Foundry Sector Sees AI Demand Surge In Q1 2024 

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The global semiconductor foundry industry saw notable shifts in market dynamics and revenue share in the first quarter of this year, as per reports. 

According to a report published by Counterpoint, the first quarter saw mixed results driven by many factors across the chip manufacturing industry. Rising AI demands and periodic slumps in the tech market have been regarded as the driving force behind this.  

Fabricators like TSMC have outperformed their market expectations due to increasing consumer interest in AI accelerators. At the same time, seasonal downturns in smartphone and PC markets led to revenue decline for foundries like Samsung. 

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Counterpoint conducted the study in two parts: an analysis of foundry companies’ revenue share and an examination of industry trends across various technology nodes.

Studying the manufacturers’ positions, the report concluded that Taiwan Semiconductor Manufacturing Company (TSMC) surpassed predicted market performance due to robust demand for AI accelerators. 

The company has revised its projections for data centre AI revenue, anticipating a twofold increase year-over-year in 2024, with an expected 50% annual growth rate in AI revenue through 2028. Despite expanding CoWoS capacity, more is needed to meet the rising demand for AI.

Accordingly, Samsung Foundry remained in second place but saw revenue decline due to seasonal fluctuations in smartphone sales. SMIC achieved third place for the first time, driven by China’s recovering demand. UMC and GlobalFoundries experienced decreased consumer and smartphone demand, with a cautious outlook on near-term automotive demand.

The report further mentioned that the industry share also saw changes in terms of technology node demand. The 5 nm and 4nm nodes held a significant 26% market share, buoyed by robust demand for AI technologies. 

On the other hand, the 3nm node saw a significant decline, dropping from third to fifth place with a 6% market share, primarily influenced by reduced iPhone production during the off-season.

The 7 nm and 6nm, 28 nm and 22nm, and 16 nm, 14nm, and 12nm nodes also experienced declines in their shares, with proportions of 12%, 8%, and 7%, respectively, primarily due to seasonal declines in the smartphone and PC markets.

Counterpoint has noticed indications of demand recovery in the industry, supported by normalised and streamlined channel inventory. It has concluded that strong AI demand and a gradual rebound in overall demand are poised to fuel growth in 2024. This quarter’s trends highlight the innovative dynamics in the foundry sector, where advanced nodes are capitalising on AI-driven expansion. In contrast, traditional nodes contend with cyclicality in consumer electronics demand.

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