TSMC Captures 2/3 of Global Contract Chip Manufacturing Market Thanks to AI as Demand for Mature Processes Falls

According to TrendForce analysts, the global semiconductor industry polarized in the fourth quarter of 2024. The need for advanced technological processes increased significantly due to the rush for AI chips, flagship SoCs for smartphones, and new processors for PCs. This allowed the ten largest contract manufacturers to increase their revenue by almost 10% to a record $38.48 billion. At the same time, demand for mature technological processes fell.

Image Source: Intel

TSMC saw shipments grow quarter-on-quarter, increasing revenue to $26.85 billion. The company secured 67% of the contract chip manufacturing market, maintaining its leadership in the industry. Samsung Foundry took second place, with revenue down 1.4% quarter-on-quarter to $3.26 billion, or 8.1% of the market share.

SMIC faced inventory adjustments from customers, which resulted in lower wafer shipments. However, the addition of new 12-inch capacity and an optimized product mix helped offset the losses. As a result, SMIC’s revenue increased 1.7% quarter-on-quarter to $2.2 billion, securing 5.5% market share and third position.

UMC benefited from long-term customer orders, maintaining capacity utilization and deliveries above expectations. This mitigated the impact of a decline in average selling price (ASP). Revenue decreased by 0.3% quarter-on-quarter to $1.87 billion, securing UMC’s fourth place. GlobalFoundries increased wafer shipments and maintained its fifth place in the ranking. However, revenue growth was partially offset by a slight decline in ASP. GlobalFoundries’ revenue increased by 5.2% quarter-on-quarter to $1.83 billion.

Image source: TrendForce

Sixth place in the informal ranking was taken by HuaHong Group, whose revenue in the fourth quarter increased by 6.1% quarter-on-quarter to $1.04 billion. Tower Semiconductor retained the seventh place in the ranking with revenue growth compared to the previous quarter by 4.5% to $387 million. The increase in the ASP offset the impact of lower fab utilization rates. VIS took the eighth place, recording a revenue decline by 2.3% compared to the previous quarter to $357 million due to reduced demand, although this was partially offset by the increase in the ASP.

Nexchip was the only company to improve its ranking, moving up to ninth place, thanks to a 3.7% quarter-on-quarter revenue increase to $344 million. PSMC fell to tenth place due to weak demand for memory and consumer chips. However, PSMC’s total revenue remained slightly higher than Nexchip’s year-on-year.

TrendForce notes that new US trade tariffs have begun to impact the industry. The surge in orders in Q4 2024 for US-bound TVs, PCs, and laptops is expected to continue into Q1 2025. In addition, China’s consumer subsidy program, introduced in late 2024, has spurred early restocking among customers.