The wave of AI and artificial intelligence is driving significant growth in the global semiconductor industry

The wave of AI and artificial intelligence has propelled the global semiconductor industry out of the "haze" and ushered in significant growth, as evidenced by recent industry data disclosures. However, looking at the global development pattern of the semiconductor industry, the pace of development varies in different regions. The wave of semiconductor expansion in Europe and America is facing resistance, while the Southeast Asian market continues to rise. The global semiconductor market is mixed, with opportunities and challenges coexisting, and there are still plenty of highlights.

AI driven, semiconductor market enters growth cycle

Recently, the Semiconductor Industry Association (SIA) released data showing that the global semiconductor industry's cumulative sales in the second quarter of this year reached $149.9 billion, a year-on-year increase of 18.3% and a month on month increase of 6.5%. Among them, the monthly sales in June this year reached 50 billion US dollars, a year-on-year increase of 22.9% and a month on month increase of 1.7%. The industry points out that this is the highest global semiconductor growth rate since April 2022. The booming development of generative AI has driven an overall increase in demand for the semiconductor industry.

The two major industries of memory and wafer foundry, driven by AI, are showing a positive development trend.

In the field of memory, the application of AI generative large models brings benefits to both DRAM and NAND Flash: AI applications require the use of high-performance GPUs, and the demand for HBM related to it is skyrocketing. The latest survey by TrendForce, a global market research firm, shows that with the iteration of AI chips, the HBM (high bandwidth memory) capacity carried by a single chip has also significantly increased. Driven by the growth of AI chips and single-chip capacity, there has been a significant increase in the overall consumption of HBM in the industry. It is estimated that the annual growth rate will exceed 200% in 2024, and HBM consumption will double again by 2025.

AI also requires flash memory products with higher storage capacity, and the attention to enterprise grade solid-state drives continues to increase. Jibang Consulting stated that due to the significant increase in demand for AI, AI server related customers have further requested suppliers to add Enterprise SSDs (Enterprise Solid State Drives) in the past two quarters. It is expected that the procurement capacity of AI related SSDs will exceed 45EB this year, and in the next few years, AI servers are expected to drive an average annual growth rate of SSD demand exceeding 60%. In order to meet the supply of SSD in AI applications and accelerate process upgrades, upstream suppliers have begun planning to launch 2YY products, which are expected to be mass-produced by 2025.

In terms of wafer foundry, due to the increasing popularity of AI big model applications, the demand for AI chips is soaring, and advanced processes have become a "hot commodity", ushering in a wave of price increases and production expansion. At the beginning of this year, TSMC informed customers that the price of 5/3nm process products would increase in 2024. In late July, TSMC issued notices to multiple customers that the prices of 5/3nm process products would increase again from January 2025. Depending on different investment plans, products, and cooperation relationships, the increase would be around 3-8%.

The booming development of advanced processes has attracted wafer fabs to accelerate the layout of 2nm, 1nm and other updated products. At the beginning of this year, TSMC informed customers that 5/3nm process products will increase in price in 2024. TSMC and Samsung plan to mass produce 2nm chips by 2025, while Rapidus plans to start trial production of 2nm chips in the same year. In addition, the industry is expected to see mass production of 1nm level chips from 2027 to 2030.

Mixed emotions, global semiconductor development pace varies

The development of the global semiconductor industry is fluctuating, with the current pace of semiconductor expansion in Europe and America slowing down due to factors such as subsidies and insufficient labor resources. At the same time, the semiconductor industry in Asia, represented by Southeast Asia, is accelerating.

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Large factories face obstacles in expanding into the European and American markets

The semiconductor projects of major companies such as TSMC, Samsung, and Intel in the European and American markets have been postponed. TSMC's first wafer fab in Arizona, USA, which was originally scheduled for mass production this year, has been postponed to the first half of 2025; The second local wafer fab is scheduled for mass production in 2026, but has been postponed until 2028.

Intel will build two new cutting-edge wafer fabs in Ohio and plans to begin chip manufacturing in 2025. Due to the sluggish market and delayed subsidy payments in the United States, Intel has postponed the chip project. After adjustment, the Fab1 and Fab2 factories of Intel's Ohio One project will be postponed until 2026-2027 for completion, and will be officially put into operation around 2027-2028. In addition, Intel invested 30 billion euros to build Fab 29.1 and Fab 29.2 wafer fabs in Magdeburg, Germany, which were originally planned to start construction in the second half of 2023. However, due to the delayed confirmation of EU subsidies and the need to remove black soil from the construction area, Intel has postponed the start date to May 2025.

Samsung's first wafer fab located in Taylor, Texas, was originally scheduled to start production in 2024, but media reports this year have postponed the production of the fab to 2026. According to the latest media reports, Samsung has proposed a large-scale investment plan to establish a storage chip factory in Texas, USA. However, the Office of Semiconductor Support Act of the US Department of Commerce has decided not to provide financial support related to this plan. Industry analysis suggests that this is equivalent to refusing Samsung's establishment of a storage chip factory in the United States.

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The semiconductor industry in Southeast Asia is gradually rising

The semiconductor industry in Southeast Asia has begun to take shape in the Asian market and is showing a rapid development trend. Malaysia and Singapore are typical representatives, while Vietnam is a new force.

Malaysia plays an important role in the global semiconductor industry chain's packaging and testing end. According to incomplete statistics from Global Semiconductor Watch, about 50 semiconductor companies have successively set up back-end packaging and testing factories in Malaysia, including Intel, Micron, Texas Instruments, NXP, Sunlight, Anson Semiconductors, Infineon, Huatian Technology, Tongfu Microelectronics, Suzhou Gude, Renesas Electronics, Anson, Ankao, STMicroelectronics, etc.

In May of this year, Malaysia announced a National Semiconductor Strategy (NSS), which will focus on the development of integrated circuit design, advanced packaging and manufacturing equipment, and storage chip fields.

Singapore is a major semiconductor production hub in Southeast Asia, with a complete semiconductor industry chain covering design, manufacturing, packaging, testing, equipment, materials, distribution, and other aspects. Many semiconductor companies, including Texas Instruments, STMicroelectronics, Infineon, Micron, GlobalFoundries, TSMC, UMC, Vanguard, and Sun Moon, have set up branches or expanded factories in Singapore. Among them, wafer foundry leaders such as TSMC, Gexin, UMC, and World Advanced have built factories here, involving 8-inch and 12 inch factories.

The semiconductor industry is one of the nine national level products in Vietnam and has been listed as one of the national development priorities for the next 30-50 years. According to the Draft Development Strategy for Vietnam's Semiconductor Microchip Industry, Vietnam plans to become a design, packaging, and testing center for the global semiconductor chip industry by 2030. At present, Vietnam has attracted foreign-funded enterprises such as Intel, Sunlight, Samsung Electronics, AnKou, Qualcomm, Anson, Renesas, TI, NXP Minmetals, Xinsi Technology, Hengnuo Microelectronics, Amperex, etc.

The latest news shows that Vietnam has recently established the National Semiconductor Industry Development Guidance Committee. The main tasks and functions of the steering committee include assisting the Prime Minister and the government in researching and guiding, and cooperating in resolving important and cross departmental affairs related to promoting the development of Vietnam's semiconductor industry; Research, consult, and suggest directions and solutions to promote the development of Vietnam's semiconductor industry; Guide the cooperation among various departments, government agencies, relevant institutions, and organizations to effectively promote the development of Vietnam's semiconductor industry.