According to Counterpoint Research’s Foundry Quarterly Tracker, the global foundry industry saw a significant revenue increase in Q2 2024, with a 9% quarter-on-quarter (QoQ) rise and a 23% year-on-year (YoY) growth.
This growth was largely driven by strong demand for AI technologies. However, CoWoS (Chip-on-Wafer-on-Substrate) supply remained constrained, with potential capacity expansions, particularly in CoWoS-L, anticipated in the near future.
Despite a slower recovery in demand for non-AI semiconductors, such as those used in automotive and industrial sectors, there were notable rush orders for IoT and consumer electronics applications. China’s foundry and semiconductor markets, in particular, showed a faster recovery compared to global counterparts, with companies like SMIC and HuaHong delivering robust quarterly results and optimistic guidance. This quicker rebound is attributed to China’s fabless customers entering the inventory correction phase earlier and bottoming out sooner than global competitors.
Key industry highlights
TSMC: TSMC recorded a mild revenue beat in Q2 2024, fuelled by continued growth in AI accelerator demand. As a result, TSMC revised its annual revenue growth guidance to mid-20%, up from its earlier estimate of low-to-mid 20%. The company expects the demand-supply imbalance for AI accelerators to persist until late 2025 or early 2026 and plans to double its CoWoS capacity by 2025 to meet the ongoing demand. Additionally, potential price increases for advanced nodes, including 3nm and 5/4nm, are anticipated in 2025, reinforcing TSMC’s technological leadership and long-term profitability.
Samsung Foundry: Samsung’s revenue grew sequentially in Q2 2024, driven by inventory pre-building and restocking for smartphones, securing its position as the second-largest player with a 13% market share. Samsung continues to focus on attracting more mobile and AI/HPC customers for its advanced nodes and expects its annual revenue growth to surpass industry averages.
SMIC: SMIC delivered strong quarterly results, with better-than-expected guidance for Q3 2024. The growth was propelled by demand recovery in China, particularly in CIS, PMIC, IoT, TDDI, and LDDIC applications. SMIC’s demand for 12-inch wafers is improving, and the average selling price (ASP) is expected to rise as inventory restocking expands among Chinese fabless companies. The company is cautiously optimistic about its annual revenue growth, anticipating a healthy increase in utilisation rates.
UMC: UMC reported stronger-than-expected quarterly results, benefiting from favourable foreign exchange rates and disciplined pricing strategies. The company expects mid-single-digit sequential growth in Q3 2024, aligning with forecasts of a weaker overall recovery in logic semiconductors, except for AI. UMC’s focus on specialised technologies, such as 22nm HV and 55nm RF SOI/BCD, and its reduced exposure to commoditised areas like LDDIC and NOR flash, are expected to support stable pricing and long-term growth.
GlobalFoundries: GlobalFoundries posted solid quarterly results, driven by new design wins and sequential growth in its automotive business despite a challenging market. The company also observed normalising inventories in the smartphone market and stabilising demand in communication and IoT markets. GlobalFoundries’ outlook indicates a mild recovery in its overall business, reflecting trends observed in other non-Chinese mature node foundries like UMC.
Industry insights
Adam Chang, an analyst at Counterpoint Research, commented: “In Q2 2024, the global foundry industry showed resilience, with most growth driven by strong AI demand and smartphone inventory restocking. The semiconductor industry’s recovery remains uneven. While leading-edge applications such as AI semiconductors are experiencing robust growth, traditional semiconductors are recovering at a slower pace. Chinese foundries are rebounding faster due to earlier inventory corrections and increased restocking by local fabless customers, while non-Chinese foundries are seeing a more gradual recovery.”
