Even with increased production capacity in Europe and United States, will Asia remain a semiconductor hub?
Christophe Fouquet, president and CEO of ASML, recently gave his opinion on this issue.
Fouquet mentioned in an interview with the media that he attended the groundbreaking ceremony of TSMC in Dresden, Germany. He believes that Europe and the United States not only need to establish subsidized chip factories, but also really affect the industrial structure. Addressing long-term cost and resiliency issues is critical to developing a true ecosystem.
Fouquet believes that for Europe and United States to succeed, they must improve the economic model of semiconductor manufacturing. It is not sustainable to produce components at a much higher cost. Subsidies are a temporary solution that buys time and space; The real challenge is to address more structural issues. Europe's main advantage in the semiconductor sector is its skilled workforce and renewable energy resources.
The increase in chip production capacity in Western countries is unlikely to change the balance of power in the semiconductor industry. Even with subsidies for new semiconductor factories, he expects chip capacity growth to slow because Asia will remain the dominant manufacturing player for many years to come.
According to industry insiders, expanding wafer production capacity often faces huge cost challenges. The cost structure of a fab includes land and facility construction, equipment procurement, technology research and development and intellectual property rights, operation and maintenance, etc., and the construction cost of a modern fab is often hundreds of billions of dollars. There are also differences in construction costs in different regions, and in Europe and the United States, the construction cost of fabs may be higher due to the need to introduce technology, cultivate talents, and improve the industrial chain.
In contrast, the Asian market benefits from a mature supply chain, a large talent pool and support policies, resulting in relatively low fab construction costs.
Chip factories in Asia are booming
Driven by the recovery of market demand and the favorable global chip subsidy policy, the value of the global semiconductor market will continue to grow in 2024.
In a September survey, TrendForce noted that the foundry market value is expected to grow by 20% in 2025, surpassing the 16% increase in 2024, driven by AI deployments and improved supply chain inventories.
In terms of regional semiconductor production capacity layout, Asia has performed outstandingly, with major markets such as Chinese mainland, Taiwan, Korea and Japan leading in monthly production capacity, followed by Europe and United States.
Japan's areas of strength in the semiconductor industry are mainly raw materials, equipment, and small active and passive devices. In the semiconductor value chain, Japan has a huge advantage in upstream semiconductor materials, and Japan can meet the high purity requirements of semiconductor materials. While Japan has not performed well in other areas of the semiconductor industry, its deep industry expertise cannot be underestimated.
Taiwan, China, is the world's largest foundry region with strong strength and market competitiveness in the field of chip production and integrated circuit design, and has the most advanced semiconductor production process technology. Taiwan, China also has a brand advantage.
Chinese mainland's advantage in the semiconductor industry is that once it matures, it can quickly achieve technology scale, which is almost impossible for other countries to match in this regard. China also has a strong presence in the OSAT field, occupying a huge share of the global market.
Korea's semiconductor industry is large and has a large number of companies, among which Samsung and SK hynix are the largest semiconductor companies in Korea.
In addition to these mature markets, new semiconductor manufacturing forces have emerged in Asia, represented by Singapore, Malaysia and Viet Nam.
Singapore is a semiconductor powerhouse in Southeast Asia, with a complete semiconductor industry chain covering design, manufacturing, packaging, testing, equipment, materials and distribution. Texas Instruments, STMicroelectronics, Infineon, Micron, GLOBALFOUNDRIES, TSMC, UMC, VIS and ASE have set up branches or expanded factories in Singapore, among which leading foundries such as TSMC, GLOBALFOUNDRIES, UMC and VIS have set up 8-inch and 12-inch wafer fabs in Singapore.
Malaysia plays a vital role in the global semiconductor packaging and testing sector. DRAMeXchange estimates that about 50 semiconductor companies have set up back-end assembly and test facilities in Malaysia, including Intel, Micron, Texas Instruments, NXP, ASE Group, Nexperia, Infineon, HT-Tech, Tongfu Microelectronics, Suzhou Good-Tech, Renesas, onsemi, Amkor and STMicroelectronics.
Viet Nam has attracted foreign investment from companies such as Intel, ASE Group, Samsung Electronics, Amkor, Qualcomm, onsemi, Renesas, Texas Instruments, NXP, Marvell, Synaptics, Hainault Microelectronics, Amphenol and others.
It is worth noting that semiconductors are one of the important products in Viet Nam and are listed as a key development focus in the next 30 to 50 years. According to the plan, Viet Nam aims to have at least 300 chip design companies, 3 semiconductor chip manufacturing plants and 20 semiconductor packaging and testing plants by 2040-2050.
