Global Semiconductor Foundry Revenue Share: Q3 2023
Published Date: November 30, 2023
This page shows the quarterly revenue share for the top players in the global semiconductor foundry market from Q1 2022 to Q3 2023.
Global Foundry Market Share (%)
(*) Samsung includes foundry service for its internal logic IC business
This page provides a view on the global foundries revenue share from 2021 till 2023. Here are some highlights from Q3 2023:
TSMC recorded sequential growth in revenue in Q3 2023, helped by positive signs of recovery in the PC and smartphone markets, along with early signs of demand stabilization.
Automotive and industrial applications underwent inventory corrections in Q3 2023, and we expect the inventory correction period to linger into Q1 2024.
AI chip demand was robust in Q3 2023 and will remain strong in Q4 2023, evident from the AI GPU shortage. We believe this trend will extend into 2024.
Recovery in advanced nodes is expected to surpass mature nodes in terms of capacity utilization rate. Mature node foundries will face challenges from low utilization rates and increasing price competition going forward.
Read our foundry quarterly report for Q3 2023 here.
For detailed insights on the data, please reach out to us at sales(at)counterpointresearch.com. If you are a member of the press, please contact us at press(at)counterpointresearch.com for any media enquiries.
Yet to see strong recovery signs in PC, smartphone, and consumer applications due to a slower pace of inventory digestion.
Automotive application remains on a growth trajectory but may have peaked in Q1 2023.
28nm continues as one of the key bright spots within the expected utilization rate back to 90% higher by the end of 2023.
United Microelectronics (UMC) reported $1.78 billion in revenue for Q1 2023, down 14.5% YoY and 20.1% QoQ, constrained by sluggish wafer demand and the continuing customer inventory digestion. Despite the utilization rate dropping to 70%, the average selling price (ASP) was still stable. The gross profit margin remained firm at 35.5% due to cost reduction and product mix optimization. The management indicated that demand recovery has not been strong in PCs, smartphones and consumer applications, and customer inventory digestion has been slower than expected.
Automotive stood out but might not be sustainable in coming quarters
The automotive business was one of the key drivers that posted growth in Q1 2023, contributing to 17% of total revenue in the quarter. Revenue from integrated device manufacturer (IDM) customers also increased to 23% in Q1 2023 from 19% in Q4 2022 helped by growth in the automotive business. However, management pointed out that revenue from automotive applications may have peaked in Q1 2023 because it has been strong for three consecutive quarters since H2 2022. Nevertheless, the automotive segment is still a long-term growth driver for UMC.
Remains positive in 28nm outlook
The utilization rate of 28nm node in Q1 2023 was relatively higher compared to other nodes despite inventory correction in the communication segment. The management guided 28nm’s utilization rate to gradually improve and exceed 90% level by the end of 2023, supported by the demand for OLED display driver ICs, digital TVs and Wi-Fi 6/6E. UMC 28nm delivers better power consumption and performance versus competitors, which strengthens the company’s value proposition to customers. The management believes the technology leadership will reflect on its 28nm market share.
2023 capital spending guidance unchanged
UMC reiterated its capital spending guidance of $3 billion for 2023. As for allocation, 90% will be used for 12-inch wafers and 10% for 8-inch wafers. Most of the capital spending will be on 12A P6 for the 28nm capacity. The capacity will reach 12kwpm by the end of 2023 with customer commitments on track, echoing the management’s positive demand outlook for OLED display driver ICs, digital TVs and Wi-Fi 6/6E. The remaining capital will be spent on 12i P3 in Singapore.
UMC has forecasted wafer shipment and ASP to be flat QoQ in Q2 2023 with utilization rate guided at low 70% and gross margin at mid-30%. The management pointed out that customer inventory digestion in semiconductors will continue to linger in Q2 2023 with limited visibility into H2 2023. However, the management is still positive on the 28nm demand outlook and the structural long-term growth trend in automotive applications driven by electrification and digitalization. The company will continue to work on cost control and product mix optimization to improve profitability during the semiconductor down cycle.
TSMC reported stronger Q1 2022 revenue driven by HPC (clients including Apple, AMD, Nvidia) which exceeded smartphone as its largest business segment for the first time of company history. Also the upside results came from UMC and SMIC, both delivered higher sales from increasing wafer price and local client demand. Relatively, the market share on Samsung and GF were stable, due to the constrains of capacities and lower production yields from some products in the advnaced nodes.
Foundry Revenue Share by Technology Nodes
The largest technology node (in revenue) was 7/6 nanometer during Q1 2022, accounting for 18% of the total foundry industry TAM. The main products in 7/6nm include smartphone AP/SoC, tablet APUs, GPUs, and CPUs that TSMC
dominated the market. The node of 16/14/12nm is the second largest node, primiarily for smartphone RF IC / 4G SoCs, wearable processors, SSD controller, and PC-related ICs. TSMC, Samsung and GlobalFoundries are the major vendors in 1xnm.
