Foundries’ 3Q23 Sees 7.9% Growth, Q4 Outlook Remains Upbeat

December 6, 2023


Summary: TrendForce's research shows that the global foundry industry experienced a dynamic third quarter, with a surge in urgent orders for smartphone and notebook components driven by healthy inventory levels and the release of new iPhone and Android devices, leading to a 7.9% quarter-on-quarter increase in the value of the top ten global foundries, and this trend is expected to continue in the fourth quarter with TSMC's 3 nm process playing a significant role.

  • TSMC and Samsung's high-cost 3 nm manufacturing process boosted revenues
  • Anticipation of year-end festive demand expected to sustain inflow of urgent orders
  • Strong demand for smartphone components, particularly for mid-to-low range 5G and 4G APs

The global Foundry industry experienced a dynamic third quarter, according to TrendForce’s latest research. The surge in urgent orders for smartphone and notebook components was driven by healthy inventory levels and the release of new iPhone and Android devices in the second half of 2023. Despite ongoing inflation risks and market uncertainties, these orders were predominantly rush orders. The high-cost 3 nm manufacturing process from TSMC and Samsung also played a significant role in boosting revenues, resulting in a 7.9% quarter-on-quarter increase in the value of the top ten global foundries, totaling approximately US$28.29 billion.

Looking ahead to the fourth quarter, the anticipation of year-end festive demand is expected to sustain the inflow of urgent orders, particularly for smartphone components. Although the end-user market has yet to fully recover, pre-sales season stockpiling for Chinese Android smartphones seems to be slightly better than expected. Demand for mid-to-low range 5G and 4G phone application processors (APs) remains strong, along with continued interest in new iPhone models. This suggests a continued upward trend for the top ten global foundries in Q4, potentially surpassing the growth rate seen in Q3. TSMC’s 3 nm process is expected to contribute significantly to revenue, as it currently holds a 58% market share in Q3.

TSMC experienced a solid growth in revenue during Q3, reaching US$17.25 billion, driven by strong demand in the PC sector and for smartphone components, including new iPhones and Android devices. Urgent orders for restocking mid-to-low end 5G and 4G inventories also contributed to this growth. The 3 nm process alone accounted for 6% of TSMC’s Q3 revenue, while advanced processes (≤7 nm) made up nearly 60% of its total revenue.

Samsung Foundry also saw robust growth, with its revenue increasing by 14.1% quarter-on-quarter to US$3.69 billion in Q3. This growth was primarily fueled by orders for Qualcomm’s mid-to-low range 5G application processors (APs), 5G modems, and mature 28 nm OLED display driver interface (DDI) processes.

GlobalFoundries maintained a stable performance in Q3, with revenue approximating US$1.85 billion, similar to the previous quarter. The company’s revenue was mainly supported by the home and industrial Internet of Things (IoT) sectors, which accounted for around 20% of its total revenue. Orders from the US aerospace and defense sectors also contributed significantly to this revenue boost.

UMC experienced a minor quarterly decrease of 1.7% in revenue, amounting to approximately US$1.8 billion. However, the support of urgent orders helped offset adjustments in automotive orders. Notably, revenue from UMC’s 28/22 nm products saw a nearly 10% increase, representing 32% of its total revenue.

SMIC benefited from seasonal consumer product demands, particularly urgent smartphone-related orders, resulting in a 3.8% revenue increase to US$1.62 billion in Q3. However, due to supply chain diversification and the relocation of American customers outside China, the revenue share from American clients decreased to 12.9%. On the other hand, revenue from Chinese clients increased to 84% due to the government’s localization initiatives and urgent orders for smartphone components.

In terms of rankings, notable changes occurred from the sixth to tenth positions. VIS and IFS made their mark, with IFS entering the global top ten for the first time since Intel’s financial restructuring. VIS surpassed PSMC to take the eighth position with a 3.8% increase in Q3 revenue to US$333 million, thanks to a recovery in large display driver IC (LDDI) and panel-related power management integrated circuit (PMIC) orders, as well as prebuilt wafer shipments. IFS experienced a 34.1% revenue increase to approximately US$311 million, benefiting from seasonal laptop orders in the second half of 2023 and contributions from its advanced high-priced processes. Other companies, such as HuaHong Group, saw a 9.3% decrease in Q3 revenue to about US$766 million. HHGrace maintained steady wafer shipment levels from the previous quarter but experienced a decline in revenue due to a roughly 10% decrease in average selling price (ASP). Tower Semiconductor maintained stable demand in the smartphone, automotive, and industrial sectors, resulting in revenue of around US$358 million in Q3. PSMC witnessed a 7.5% drop in revenue to US$305 million, with PMIC and Power Discrete revenues declining nearly 10% and 20%, respectively, impacting overall performance.

