Good News! Semiconductor to Recover in 2024 Amidst Intense Competition

According to the most recent IDC research, global demand for artificial intelligence (AI) and high-performance computing (HPC) is rising rapidly. This growth is in tandem with the demand for smartphones, personal computer, infrastructure, and growth in the automotive industry. It is expected that when the semiconductor industry recovers, it will bring about a new growth spurt in related industries.

“The trade war and tight control over supply and output by major chip manufacturers have contributed to the high prices of semiconductors since the beginning of November last year. However, with the continued increase in demand for AI, it will drive the overall semiconductor market to recover in 2024, with a compound annual growth rate of over 20%. This means that the semiconductor supply chain including design, production, packaging and testing, will definitely bid farewell to the downturn in 2023,” said Galen Zeng, Senior Research Manager of IDC Asia/Pacific.

Apparently, the emerging "Advanced driver assistance systems (ADAS)" and "infotainment systems" are key factors driving the development of the automotive semiconductor market, as ADAS accounts for the largest share of the automotive semiconductor market. It is expected to have a compound annual growth rate (CAGR) of 19.8% by 2027, accounting for 30% of the automotive semiconductor market that year. Meanwhile, infotainment systems account for the second largest share of this market, with a CAGR of 14.6% by 2027, accounting for 20% of the market in that year. Driven by automotive intelligence and connectivity, automotive electronics will become increasingly reliant on chips overall, which means the demand for semiconductors will be sustained over the long term.

In addition, AI will become more integrated into personal electronic devices from 2024 onwards, with AI smartphones, AI PCs, and AI wearables gradually being introduced to the market. It is expected that there will be more innovative applications for this type of device which will lead to increasing demand for semiconductors designed to run artificial intelligence workloads.

Regarding the competitive situation in the semiconductor market, Taiwan Semiconductor Manufacturing Company (TSMC) is still the leader in this race. It is currently holding a market share of 13% in 2023. Moreover, TSMC's market share in the chip foundry business was over 58% in 2023.

To maintain this advantage, TSMC is investing heavily to increase its production capacity and developing sub-2nm chip foundries. The company has also announced plans to build four advanced factories in Taiwan and expand its operations around the world via new plants in Arizona state of the United States (3-4 nm chips), Japan (12–28 nm chips), and Germany (12–28 nm chips). This expansion reflects TSMC's commitment to innovation and its ability to meet the growing demand for smaller, faster, and more efficient chips.

On the other hand, its competitor Samsung which has a factory in Texas, United States, will play a key role in providing 11-14nm FinFET technology for radio frequency applications. This highlights Samsung's expertise in producing advanced chips. Meanwhile, CPU pioneer Intel is aiming to reclaim the chip foundry throne with its 18A process, a technology that will push the boundaries of semiconductor manufacturing. At the moment, the company is investing heavily in facilities in both the United States and Europe to bring this ambitious project to fruition.

As the race to develop and manufacture sub-2nm chip foundries intensifies, leaders such as TSMC, Samsung and Intel are investing billions of dollars to maintain their position in this industry and ensure that the world has access to cutting-edge chips to power modern technologies that are vital and essential to humanity's daily lives.

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