subsidies face disruption due to a court ruling, risking Germany's competitiveness in the global market.

Global Subsidies and Competition: Countries like Israel, the U.S., Taiwan, South Korea, Japan, and China aggressively subsidize their semiconductor industries. Despite ongoing conflicts, Israel recently announced a substantial grant for Intel's new fab. China's semiconductor import substitution campaign is in full swing, potentially impacting global semiconductor makers who rely on sales to China.

In conclusion, as Asia cements its dominance in semiconductor production, the U.S. and EU must navigate challenges and ramp up efforts to secure their positions in the evolving global technological landscape. The semiconductor industry's strategic importance to national and economic security is undeniably in the spotlight, setting the stage for continued shifts and adaptations in the years to come.