The broader semiconductor industry is expected to break the bank to the tune of half a trillion USD on dozens of new chip fabrication plants globally. According to SEMI’s World Fab Forecast report, the demand for chips will be spurred by the automotive and high-performance computing sectors.
The semiconductor industry association SEMI estimated chipmakers would spend a total of more than $500 billion on 84 global facilities by 2024. Construction of 23 of these new chipmaking plants began in 2021, 33 began in 2022, while the construction of 28 new plants will start in 2023.
Notably, the number of chip fabrication units that went under construction in 2022 is almost twice as much as in 2019 and 2020 (17 each), further solidifying the fact that COVID-19-induced semiconductor shortages exposed the gaps in chip production and demand fulfillment for electronics, whether computing, mobile, appliances, or cloud and server-related services or electric vehicles.
New Semiconductor Manufacturing Facilities Construction | Source: SEMIOpens a new window
To bridge this gap, the biggest thrust is expected to come from Asia, with China alone working on 20 supporting mature technologies. The rest of Asia, excluding China, will see 29 new chip-making plants, 14 of which will be built in Taiwan, six each in Japan and Southeast Asia, and three in South Korea.
Chip manufacturing incentives worth as much as $52 billion available under the CHIPS and Science Act has helped the U.S. to attract multi-billion dollar commitments from multiple vendors, including Intel, TSMC, Samsung, Qualcomm, GlobalFoundries, Micron, and others.
See More: U.S. Trade Group Calls for Up To $30B In Additional Incentives for Chip Designers
The new legislation “has vaulted the region into the lead worldwide in new capital spending as the government investment spawns new chipmaking facilities and supporting supplier ecosystems,” SEMI noted.
It is worth noting that the legislation of the CHIPS Act in the U.S. is also aimed at domesticating chip supply chain and production in the wake of semiconductor shortages revealing the uncomfortable fact that most of the chip fabrication activities are focused in Asia, especially the eastern region. A shortage of a commodity as ubiquitous as semiconductors can impact not only commerce but also national security.
As such, the U.S. is not only wooing fabricators to set up shop in multiple U.S. states, it is also leveraging its heft to kick its economic and geopolitical rival China down a notch through sanctions (added Huawei to Entity List in 2019 and 36 other Chinese companiesOpens a new window this week), imposing export curbs on related technologies and equipment, or discouraging investment.
This is possibly why China’s 20 new under-construction facilities are for mature semiconductors and not advanced ones.
Meanwhile, similar legislation in Europe, called European Chips Act, is expected to help investment in the Europe/Mideast region reach a “historic high.” The region will see the construction of 17 new chip fabricationOpens a new window units by 2024.
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Sumeet Wadhwani
Asst. Editor, Spiceworks Ziff Davis
An earnest copywriter at heart, Sumeet is what you'd call a jack of all trades, rather techs. A self-proclaimed 'half-engineer', he dropped out of Computer Engineering to answer his creative calling pertaining to all things digital. He now writes what techies engineer. As a technology editor and writer for News and Feature articles on Spiceworks (formerly Toolbox), Sumeet covers a broad range of topics from cybersecurity, cloud, AI, emerging tech innovation, hardware, semiconductors, et al. Sumeet compounds his geopolitical interests with cartophilia and antiquarianism, not to mention the economics of current world affairs. He bleeds Blue for Chelsea and Team India! To share quotes or your inputs for stories, please get in touch on sumeet_wadhwani@swzd.com
