Introduction
The semiconductor foundry industry had a remarkable 2024, driven by market fluctuations, technological advancements, and the increasing demand for AI chips. Major players like TSMC, SMIC, and Hua Hong Semiconductor have released theirGlobal Foundries Report, providing a glimpse into their performance and future strategies for 2025.
Industry experts predict a 20% growth in the total foundry market value, fueled by the rapid expansion of artificial intelligence.
As competition intensifies, pricing strategies, capacity expansion, and government policies will play a crucial role in shaping the industry’s future.
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Key Takeaways
TSMC leads with record-breaking revenue and aggressive expansion. The company is investing $17.14 billion in advanced manufacturing and an additional $10 billion in its subsidiary, TSMC Global.
SMIC achieved record revenue of $8 billion but saw a sharp decline in net profits. The company remains optimistic, expecting above-average growth in early 2025.
Hua Hong completed major inventory adjustments in 2024 but struggled with lower selling prices. The company expects $530 million–$550 million revenue in Q1 2025.
AI-driven demand will boost the foundry sector, especially in advanced and mature process technologies.
Price adjustments are reshaping the market. TSMC is raising 3nm and 5nm chip prices by up to 10%, while mature process chips will see discounts.
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TSMC: Record-High Revenue & Massive Investment
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest foundry, reported NT$2.8943 trillion ($91 billion) in 2024 revenue, marking a 33.9% year-over-year growth.
Net profit after tax stood at NT$1.1732 trillion ($37 billion), with earnings per share (EPS) reaching NT$45.25 ($1.43)—both historic highs.
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Expansion & Future Plans
To maintain its technological lead, TSMC has approved a $17.14 billion capital expenditure for upgrading:
- Advanced chip manufacturing (3nm and below)
- Advanced packaging technologies
- Mature and specialty process capabilities
Additionally, the company plans to invest $10 billion in TSMC Global, mainly to manage foreign exchange risks.
Pricing Strategy for 2025
TSMC announced 5%–10% price hikes on 3nm and 5nm chips starting January 2025. Meanwhile, its CoWoS advanced packaging prices will rise 15%–20% due to high AI-driven demand.
However, the company is offering discounts on mature nodes for high-volume orders.
SMIC: Record Revenue but Profit Decline
China’s Semiconductor Manufacturing International Corporation (SMIC) reported an annual revenue of $8.03 billion, a 27.02% year-over-year increase. However, its net profit fell by 45.4% to $493 million, mainly due to lower investment returns and financial income losses.
Production & Capacity Growth
SMIC expanded its monthly production capacity to 948,000 8-inch equivalent wafers, with total wafer shipments exceeding 8 million for the year.
The company spent $7.33 billion in capital expenditure, maintaining strong production capacity.
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Outlook for 2025
Despite the profit drop, SMIC is optimistic about 2025. The company expects:
- Stronger-than-average Q1 revenue growth
- Stable capital expenditures similar to 2024
- Increased domestic demand for automotive and consumer electronics chips
SMIC CEO highlighted China’s shift toward domestic chip production, especially in the automotive sector, where companies are moving from validation to mass production.
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Hua Hong: Challenges Amid Inventory Adjustments
Hua Hong Semiconductor, China’s second-largest foundry, reported Q4 2024 revenue of $539.2 million, up 18.4% year-over-year but only 2.4% quarter-over-quarter.
For the full year, Hua Hong’s revenue fell to $2.004 billion, a 12.3% decrease from 2023, primarily due to lower average selling prices. However, its wafer shipments increased, partially offsetting the impact.
Profitability Challenges
- Gross margin for 2024 dropped to 10.2%, down 11.1 percentage points year-over-year
- Operating expenses increased 8.4% due to rising R&D costs and new factory operations
Q1 2025 Forecast
Hua Hong expects revenue between $530 million and $550 million, with a gross margin of 9%–11%.
The company remains focused on stabilizing its pricing strategy and managing costs.
Industry Trends & Competitive Landscape
AI & Advanced Process Demand to Drive Growth
According to TrendForce, the global foundry market is projected to grow 20% in 2025, primarily due to:
- Rising demand for AI-driven chips (Cloud AI, Edge AI, and power management chips)
- Continuous advancements in advanced node technology (3nm and below)
- Strong recovery in consumer electronics and IoT markets
TSMC is expected to double its CoWoS capacity to 75,000–80,000 wafers per month in 2025, driven by custom AI chip demand.
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Pricing Strategies & Competitive Pressures
- TSMC dominates in advanced nodes, while SMIC and Hua Hong focus on mature and specialty nodes
- TSMC raising prices on advanced nodes but offering discounts on mature process chips
- SMIC maintaining stable pricing but willing to negotiate with key customers
- Hua Hong focusing on cost efficiency to remain competitive
New Strategies from Other Foundries
- UMC is partnering with Intel to develop smaller, more efficient chips while expanding beyond mature nodes.
- PSMC is shifting away from low-margin display drivers and sensors to focus on 3D-stacked memory technology.
Conclusion: The Road Ahead for 2025
The global semiconductor foundry industry is set for a transformative year in 2025.
With AI continuing to drive demand, TSMC, SMIC, and Hua Hong are positioning themselves strategically through capacity expansions, pricing adjustments, and technology investments.
The competition will intensify, but one thing is certain: AI and technological innovation will shape the next phase of the foundry industry.
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