China's semiconductor firms in the IC packaging & testing, equipment, foundry, and IC design industries performed much better than their IDM, materials, optoelectronics, and memory compatriots in terms of market capitalization in 2023, according to DIGITIMES Asia 2023 top 100 semiconductor market cap ranking report. Recent sales reports also reflect a robust recovery of business on the way.

Although prices in December 2023 continued to decline, Chinese and Taiwanese panel manufacturers plan to expand production cuts during the Lunar New Year period.

With the rapid development of generative AI and large language model (LLM) applications, the data center AI chip market size will also leap upward in 2023. While competitors AMD and Intel are set to get a piece of that pie, Nvidia, a dominant leader in the data center AI chip market, seems more interested in making new pies.

At the close of 2023, it's reported that TSMC and Samsung will delay the mass production of 4nm chips at their new fabs in the US from 2024 to 2025, posing a challenge to the Biden administration's semiconductor expansion efforts. Intel's move to commence 2nm production in 2024 has been hailed as a critical step, aligning with the US Chips and Science Act goals, including widening its semiconductor tech gap with China through commercializing sub-2nm technology.

As 2023 draws to a close, Open Radio Access Network (O-RAN), once seen as a promising innovation, has witnessed limited progress amid a global economic slowdown. Omdia estimates predict an 11% annual decline in the global RAN market in 2023, impacting new players entering the O-RAN industry. However, a significant development is AT&T's announcement of a five-year, US$14 billion deal with Ericsson to deploy an O-RAN architecture, raising questions about the openness of the collaboration.

Intel has reportedly acquired 6 high-NA EUV lithography machines from ASML, which is scheduled for shipment in 2024, according to South Korean media outlets. Intel's fast adoption of the high-NA EUVs reflects its ambition to grab the 2nm node foundry market share before TSMC can do it.

China's automotive industry reached a milestone in 2023. The country became the world's largest car exporter this year and saw the homegrown automakers occupy over 50% of the domestic market share for the first time. In 2024, Chinese carmakers will continue their offense, causing a reshuffle in the EV and automotive sectors worldwide.

With photonic integrated circuits, above all silicon photonics, seeing a wave of industry hype owing to their vast potential in the datacom and telecom applications, relevant suppliers in Taiwan's semiconductor and electronics manufacturing sector have been gearing up for the opportunities, particularly as international photonics players increasingly seek to tap into Taiwanese chip manufacturing prowess.

There are three ways to grow the economic scale in the modern-day semiconductor industry: continuous miniaturization of processes, advanced packaging, and the application of new materials.

China-based pure-play foundry SMIC reportedly dedicated an R&D team to make 3nm chips, with only DUV lithography equipment available as the US blocked its access to EUV machines. It would be a Herculean task for the chipmaker, even with a brilliant co-CEO, Liang Mong-song, leading the team.

The recent termination of electric vehicle (EV) subsidies in Germany, coupled with a global surge in inflation, rising prices, and interest rates, has presented a hurdle for EV sales. Germany's sudden halt to EV incentives has unexpectedly opened the door for a resurgence of internal combustion engine(ICE) vehicles, particularly benefiting German automakers such as Volkswagen, Mercedes-Benz, and BMW. With combustion vehicles as their strength and electric vehicles as a supplemental offering, these companies strategically fortify their positions to navigate external challenges.

The importance of the semiconductor industry to Taiwan is self-evident. Among them, TSMC (Taiwan Semiconductor Manufacturing Company) holds a high global market share in advanced processes defined as below 10 nm. Therefore, whether it's Apple's mobile application processors, AI server GPUs, or custom ASICs required for cloud data centers, most of those advanced chips ultimately depend on TSMC's production.

In 2023, the generative AI market is poised to generate approximately US$3.7 billion in total revenue (physical infrastructure not included), as highlighted in a recent report by S&P Global. Nvidia CEO Jensen Huang likened this year to the "iPhone moment for artificial intelligence" in February, signifying a crucial juncture for the highly anticipated technology and its seamless integration into various aspects of daily life. In retrospect, as we examine the significant events and advancements of the AI-dominated year, DIGITIMES Asia delves into the pivotal moments, progress, and prospects that have defined the landscape of AI and large language models.

EVs are on track to gain momentum in the coming years. In 2023, a price war intensified the industry's competition. Geopolitics facilitated the localization of production. Multiple factors will continue to weigh in on the sector's rivalry and collaboration in 2024, with China remaining the center of it.

The semiconductor industry went through a year-long correction over the past year. With smartphone and PC inventory correction finally ending, new hopes are emerging on the horizon.