Semiconductor Fab Capacity Set to Surge: 6% Growth in 2024, 7% in 2025

The global semiconductor manufacturing industry is increasing its capacity to meet the growing demand for chips driven by the rise of AI applications, with China leading the way and significant growth expected in the foundry and memory sectors.

The rise of AI applications is driving the need for more powerful chips, leading to an increase in manufacturing capacity.
China is at the forefront of this capacity expansion, with other regions also experiencing growth, albeit at a slower pace.
The foundry and memory sectors are witnessing significant increases in capacity, while the 3D NAND market recovery remains slow.

In a world that is becoming increasingly dependent on technology, the demand for chips is reaching unprecedented levels. To keep up with this soaring demand, the global semiconductor manufacturing industry is gearing up to increase its capacity. According to SEMI’s latest quarterly World Fab Forecast report, the industry is expected to see a 6% increase in capacity in 2024 and a further 7% gain in 2025, reaching a record high of 33.7 million wafers per month.

But what is driving this surge in capacity? Well, it’s none other than the rise of generative artificial intelligence (AI). AI has become the backbone of various applications, from data center training to inference and leading-edge devices. As a result, chipmakers like Intel, Samsung, and TSMC are set to start production of 2 nm Gate-All-Around (GAA) chips, which will significantly boost the total leading-edge capacity growth by 17% in 2025. These chips are designed to enhance processing power efficiency, making them ideal for AI applications.

Ajit Manocha, the president and CEO of SEMI, explains the significance of AI in driving the growth of semiconductor manufacturing capacity. He says, “The proliferation of AI processing, from cloud computing to edge devices, is fueling the race to develop high-performance chips and driving a robust expansion of global semiconductor manufacturing capacity.” In simpler terms, AI is the driving force behind the need for more powerful chips, which in turn leads to an increase in manufacturing capacity.

When it comes to the regions leading this capacity expansion, China takes the crown. Chinese chipmakers are expected to maintain double-digit growth, with a projected 14% increase in capacity to 10.1 million wpm in 2025. This accounts for nearly a third of the industry’s total capacity. Despite potential risks and challenges, China continues to invest heavily in expanding its semiconductor manufacturing capacity. This is partly to mitigate the impact of recent export controls and to establish itself as a major player in the industry.

Other major chip-making regions, such as Taiwan and South Korea, are also expected to see modest growth in capacity. Taiwan is forecasted to rank second in capacity in 2025, with a 4% growth rate, while South Korea is projected to take the third spot with a 7% expansion in capacity. Japan, the Americas, Europe & Mideast, and Southeast Asia are also expected to experience growth in their semiconductor manufacturing capacities, albeit at a slower pace.

Looking at the different segments within the industry, the Foundry segment is set to witness significant growth. This can be attributed to Intel’s establishment of its foundry business and China’s capacity expansion. The foundry segment is projected to increase its capacity by 11% in 2024 and 10% in 2025, reaching a total of 12.7 million wpm by 2026.

The memory sector is also experiencing a surge in capacity due to the rapid adoption of high bandwidth memory (HBM). As AI servers demand faster processors, the need for denser HBM stacks has increased. Each stack now integrates 8 to 12 dice, leading to unprecedented growth in memory capacity. DRAM makers are responding to this demand by increasing their investment in HBM/DRAM, resulting in a projected 9% increase in DRAM capacity for both 2024 and 2025.

On the other hand, the 3D NAND market recovery remains slow, with no growth in capacity forecasted for 2024. However, there is hope for a 5% increase in capacity in 2025. This slow recovery can be attributed to various factors, but it does not overshadow the overall growth in the industry.

So, what does all this mean for us as consumers? Well, the rise of AI applications in edge devices, such as smartphones and Laptops, will have a direct impact on the amount of DRAM these devices require. For instance, mainstream smartphones are expected to increase their DRAM content from 8 GB to 12 GB, while laptops using AI assistants will need at least 16 GB of DRAM. As AI continues to expand its reach to edge devices, the demand for DRAM will only continue to grow.

In conclusion, the global semiconductor manufacturing industry is gearing up to meet the surging demand for chips. The rise of AI applications is driving the need for more powerful chips, leading to an increase in manufacturing capacity. China is at the forefront of this capacity expansion, with other regions also experiencing growth, albeit at a slower pace. The foundry and memory sectors are witnessing significant increases in capacity, while the 3D NAND market recovery remains slow. As consumers, we can expect our devices to become even more powerful as AI continues to evolve and shape the industry.

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Background Information

About Intel: Intel Corporation, a global technology leader, is renowned 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 groundbreaking 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.

About Samsung: Samsung, a renowned 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 groundbreaking products like the Galaxy series of smartphones, QLED TVs, and SSDs that have revolutionized the way we live and work.

About TSMC: TSMC, or Taiwan Semiconductor Manufacturing Company, is a semiconductor foundry based in Taiwan. Established in 1987, TSMC is a prominent 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 cutting-edge 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).

NAND: NAND technology is a type of non-volatile memory that is used in many computer applications. It is a type of flash memory that is used to store data in a non-volatile manner, meaning that the data is not lost when the power is turned off. NAND technology is used in many computer applications, such as solid-state drives, USB flash drives, digital cameras, and memory cards. It is also used in many embedded systems, such as cell phones, tablets, and other consumer electronics. NAND technology is a reliable and cost-effective way to store data, making it a popular choice for many computer applications.