According to Knometa Research, by 2026, Chinese mainland will surpass South Korea and Taiwan as the leading region for IC wafer production capacity. At the same time, Europe's share will continue to decline.
Knometa Research expects global IC wafer capacity to grow at an annual rate of 4.5% in 2024, 8.2% in 2025 and 8.9% in 2026.
China has been investing heavily in leading chip manufacturing capacity and will take market share from all but the Americas. As a result, China will overtake South Korea and Taiwan in 2026.
By the end of 2023, Chinese mainland's share of global monthly wafer production capacity was 19.1%, a few percentage points behind South Korea and Taiwan. By 2025, Chinese mainland's share of production capacity is expected to be roughly the same as that of leading countries. Then, by 2026, Chinese mainland is expected to occupy the top spot.
Europe accounted for about 5% of global IC wafer capacity in December 2021, and its share will continue to decline from 4.8% in December 2023 to 4.5% in December 2026. This is despite the fact that Intel, TSMC and partners have announced plans for European fabs, as well as a joint venture between ST and Globalfoundries. Most of them won't go live in bulk until the end of this forecast period.
In fact, most geographical regions of the world are building up large amounts of integrated circuit manufacturing capacity, often heavily subsidized by governments.
U.S.-led sanctions on China's semiconductor industry have hampered efforts by Chinese companies to develop and install leading-edge process technology capacity, but China's wafer capacity is expected to show the highest growth in the coming years. Politicians in the United States and Europe are now beginning to worry that traditional Chinese-made chips could flood and disrupt markets around the world.
China's ability to take global leadership depends on whether foreign companies with fabs in China, such as Samsung, SK hynix, TSMC and UMC, can continue to receive some reprieves from sanctions.
A significant portion of China's IC wafer capacity is owned by foreign companies, including the aforementioned companies as well as companies such as Powerchip (through its Nexchip subsidiary), Texas Instruments, Alpha & Omega Semiconductor and Diodes. By the end of 2023, while Chinese mainland has about 19% of the world's wafer production capacity, Chinese companies account for only 11%.
· Semiconductor wafer production capacity is at an all-time high
According to SEMI's "Global Fab Forecast" report released in January this year, semiconductor wafer production capacity is at an all-time high, including the opening of 42 new fabs this year, nearly half of which are located in China.
Growth in 2024 will be driven by increased cutting-edge logic and foundry capacity, applications such as generative AI and high-performance computing (HPC), and a recovery in final demand for chips. Capacity expansion slowed in 2023 due to weak demand in the semiconductor market and the resulting inventory adjustments.
"The recovery in global market demand and the strengthening of government incentives are driving a surge in fab investment in major chip manufacturing regions, with global capacity expected to grow by 6.4% in 2024," said Ajit Manocha, President and CEO of SEMI. "The heightened global focus on the strategic importance of semiconductor manufacturing to national and economic security is a key catalyst for these trends."
According to the report, from 2022 to 2024, the global semiconductor industry plans to build 82 new wafer fabs to be put into operation, including 11 projects in 2023 and 42 projects in 2024, with wafer sizes ranging from 300mm to 100mm.
Chinese mainland's share of global semiconductor production is expected to increase, driven by incentives. Chinese chipmakers are expected to launch 18 projects in 2024, with capacity up 12% year-on-year to 760 wpm in 2023 and 13% year-on-year to 860 wpm in 2024.
Taiwan is expected to remain the second-largest region in semiconductor capacity, with capacity growth of 5.6% to 540 wpm in 2023 and 4.2% to 570 wpm in 2024. The region is expected to start operating five fabs in 2024.
South Korea has the third-highest chip production capacity, with 490 wpm in 2023 and 510 wpm in 2024, with capacity set to increase by 5.4% as a fab comes online. Japan is expected to rank fourth with 460 wpm in 2023 and reach wpm by 2024, with capacity increasing by 2% as four fabs come online in 2024.
Global fab forecasts show that the Americas will build six new fabs by 2024, and chip capacity will increase by 6% year-on-year to 310 wpm. Europe and the Middle East are expected to increase capacity by 3.6% to 270 WPM in 2024 as four new fabs will come into operation. With the launch of four new fab projects, Southeast Asia is expected to increase capacity by 4% to 170 WPM by 2024.
Foundry suppliers are expected to be the largest buyers of semiconductor equipment, with capacity increasing to 930 WPM in 2023 and a record 1,020 WPM in 2024.
Capacity expansion in the memory sector slows down in 2023 due to weak demand for consumer electronics such as PCs and smartphones. Wafer capacity in the DRAM segment is expected to increase by 2% to 380 WPM in 2023 and 5% to 400 WPM in 2024. The installed capacity of 3D NAND is expected to remain at 360 WPM in 2023 and grow by 2% to 370 WPM in 2024.
In the discrete and analog space, vehicle electrification remains a key driver for capacity expansion. Discrete wafer capacity is expected to grow 10% to 410 WPM in 2023 and 7% to 440 WPM in 2024, while analog capacity is expected to grow 11% to 210 WPM in 2023 and 10% to 240 WPM in 2024.
The latest update to the SEMI World Fab Forecast Report lists 1,500 facilities and production lines worldwide, including 177 high-volume facilities and production lines, which are expected to begin operations in 2023 or later.
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