Driven by AI demand, TSMC’s performance, and China’s industry recovery, the global foundry industry jumped 27% YoY in Q3 2024. However, non-AI demand remained slow.
The global semiconductor foundry industry saw a 27% YoY and 11% QoQ revenue growth in Q3 2024, according to a report by the Counterpoint Research. The growth was primarily driven by strong AI demand and a faster-than-expected recovery in China. Moreover, demand for advanced nodes like TSMC’s N3 and N5 continued to drive growth, fuelled by vital AI semiconductor needs and smartphone demand.
However, according to the report, recovery in non-AI semiconductors remained slow, and the global utilisation rate (UTR) for mature-node foundries outside China remained weak at 65%–70%. Among mature nodes, 12-inch wafers experienced a better recovery than 8-inch nodes.
In 3Q24, China’s foundry market recovery outpaced the global market. Companies like SMIC and HuaHong saw UTRs rise to over 90% in Q3, up from over 80% the previous quarter.
This was supported by early demand recovery from China’s fabless firms and semiconductor localisation efforts. As Chinese foundries aggressively expand capacity in mature nodes, competition in this space is set to intensify into 2025.
Taiwan Semiconductor Manufacturing Company (TSMC) reported a strong 3Q24 performance, exceeding expectations with high gross margins driven by high UTRs at its N5 and N3 nodes. The company’s industry revenue share rose to 64%, from 62% in Q2.
TSMC expects significant AI demand growth, with AI servers making up the mid-teens of its 2024 revenue. Despite expanding CoWoS capacity in 2025, it continues to address rising AI demand and forecasts a steady recovery in the non-AI semiconductor market starting in 2025.
Samsung Foundry’s revenue grew slightly QoQ but faced weaker-than-expected seasonal demand for Android smartphones. It maintained its second-place position with a 12% market share. Samsung is advancing its 2nm GAA process for 2025 mass production, targeting mobile, HPC, AI, and automotive applications and collaborating with customers on 2.5D and 3D packaging solutions.
Ranking third with 6% market share, GlobalFoundries had satisfactory Q3 2024 results, with increased wafer shipments and sustained pricing power. The company saw a boost in smartphones from inventory normalisation, while automotive and IoT demand remained stable. It expects strong non-smartphone growth in Q4, despite a larger-than-usual smartphone decline.
SMIC, with 5% market share, reported strong Q3 revenue growth, driven by increased consumer electronics, smartphones, and IoT demand. Its UTR reached 90.4%, driven by solid demand in 28nm, 40nm, and 65nm nodes. SMIC is optimistic for annual growth despite conservative Q4 guidance due to expected seasonal weakness.
With 5% market share again, UMC saw steady revenue growth in 3Q24, driven by demand for 22/28nm nodes, though non-AI demand remained sluggish in sectors like automotive and industrial. Its utilisation rate exceeded previous guidance, and UMC focuses on specialised technologies to maintain competitiveness. However, a wafer price adjustment is expected in early 2025, which may affect margins.
Research Analyst Adam Chang from Counterpoint noted that strong AI semiconductor demand is driving TSMC’s growth, particularly with N5 nodes for AI accelerators and data centres.
Commenting on the growth, “This surge in demand for advanced nodes is a key factor propelling the overall foundry industry’s growth, as AI applications continue to be a major catalyst for innovation. However, the oversupply in mature nodes, compounded by increased capacity at both Chinese and global mature node foundries, creates challenges in that segment.”
He advised that as AI demand continues to push the semiconductor and foundry industries forward, companies in mature-node foundries will need to adapt to maintain profitability.
