Thomas Alsop
Research expert covering the global hardware industry
Semiconductor foundries - statistics & facts
The world relies on Taiwan for semiconductor manufacturing, home to the foundry giant Taiwan Semiconductor Manufacturing Company (TSMC). However, concerns have been raised about the reliance on one region and one company, especially as tensions between China and the United States over Taiwan continue to rise. As a result, governments around the world have taken steps to address this dependence by investing in domestic semiconductor manufacturing and fostering closer cooperation. The development of new fabrication plants across the world is key to deepening capacity and meeting semiconductor demand, such as the boom in AI technologies and growth of electric vehicles.
A foundry manufactures chips in a fabrication plant, commonly referred to as a fab. Such firms rely on semiconductor manufacturing equipment and materials to fabricate a chip design on a silicon wafer. Wafer fabrication is a highly capital-intensive process and requires extensive and in-depth knowledge, especially when producing advanced chips, such as those designed to support artificial intelligence (AI) applications.
TSMC is the dominant force among foundries
The foundry market leader is TSMC, with the company contracted to complete fabrication tasks for various customers including Nvidia, Apple, AMD, and Qualcomm. TSMC occupies around 60 percent of the semiconductor foundry market, with competitors including Samsung Foundry in South Korea, GlobalFoundries in the United States, and Semiconductor Manufacturing International Corporation, or SMIC, in China. As it seeks to maintain its competitive edge and diversify its offering, TSMC has set out plans to expand or begin operations across the United States, Singapore, Japan, and Germany.What is a semiconductor foundry?
The semiconductor industry can be categorized into three distinct stages: design, fabrication, and assembly. Companies that perform all three of these steps are referred to as integrated device manufacturers, or IDMs, with examples including Intel and Samsung. Firms that only design chips, known as fabless companies, do not own any production facilities. The actual production or fabrication of semiconductors is outsourced to foundry companies.A foundry manufactures chips in a fabrication plant, commonly referred to as a fab. Such firms rely on semiconductor manufacturing equipment and materials to fabricate a chip design on a silicon wafer. Wafer fabrication is a highly capital-intensive process and requires extensive and in-depth knowledge, especially when producing advanced chips, such as those designed to support artificial intelligence (AI) applications.
Safeguarding the supply of chips
Multiple governments have announced a range of measures over the last two years to safeguard the supply of chips. China, the United States, and the European Union have approved multibillion-dollar funding packages to boost semiconductor manufacturing within their own borders. With Taiwan alone accounting for a 70 percent share of foundry market revenue, geopolitical tensions with China remain a challenge, threatening not just the territory, but also the global economy should a military conflict take place. And, with mounting chip demands from the developments in AI, this is set to put further pressure on semiconductor foundries to achieve targets.
