Boosted by short-term orders in the electronics supply chain and shipments of AI and high-performance computing (HPC) chips, Taiwan's wafer foundry industry posted better-than-expected revenue in the first half of 2024, reaching US$44.5 billion. This represents a growth of 19% year-on-year and 6% from the second half of 2023, indicating a steady recovery in the industry, according to DIGITIMES Research's latest report covering Taiwan's wafer foundry industry.
Revenue is expected to increase by another 18% sequentially in the second half of 2024, bringing the full-year total to US$97 billion, driven by demand for advanced processes in 5G smartphones and HPC applications. Meanwhile, amidst rising geopolitical risks, TSMC has introduced its "Foundry 2.0" initiation to address growing antitrust concerns, although it remains uncertain whether various governments will adopt it, the report indicated.
In the first half of 2024, Taiwan's wafer foundry industry outperformed expectations, mainly benefiting from robust demand for AI and HPC applications, offsetting the adverse electronics industry's off-season effect and the slow recovery in mature processes.
Regarding the second half of the year, while the electronics industry is expected to have moderate momentum in its peak season and the demand recovery for mature processes remains weak, the ongoing strong demand for Nvidia and AMD's AI and HPC chips will support revenue growth in the 5/4 nm processes.
Additionally, foundry demand for flagship 5G smartphone application processors from Apple, Qualcomm, MediaTek, and Intel's Lunar Lake processors will likely push the proportion of the 3nm process revenue to the 20% level. These factors will help Taiwan's wafer foundry industry achieve record-high revenue in 2024.
Moreover, with geopolitical risks increasing in the lead-up to the US presidential election, Taiwan's wafer foundries, including TSMC, are likely to face added pressure. TSMC's initiation of Foundry 2.0, redefining the scope of business covering the foundry industry, highlights the growing convergence between wafer foundry services and non-memory integrated device manufacturing (IDM) and the rising importance of advanced packaging technologies.
TSMC is actively investing in these technologies to serve its customers better. DIGITIMES Research projects that under this new framework, TSMC's market share could decline to 28%, while Intel's share may rise to 22%, narrowing the gap between the two firms and potentially alleviating antitrust concerns for TSMC.
