Market Analysis

Global semiconductor fab capacity projected to expand 6%

To keep up with the increasing demand for chips, the global semiconductor manufacturing industry is projected to expand capacity by 6% in 2024 and achieve a 7% increase in 2025, reaching a record capacity of 33.7 million wafers per month (wpm, 8-inch equivalent), according to SEMI’s latest quarterly World Fab Forecast report.

The capacity for leading-edge nodes, specifically 5nm and below, is expected to grow by 13% in 2024. This growth is primarily driven by the requirements of generative artificial intelligence (AI) for data centre training, inference, and advanced devices. To enhance processing power efficiency, chipmakers such as Intel, Samsung, and TSMC are set to begin production of 2nm Gate-All-Around (GAA) chips, which will contribute to a 17% increase in total leading-edge capacity growth in 2025.

“The proliferation of AI processing, from Cloud computing to Edge devices, is fuelling the race to develop high-performance chips and driving a robust expansion of global semiconductor manufacturing capacity,” said Ajit Manocha, SEMI President and CEO. “This creates a virtuous cycle: AI will drive the growth of semiconductor content across a diverse range of applications, which in turn encourages further investment.”

Capacity expansion by region

Chinese chipmakers are expected to maintain double-digit capacity growth, with a 14% increase to 10.1 million wpm in 2025, making up nearly a third of the industry’s total. This follows a 15% rise to 8.85 million wpm in 2024. Despite potential risks of overexpansion, the region continues aggressive investment in capacity to counter the impact of recent export controls. Major foundry suppliers such as Huahong Group, Nexchip, Sien Integrated, SMIC, and DRAM manufacturer CXMT are heavily investing to boost the region’s semiconductor manufacturing capacity.

Most other major chipmaking regions are expected to see capacity growth of no more than 5% in 2025. Taiwan is forecast to be second in capacity in 2025, reaching 5.8 million wpm, a 4% growth rate. South Korea is projected to take the third spot, expanding capacity by 7% to 5.4 million wpm, surpassing the 5 million wpm mark for the first time in 2024. Japan, the Americas, Europe & Mideast, and Southeast Asia are expected to grow semiconductor manufacturing capacity to 4.7 million wpm (3% YoY), 3.2 million wpm (5% YoY), 2.7 million wpm (4% YoY), and 1.8 million wpm (4% YoY), respectively.

Capacity expansion by segment

Driven largely by Intel’s establishment of its foundry business and China’s capacity expansion, the foundry segment is projected to increase capacity by 11% in 2024 and 10% in 2025, reaching 12.7 million wpm by 2026.

The rapid adoption of high bandwidth memory (HBM) to meet rising demand for faster processors required by AI servers is driving unprecedented capacity growth in the memory sector. The increasing AI adoption has spurred demand for denser HBM stacks, with each stack now integrating 8 to 12 dice. Leading DRAM manufacturers are responding by increasing investment in HBM/DRAM. DRAM capacity is expected to grow by 9% in both 2024 and 2025. In contrast, the recovery of the 3D NAND market remains slow, with no growth forecast for 2024 and a 5% increase expected in 2025.

The rise of AI applications in edge devices is expected to increase DRAM content in mainstream smartphones from 8GB to 12GB, while laptops using AI assistants will need at least 16GB of DRAM. The expansion of AI to edge devices will further drive demand for DRAM.