Semiconductor Week in Review (Dec 8- 14) :
The global semiconductor industry is experiencing significant shifts in late 2024, with TSMC cementing its dominance in advanced chip manufacturing while rivals Samsung and Intel struggle to maintain competitiveness. As TSMC maintains full capacity utilization in 3nm and 5nm processes, Japan's Rapidus ambitiously targets 2nm chip production by 2025, backed by substantial government support.
Meanwhile, China's chip design sector grew at 11.9%, lagging behind the global industry's 19% growth rate for the first time. At the same time, South Korean memory makers Samsung and SK Hynix receive relief from US export controls for their Chinese operations. This dynamic landscape is further complicated by India's growing semiconductor imports and Apple's plans for an ultra-thin iPhone, highlighting the evolving nature of global semiconductor supply chains and technological innovation.
Taiwan semiconductor giant stands alone as rivals falter in advanced chip manufacturing
Tsmc's dominance in the semiconductor foundry business appears unshakeable through 2025, with the company maintaining a stranglehold on advanced chip production below 7nm while competitors Samsung and Intel struggle to keep pace. Samsung's foundry market share is expected to drop below 10%, while Intel grapples with leadership challenges and strategic uncertainties in its attempt to spin off its manufacturing business.
Despite concerns over US-China AI chip restrictions, Tsmc's chairman C.C. Wei confidently declared the company faces no real competition, as it maintains full capacity utilization in 3nm and 5nm processes with November revenue projected at NT$270-275 billion.
The company's technological lead, particularly with its upcoming 2nm GAA process, combined with its crucial position in the global semiconductor supply chain and strong US customer base accounting for over 70% of revenue, has effectively created a moat that neither Samsung's technical challenges nor Intel's strategic fumbles can bridge.
Japan races toward 2nm chip production as Rapidus targets 2025 trial run, despite funding hurdles
Rapidus, Japan's ambitious semiconductor venture, is making significant strides toward its 2nm chip production goals. Chairman Tetsuro Higashi announced at SEMICON Japan 2024 that trial production will begin in April 2025 at the company's Chitose facility. The Japanese government is throwing substantial weight behind the initiative, pledging JPY200 billion for fiscal 2025 and working to address a JPY4 trillion funding gap for mass production by 2027.
While the factory is set to receive critical equipment including EUV lithography machines by December 2024, the project faces significant financial challenges despite securing JPY7.3 billion in private investments from major stakeholders like Toyota and SoftBank. The government's commitment extends to a broader JPY10 trillion investment in AI and semiconductor industries, viewing Rapidus as essential to reducing global dependence on TSMC and strengthening Japan's semiconductor capabilities.
The funding strategy includes a mix of institutional investments, debt guarantees, and a novel proposal to exchange public assets for company shares, highlighting Japan's determination to regain its position in advanced chip manufacturing.
South Korean chipmakers win China relief as CXMT dodges US curbs
South Korean memory chip giants Samsung and SK Hynix receive breathing room under new US semiconductor export controls, maintaining their verified end-user status for Chinese operations while the notable exclusion of Chinese manufacturer CXMT from restrictions raises industry concerns. The exemptions allow Samsung to continue producing 40% of its NAND memory at its Xi'an factory and upgrade to the 236-layer V8 process, while SK Hynix can proceed with fourth-generation 10nm class DRAM production at its Wuxi facility, where it makes 45% of its DRAM.
However, CXMT's absence from the Entity List has sparked worry in South Korea's semiconductor sector, especially as Morgan Stanley projects the Chinese firm to surpass Micron in global DRAM shipments by 2026. Industry experts suggest this omission might stem from US equipment makers' reliance on Chinese sales or could be a strategic move to check South Korean companies' growth, while CXMT benefits from strong domestic market support and government backing.
Apple plans thinnest iPhone yet as 2025's iPhone Air enters production phase
Apple's rumored iPhone 17 Air, which has entered the new product introduction phase at Foxconn, signals a potential shift in the tech giant's product strategy amid criticism over design stagnation. The device, reportedly set for a 2025 release at 6.25mm thick, will replace the current iPhone Plus model in a lineup alongside the base iPhone, iPhone Pro, and iPhone Pro Max, according to supply chain sources.
While positioned in the mid-range market segment due to its experimental nature, the Air's ultra-thin chassis requires a complete overhaul of design and production processes, potentially serving as a technological stepping stone toward foldable phones if screen crease issues can be resolved.
India sees chip imports surge 18.5% as domestic semiconductor push takes shape
India's escalating semiconductor imports mirror its ambitious push into electronics manufacturing, with new data showing an 18.5% year-over-year surge to US$20.19 billion in fiscal 2024. The country imported 18.43 billion chips during this period, with China emerging as the dominant supplier, accounting for over 30% of imports in early fiscal 2025, followed by Taiwan, Hong Kong, and South Korea.
To counter this growing dependency, India has launched the Semicon India Programme, approving five semiconductor manufacturing projects worth INR1.52 trillion (approx. US$18 billion), while simultaneously investing in workforce development through initiatives like the Chips-to-Start-ups scheme, which has already trained over 25,000 engineering students in chip design and related technologies.
The government's multifaceted approach aims to transform India from a major semiconductor importer into a self-reliant manufacturing hub, though the transition remains in its early stages as import volumes continue to climb.
Intel, Samsung foundry ambitions fade as TSMC's dominance grows
Semiconductor giants Intel and Samsung face mounting challenges in their foundry businesses as industry leader TSMC maintains its dominance with over 60% market share. Despite ambitious plans—Intel's goal to overtake Samsung as the second-largest foundry and Samsung's US$94 billion investment strategy to surpass TSMC by 2030—both IDMs struggle with fundamental issues. Both companies grapple with low yields, limited customer adoption, and operational inefficiencies, compounded by their integrated business models that deter external customers.
Samsung's recent setbacks include losing Nvidia's 8nm orders and struggling with 3nm chip adoption, while Intel faces criticism over Pat Gelsinger's leadership and has increased outsourcing to TSMC amid declining facility utilization. Industry experts suggest both companies may need significant restructuring, including workforce reductions and scaled-back investments, to prevent wider corporate crises as they fall further behind TSMC technologically.
China's chip design sector growth lags global semiconductor recovery for first time
China's semiconductor design industry is projected to grow 11.9% to CNY646 billion (approx. US$89.66 billion) in 2024, marking the first time it has fallen behind the global semiconductor industry's expected 19% growth, according to Wei Shaojun, president of the China Semiconductor Industry Association IC Design Branch.
Speaking at ICCAD-Expo 2024 in Shanghai, Wei highlighted the sector's ongoing challenges, including restricted access to advanced manufacturing processes and a heavy focus on mid-to-low-end market segments. While the Yangtze Delta region leads with 16.2% growth to CNY382.84 billion, the industry faces mounting pressure as evidenced by the top 10 design firms' sales declining 3.7% to CNY176.2 billion.
Wei emphasized the urgent need for comprehensive technological upgrades and ecosystem development, particularly as China's chip design houses remain concentrated in communications and consumer electronics, with limited presence in the strategic computer and AI chip markets.
