Rising Value in the Foundry Industry... "Market Size Expected to Grow 13% Next Year"

Samsung, SK Hynix, and Other Domestic Semiconductor Companies Increase Facility Investment and Response Measures

[Asia Economy Reporter Jeong Hyunjin] Amid the global semiconductor shortage, the value of foundry (semiconductor contract manufacturing) companies is rapidly rising, with the market size expected to grow by 13% next year, continuously setting new 'all-time high' records. Domestic semiconductor companies such as Samsung Electronics and SK Hynix plan to actively respond to foundry demand by investing aggressively in facilities and technology development, aiming to increase their market share.

On the 29th, Taiwanese market research firm TrendForce forecasted that the annual foundry market revenue next year will reach $117.69 billion (approximately 137.6 trillion KRW), a 13.3% increase compared to the same period last year. Although the top 10 foundry companies are expected to exceed $100 billion in revenue this year, the semiconductor supply shortage is not resolved, so related revenues are expected to increase due to price hikes. In fact, as foundry demand has recently surged, foundry manufacturing costs have been rising. TrendForce explained, "The new production lines that foundry companies have decided to add in response to the shortage will begin full-scale mass production from the second half of next year."

According to TrendForce, the total capital expenditure of the top 10 foundry companies this year increased by 43% compared to the same period last year, exceeding $50 billion. From next year, with new fabs being completed and equipment gradually introduced, capital expenditure is estimated to be around $50 billion to $60 billion. Additionally, with TSMC announcing plans to build a factory in Japan and other additional investment plans emerging, the scale of capital investment in the foundry industry is expected to increase.

TrendForce stated, "The newly introduced production lines next year will play a role in partially alleviating the current severe semiconductor supply shortage," but also evaluated, "However, since actual semiconductor supply will occur after the second half of next year, typically considered the peak season, the foundry market is unlikely to show a significant sign of stabilization."

Samsung Electronics Pyeongtaek Campus Panorama

As the foundry market is expected to continue its growth trend for the time being, the domestic semiconductor industry is proactively investing in facilities. Samsung Electronics, the second-largest foundry company, plans to invest 171 trillion KRW in system semiconductors by 2030. This year, it announced an investment to build a foundry plant worth $17 billion in the United States and is currently reviewing candidate sites including Taylor City, Texas. It is expected that Samsung Electronics Vice Chairman Lee Jae-yong will visit the U.S. next month to make the final decision. Samsung Electronics announced through its Q3 earnings report yesterday that foundry sales were the highest ever on a quarterly basis and stated, "We will expand foundry production capacity to three times that of 2017 by 2026." This is interpreted as a plan to seize market trends and expand the market through timely investment and technological leadership with advanced processes.

SK Hynix officially began expanding its foundry production capacity by signing a contract to acquire Key Foundry on the same day. In May, SK Hynix set a goal to double its 8-inch foundry production capacity and signed a contract to acquire 100% of Key Foundry's shares from Magnus Semiconductor Limited for 575.8 billion KRW. It plans to complete the acquisition after obtaining regulatory approvals from major countries. SK Hynix stated, "We will strengthen system semiconductor competitiveness, stabilize the global semiconductor supply chain, and support the domestic fabless ecosystem."

DB HiTek has also invested in process efficiency for its 8-inch foundry this year to meet the surging demand. It has also planned to enter the automotive semiconductor business.