Business Growth on Top Semiconductor Foundries in 2023: TrendForce

The top 10 semiconductor foundries have achieved 7.9 percent increase in revenue during the fourth quarter of 2023 to $30.49 billion, TrendForce said.
Global foundry leaders in 2023 TrendForce reportThis surge in revenue has been attributed to the demand for smartphone components, particularly mid and low-end smartphone application processors (APs) and peripheral power management integrated circuits (PMICs).

Moreover, the launch season for Apple’s latest devices has significantly contributed to this growth, driving shipments for the A17 chipset and associated peripheral integrated circuits (ICs), including OLED display driver ICs (DDIs), CMOS image sensors (CIS), and PMICs.

TSMC (Taiwan Semiconductor Manufacturing Company) has notably enhanced its revenue contribution with its premium 3nm process, pushing its global market share beyond the 60 percent threshold for this quarter.

The report highlights that 2023 presented challenges for foundries, characterized by high inventory levels across the supply chain, a sluggish global economy, and a slow recovery in the Chinese market. These factors led to a downward cycle in the industry, resulting in a 13.6 percent annual drop in revenue for the top ten foundries, reaching just $111.54 billion.

However, 2024 is anticipated to bring a more promising outlook, with AI-driven demand expected to boost annual revenue by 12 percent to $125.24 billion. TSMC, benefiting from steady advanced process orders, is poised to exceed the industry average in growth.

Top Players Consolidate Market Dominance

The report indicates that the top five foundries have expanded their market share to 88.8 percent, with TSMC alone claiming over 60 percent. TSMC’s wafer shipments experienced a rise in the fourth quarter of 2023, driven by demand from smartphones, notebooks, and AI-related high-performance computing (HPC), resulting in a 14 percent jump in revenue to $19.66 billion. The revenue share from processes of 7nm and below also witnessed a notable increase. With the progressive ramp-up of 3nm production, the share of revenue from advanced processes is expected to surpass 70 percent.

On the other hand, Samsung received orders for various new smartphone components, primarily in mature processes above 28nm. Despite this, a slight 1.9 percent quarter-on-quarter drop in Samsung’s foundry revenue to $3.62 billion was observed due to fluctuating demand for advanced process main chips and modems.

GlobalFoundries saw a modest 5 percent revenue growth in the automotive segment, attributed to a surge in long-term agreements (LTAs) signed by numerous automotive clients and slight optimizations in average selling price (ASP). However, shipments in key application areas such as smart mobile devices, communication, and home/industrial Internet of Things (IoT) witnessed declines, resulting in an overall revenue of approximately $1.85 billion in the fourth quarter.

UMC (United Microelectronics Corporation) experienced occasional spikes in orders from the smartphone and PC sectors. Still, a weak global economy and conservative wafer start decisions by clients led to a downturn in wafer shipments, resulting in a 4.1 percent decrease in fourth-quarter revenue to about $1.73 billion.

Shifting Rankings and Industry Dynamics

Three significant changes were observed in the rankings from sixth to tenth position. PSMC moved up to eighth place, benefiting from the recovery in specialty dynamic random-access memory (DRAM) wafer outputs and urgent orders for smartphone components.

Nexchip re-entered the top ten ranking, securing the ninth spot due to urgent touch and display driver integration (TDDI) orders and high-volume shipments of new CMOS image sensor (CIS) products.

VIS dropped to tenth place due to a slowdown in TV-related orders and inventory adjustments by automotive and industrial control customers, particularly in revenue from power management platforms.

Additionally, IFS, which entered the top ten for the first time in the third quarter of 2023, was pushed out of the rankings by PSMC and Nexchip due to factors such as the transition between new and old generations of central processing units (CPUs) and lackluster inventory momentum at Intel. Other companies, such as HuaHong Group and Tower, saw minor declines in revenue, attributed to various market dynamics and industry shifts.

While Tower’s long-term focus on niche markets like radio frequency front-end modules (RFFEM), automotive, and industrial control helped shield it from the impacts felt by companies primarily in the consumer electronics sector, adjustments in inventories by automotive and industrial control clients led to a further decrease in Tower’s utilization rate in the fourth quarter.