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Taiwan raised its epidemic warning for the whole country to Level 3 on May 19 in response to a rapid increase in local confirmed cases of COVID-19.
Major semiconductor and component companies in Taiwan announced a series of steps over the weekend to minimize the pandemic risk, including working in separate teams and working from home (WFH).
Counterpoint believes there will be only a limited impact on the semiconductor shortages being faced globally.
After raising its epidemic warning to Level 2 on May 11, the Taiwan Central Epidemic Control Center (CECC) again raised it to Level 3 on May 15 for Taipei City (Taiwan’s capital city) and New Taipei City (Taiwan’s largest city). It further raised the warning level for the rest of the island to Level 3 on May 19, in response to a surge in COVID-19 cases amid an increased risk of community transmission.
The new wave of domestic infections started from an outbreak at a major airline in Taiwan. It has already caused hundreds of local confirmed cases, accounting for over 90% of total local transmitted (and confirmed) cases since the beginning of the pandemic in 2020. That said, before this airline outbreak, Taiwan was only reporting zero or single digit confirmed cases per day entering 2021, and most of them were imported cases.
Restrictions on indoor and outdoor activities
The Level 3 restrictions will remain in force until May 28. Taipei City and New Taipei City reported the most confirmed cases recently. Taipei City accounts for 11% of Taiwan’s population and New Taipei City accounts for 17%. According to Taiwan National Statistics, Taipei City and New Taipei City together contribute 43% of Taiwan’s revenue. Therefore, the restrictions imposed on enterprises under Level 3 could trigger certain concerns over Taiwan’s economic momentum.
In general, Level 3 restrictions bar indoor activities involving more than five people or outdoor activities involving more than 10 people. However, such activities can be allowed if the organizers follow government rules and get approvals from the regulatory authority. For example, the government rules for such gatherings require the participants to sit separated by a vacant seat, to wear masks, to record their name and contact information, and not to have food and beverages.
Non-Taiwanese can’t enter Taiwan
Following the CECC announcement, border restrictions were brought on May 17. Under these, only Taiwanese and people who have a resident certificate are allowed to enter or transit through Taiwan. The border restrictions are subject to adjustments on a rolling basis along with epidemic warning.
What Taiwan companies are doing
Based on our research, 55% of leading-edge (10 nm and below) logic IC capacity and 45% of total logic foundry capacity is located in Taiwan. Combined with other key component vendors and ODMs, Taiwan is a major player in the global supply chain. Therefore, the companies based here are more careful on COVID-19.
The company will start working in separate teams and on rotational schedules and WFH from May 19.
TSMC has its major foundry capacities in Hsinchu (Northern Taiwan), Taichung (Central Taiwan) and Tainan (Southern Taiwan).
All non-essential vendors will be restricted from entering TSMC facilities. Face-to-face meetings stand canceled while TSMC staff and vendors have been told to avoid moving across the company’s main production sites.
Mediatek has announced a WFH policy for its employees in Taipei City and New Taipei City for the May 17-May 28 period.
The staff in Hsinchu will begin separate team operations.
Realtek’s WFH policy and separate team operations at its Hsinchu office will remain in force from May 17 to June 8.
UMC announced its separate team operations on May 17. The staff has been asked not to move across its three different operating areas (Taipei, Hsinchu and Tainan) until May 28.
The company says it will follow stricter rules than local governments during epidemic outbreaks. Restrictions have been placed on the entry of non-essential vendors and guests to UMC facilities.
Vanguard’s non-production line employees will enter separate team operations and follow a WFH policy from May 19 to June 15.
Non-essential vendors and guests are not allowed to enter Vanguard’s fab and offices.
Hon Hai, the major iPhone and other smartphone assembler, has announced a WFH policy for its employees for the May 17-May 28 period.
CECC’s Four-tier Epidemic Warnings
What if Taiwan raises warning to Level 4
If local cases continue to accumulate in the next few days and hit the 100+ cases per day mark for two weeks, with more than half being of unknown origins, Taiwan will need to impose Level 4 restrictions.
Under Level 4, people can leave home only for essential activities (like buying daily necessities). Besides, all in-person school and work is suspended, and companies and schools must implement WFH and remote education. Last but not least, lockdowns will be activated in cities/towns where outbreaks become severe.
However, according to CECC, the possibility of Taiwan entering Level 4 warning is low. The country is comparatively better placed in dealing with this pandemic due to its experience in tackling the SARS outbreak of 2003 and the first wave of COVID-19 last year.
There is no doubt Taiwan is facing a bigger COVID-19 risk this time. However, companies with larger scales (like those listed above) have already raised their pandemic prevention measures to Level 3 and will manage to limit any negative impact. Therefore, unless Taiwan is forced to raise the epidemic warning to Level 4, we do not see any major concern over capacity constraints.
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