Top Semiconductor Foundry Companies to Watch in 2023
The semiconductor industry is a vital component of the global technology landscape, playing a crucial role in the production of electronic devices. In 2023, the rankings of the top semiconductor foundry companies saw notable changes, reflecting the dynamic nature of the industry. This article highlights the top semiconductor foundry companies to watch in 2023, focusing on their performance, innovations, and market influence.
Key Takeaways
- TSMC remains the world’s largest and most influential semiconductor foundry company.
- GlobalFoundries, UMC, and SMIC are significant players in the foundry market, specializing in manufacturing semiconductor products for other companies.
- The semiconductor industry faced challenges in 2023, including slow growth and inventory backlogs in key markets like smartphones and PCs.
- Asian companies, particularly from China, South Korea, and Japan, continue to play a crucial role in the global semiconductor supply chain.
- Despite the downturns, the semiconductor industry showed resilience and strong resistance to market fluctuations in 2023.
1. TSMC
Overview
Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s largest dedicated independent semiconductor foundry. TSMC has consistently led the market in terms of revenue and technological advancements. In the fourth quarter of 2023, TSMC’s revenue continued to dominate the semiconductor foundries market.
Recent Developments
Just last month, TSMC announced the inauguration of its Advanced Backend Fab 6. This significant development marks a milestone in the expansion of TSMC’s 3DFabric™ system integration technology. This new facility is TSMC’s first completely automated advanced packaging and testing fab that allows for integrated front-end to back-end process and testing services.
Challenges
In an earnings call with investors and analysts earlier this year, TSMC Chairman Mark Liu explained that the company was grappling with an “insufficient amount of skilled workers with the specialized expertise required for equipment installation in a semiconductor-grade facility.”
Future Plans
In addition to the new Intel fabs, TSMC has also set its eyes on Arizona as a landing spot for a new facility. Announced in 2020, TSMC’s new semiconductor fabrication plant, Fab 21, will produce 3- and 5-nanometer chips and have a capacity of roughly 20,000 WSPM (wafer starts per month). When it does begin operations, the $40-billion facility will become only the third semiconductor fabrication plant TSMC has built outside of Taiwan.
While TSMC’s Fab 21—sometimes called TSMC Arizona—was originally slated to become operational sometime in 2024, earlier this year the company announced that it was going to have to push the plant’s opening to 2025. Though the initial construction of the facility was completed in 2022, TSMC has since struggled to procure enough technicians to install the fab’s sophisticated equipment.
2. GlobalFoundries
GlobalFoundries (GF) is one of the world’s leading semiconductor foundries. GF is one of the world’s leading semiconductor foundries and has been making significant strides in expanding its manufacturing capabilities.
Expansion Plans
This past spring, GlobalFoundry purchased 800 acres of land adjacent to its current Malta campus, giving it the space and flexibility to expand its manufacturing capacity, including via the construction of a new fab. The new fab is expected to be completed by 2025.
Financial Performance
GlobalFoundries, ranked 21st among the top 25 manufacturers, saw sales fall 9% to $7.4 billion in 2023. The decline was attributed to slow growth and inventory backlogs in smartphones, PCs, data centers, and other end markets.
Market Position
Among the top 25 manufacturers, in addition to TSMC, the other three pure wafer foundries are GlobalFoundries, UMC, and SMIC. These companies specialize in manufacturing semiconductor products for other companies based on designs provided by customers.
3. UMC
United Microelectronics Corporation (UMC) operates as a semiconductor foundry, providing circuit design, assembly, and testing services for "fabless" design shops that don’t have their own manufacturing capacity. These characteristics make it very similar to the larger Taiwan Semiconductor. However, what makes UMC worth considering is its huge income potential, with an annual dividend yield of 7.3%, which is approximately five times the S&P 500 right now. Admittedly, that distribution is only paid once a year in the summer. But if you’re patient and in it for the long haul, UMC is a semiconductor stock worth considering—particularly with its outlook of 16% revenue growth in the next fiscal year.
4. SMIC
SMIC, or Semiconductor Manufacturing International Corporation, is one of the leading semiconductor foundries in China. The company’s revenue and gross margin both beat the guidance in recent quarters, showcasing its strong financial performance. SMIC has been making significant strides in the semiconductor industry, particularly in the development of advanced nodes and technologies.
Recent Developments
SMIC has announced its 2023 ESG report, emphasizing its commitment to sustainable development and corporate responsibility. The company continues to invest in new technologies and expand its production capabilities.
Market Position
SMIC is strategically positioned to cater to both domestic and international markets. Its focus on innovation and quality has helped it secure a competitive edge in the global semiconductor industry.
Future Prospects
Looking ahead, SMIC aims to further enhance its production yield and efficiency. The company is also exploring opportunities in emerging technologies and markets, which could drive future growth.