Foundries’ 3Q23 Sees 7.9% Growth, Q4 Outlook Remains Upbeat


Background Information

About Intel: Intel Corporation, a global technology leader, is for its semiconductor innovations that power computing and communication devices worldwide. As a pioneer in microprocessor technology, Intel has left an indelible mark on the evolution of computing with its processors that drive everything from PCs to data centers and beyond. With a history of advancements, Intel's relentless pursuit of innovation continues to shape the digital landscape, offering solutions that empower businesses and individuals to achieve new levels of productivity and connectivity.

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About Qualcomm: Qualcomm, a leading American global semiconductor and telecommunications equipment company, has played a pivotal role in shaping the modern technology landscape. Founded in 1985, Qualcomm has been at the forefront of innovation, particularly in the realm of mobile communications and wireless technology. The company's advancements have been instrumental in the evolution of smartphones, powering devices with their Snapdragon processors that deliver exceptional performance and efficiency. With a strong commitment to research and development, Qualcomm has enabled the growth of 5G technology, paving the way for faster and more connected experiences.

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About Samsung: Samsung, a South Korean multinational conglomerate, has established itself as a global leader in various industries, including electronics, technology, and more. Founded in 1938, Samsung's influence spans from smartphones and consumer electronics to semiconductors and home appliances. With a commitment to innovation, Samsung has contributed products like the Galaxy series of smartphones, QLED TVs, and SSDs that have revolutionized the way we live and work.

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About Tower Semiconductor: Tower Semiconductor, also known as TowerJazz, is a global semiconductor foundry company that provides advanced analog and mixed-signal process technologies. Founded in 1993, Tower Semiconductor is headquartered in Migdal HaEmek, Israel, and operates multiple manufacturing facilities worldwide. The company offers a wide range of specialized semiconductor manufacturing services, including CMOS (Complementary Metal-Oxide-Semiconductor), RF (Radio Frequency), power management, and more. Tower Semiconductor serves various industries such as consumer electronics, automotive, industrial, medical, and aerospace by producing custom-designed chips and integrated circuits. Tower Semiconductor is for its expertise in specialty semiconductor manufacturing, enabling the production of chips with unique features and capabilities. The company's focus on analog and mixed-signal technologies caters to applications that require precise signal processing and connectivity. Their collaborative approach with clients often involves developing tailored solutions to meet specific requirements, positioning them as a reliable partner in the semiconductor manufacturing industry.

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About TSMC: TSMC, or Taiwan Semiconductor Manufacturing Company, is a semiconductor foundry based in Taiwan. Established in 1987, TSMC is a important player in the global semiconductor industry, specializing in the manufacturing of semiconductor wafers for a wide range of clients, including technology companies and chip designers. The company is known for its semiconductor fabrication processes and plays a critical role in advancing semiconductor technology worldwide.

Technology Explained

Foundry: A foundry is a dedicated manufacturing facility focused on producing semiconductor components like integrated circuits (ICs) for external clients. These foundries are pivotal in the semiconductor industry, providing diverse manufacturing processes and technologies to create chips based on designs from fabless semiconductor firms or other customers. This setup empowers companies to concentrate on innovative design without needing substantial investments in manufacturing infrastructure. Some well-known foundries include TSMC (Taiwan Semiconductor Manufacturing Company), Samsung Foundry, GlobalFoundries, and UMC (United Microelectronics Corporation).

OLED: Organic light-emitting diode (OLED) technology is a cutting-edge display technology that has revolutionized the computer industry by producing superior image quality and superior energy efficiency. OLED technology works by using organic compounds to create an efficient and flexible light source. This type of technology has enabled thinner and lighter designs as well as improved color range and resolution. OLED technology is currently used in laptop displays and is increasingly used in televisions and mobile devices. Its benefits, such as relatively low power consumption and extraordinary brightness, give a more vivid and more powerful image even in dim areas. OLED technology has also improved computer performance, as its power efficiency passes on to other computer components and leads to extended battery life. OLED technology also features shorter response time and full color reproducibility, making it ideal for fast-paced action games.

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