Global fab construction is proceeding at an astonishing pace, and the semiconductor industry is gradually evolving into the core area of global economic competition. This is not only to meet the growing market demand, but also reflects the profound layout of national governments in the field of strategy and security. The International Semiconductor Industry Association (SEMI) expects global wafer production capacity to grow by 6% in 2024 and another 7% in 2025, reaching an all-time high of 33.7 million wafers per month. This trend shows that the fab has become not only an engine of economic growth, but also a strategic resource for countries in terms of science and technology, armaments and economic security.
The motivation of each country to promote the construction of wafer fabs
Semiconductors are not only a key component of consumer electronics, but also a core technology in the country's critical infrastructure and military equipment. As a result, governments around the world have introduced policies to stimulate the local semiconductor industry to reduce dependence on foreign countries. The United States CHIPS Act provides $52 billion in funding to attract Intel, TSMC and Samsung to build new fabs in the United States. In addition, Europe has launched the "EU Chips Act", which plans to invest 43 billion euros to enhance Europe's competitiveness in the global semiconductor industry. Not to be outdone, Japan has launched about 500 billion yen of financial support through the "Semiconductor Strategy" to promote the recovery and improvement of chip manufacturing capacity.
In terms of specific examples, the United States TSMC Arizona factory is one of the important cases in this construction wave, which is expected to be completed and put into operation in 2024. The first phase of the factory will invest $12 billion, and the second phase will reach a total investment of $40 billion, and will produce advanced 5nm and 4nm chips. Similarly, in Japan, TSMC partnered with Sony to build a Kumamoto fab focused on the manufacture of image sensors and other high value-added chips, with an investment of $8.6 billion.
Figure: Global fab construction boom: semiconductors have become an important armament resource
Semiconductor layout in emerging economies
Not only are developed economies accelerating the deployment of fabs, but emerging economies such as India, Viet Nam, Malaysia and other countries are also emerging in the field of wafer manufacturing. The India government has released an ambitious semiconductor policy with around $10 billion in incentives, attracting domestic giants such as Tata Electronics to partner with global semiconductor companies to push India as a new hub for global semiconductor manufacturing. India is currently building its first 12-inch wafer fab, indicating that India is expected to occupy a place in the global semiconductor industry chain in the next few years.
At the same time, Viet Nam and Malaysia are also actively promoting local semiconductor manufacturing. Viet Nam plans to build its first fab by 2030 and expand its chip packaging and testing capabilities to reduce external dependence. As an important base for global semiconductor packaging and testing, Malaysia occupies about 13% of the global packaging and testing market, and plans to invest 500 billion JPY through the "National Semiconductor Strategy" to further enhance its position in the global industrial chain.
Huge growth potential in the wafer fabrication equipment market
With the expansion of global fabs, the demand in the semiconductor manufacturing equipment market is also surging. According to SEMI, 300mm fab equipment spending is expected to reach a record $137 billion by 2027. Equipment suppliers such as ASML and Applied Materials will benefit from this wave, especially as the global semiconductor equipment market is expected to continue to expand, driven by demand for extreme ultraviolet lithography (EUV) equipment.
It is worth noting that the technical threshold for wafer manufacturing is extremely high, and the requirements for equipment in advanced processes are becoming more and more stringent. TSMC, for example, has achieved breakthroughs in the 3nm and 2nm technology nodes, which not only rely on its world-leading technical capabilities, but also rely on the strong support of the global equipment supply chain. The boom in the fab equipment market will further consolidate the close connection between this market and the industrial chain, and promote the entire semiconductor industry to a higher level of technology.
Potential challenges and future prospects
Although the global fab construction tide is fierce, it also comes with certain challenges. The first is the risk of overcapacity. As more countries join the race for wafer manufacturing, the supply of wafers is likely to outstrip demand in the coming years, leading to lower prices and shrinking margins. In the case of the global semiconductor bubble in the early 2000s, for example, overinvestment and capacity expansion triggered a severe market correction.
However, the market environment at this stage is different from that time. First, semiconductors have become a foundational technology in almost every industry, from artificial intelligence and autonomous driving to 5G networks and the Internet of Things (IoT), and the demand for chips will only continue to grow. In addition, foundries and IDM manufacturers are finely managing the pace of capacity release to ensure the balance between supply and demand in the market. At the same time, the technical complexity of semiconductor manufacturing makes the barriers to entry still high, and although emerging economies are trying to join the competition, it will still be difficult to challenge the position of giants such as TSMC and Samsung in the short term.
Epilogue
The global fab construction boom is not only a reflection of technological competition, but also a reflection of the deep-seated considerations of countries in terms of technological and economic security. As governments around the world continue to increase their support for the local semiconductor industry, the global wafer manufacturing industry will usher in a new round of expansion and technological innovation. However, in this era of coexistence of opportunities and challenges, how to effectively control production capacity, maintain market balance and promote technological innovation will determine the pattern and development direction of the global semiconductor industry in the future.