5. Samsung Foundry
Samsung Foundry, Samsung’s semiconductor manufacturing division, stands behind only TSMC as the world’s largest contract maker of chips. The South Korean-based company has had a presence in Texas since the late 1990s, when it built its first US-based semiconductor fabrication plant in Austin (now known as the S2 foundry). In 2021, Samsung announced that it would be breaking ground on a new semiconductor fabrication plant in Taylor, Texas—roughly 16 miles from its S2 foundry—and funneling around $17 billion into construction, equipment, machinery, and improvements to the space. Samsung declared it to be the single largest investment the company has ever made on US soil. The new fab is set to produce 5nm nodes and is expected to be completed between 2023 and 2042.
6. Intel Foundry Services
Intel Foundry Services (IFS) is a relatively new player in the semiconductor foundry market, but it has quickly made significant strides. Intel broke ground on two more semiconductor fabs in September 2021, named Fab 52 and Fab 62, located on its Ocotillo campus in Chandler, Arizona. These fabs are expected to be completed by 2024 and will produce 7 nm semiconductors using Intel’s 20A fabrication technology.
Intel has also been transparent about its financials, breaking out its products and foundry segment separately. This move gives investors a clearer picture of the company’s financial health. In 2023, Intel Foundry had sales of $18.9 billion, down from $27.5 billion the previous year. The unit had revenue of $4.4 billion in the first quarter of the year.
Intel’s expansion isn’t limited to Arizona. The company is also setting up new operations in Ohio, attracted by generous state incentives totaling around $2 billion. These new plants will manufacture chips on Intel’s 18A and 20A nodes.
7. Tower Semiconductor
Tower Semiconductor, headquartered in Israel, is a leading player in the semiconductor foundry industry. The company specializes in advanced semiconductor chipmaking and offers a wide range of customizable process technologies. Tower Semiconductor is known for its high-quality manufacturing and innovative solutions that cater to various markets, including consumer electronics, automotive, and industrial applications.
8. Vanguard International Semiconductor
Vanguard International Semiconductor (VIS) is a prominent player in the semiconductor foundry industry. Despite the difficult macroeconomic environment, VIS has managed to maintain a stable position in the market. The company specializes in the production of advanced semiconductor chipmaking technologies, catering to a diverse range of applications.
Market Position
VIS is among the top 25 global vendors, focusing on niche markets that require specialized manufacturing processes. The company has a strong presence in the automotive semiconductor sector, which has seen high demand even during economic downturns.
Recent Developments
After experiencing inventory adjustments and a downturn in demand in the semiconductor market from the second half of 2022 to the end of 2023, VIS is rumored to evaluate its first 12-inch wafer production line. This move could potentially enhance its manufacturing capabilities and market reach.
Future Prospects
VIS is well-positioned to capitalize on the growing demand for automotive and other specialized semiconductor applications. The company’s focus on advanced technologies and niche markets makes it a key player to watch in the coming years.
9. Hua Hong Semiconductor
Hua Hong Semiconductor is a prominent player in the field of advanced semiconductor chipmaking. As one of the leading foundry companies in China, it has made significant strides in the industry.
Market Position
Hua Hong Semiconductor is among the top semiconductor foundries globally, contributing to China’s growing influence in the semiconductor market.
Key Products and Services
- Integrated Circuits (ICs)
- Photonic Devices
- Sensors
- Discrete Devices
Recent Performance
Despite a challenging market environment, Hua Hong Semiconductor has maintained a strong position. However, like many in the industry, it faced a decline in revenue in 2023 due to slow growth in end markets such as smartphones, personal computers, and data center servers.
Future Outlook
Hua Hong Semiconductor is expected to continue its growth trajectory by focusing on innovation and expanding its product offerings. The company aims to leverage its expertise to capture new opportunities in emerging markets.
10. Dongbu HiTek
Dongbu HiTek is a prominent player in the semiconductor foundry industry, known for its specialized manufacturing processes and customer-centric services. The company excels in providing analog and mixed-signal foundry services.
Key Services
- Analog and Mixed-Signal Foundry Services
- High Voltage CMOS
- Bipolar CMOS DMOS (BCD)
- Embedded Non-Volatile Memory (eNVM)
Market Position
Dongbu HiTek has carved out a niche in the market by focusing on high-growth sectors such as automotive, industrial, and consumer electronics. The company’s ability to offer specialized solutions has made it a preferred partner for many firms.
Technological Innovations
Dongbu HiTek is committed to continuous innovation, investing heavily in research and development to stay ahead of technological trends. The company has made significant advancements in:
- High Voltage CMOS technology
- Bipolar CMOS DMOS (BCD) processes
- Embedded Non-Volatile Memory (eNVM) solutions
Future Outlook
With a strong focus on innovation and customer satisfaction, Dongbu HiTek is well-positioned to capitalize on emerging opportunities in the semiconductor industry. The company’s strategic initiatives and technological advancements make it a key player to watch in 2023.
Conclusion
The semiconductor industry in 2023 has demonstrated remarkable resilience despite facing significant challenges such as slow growth and inventory backlogs in key markets like smartphones, PCs, and data centers. The rankings of the top semiconductor suppliers have seen notable shifts, with some companies rising and others falling. Foundry companies, including TSMC, GlobalFoundries, UMC, and SMIC, continue to play a crucial role in the global supply chain, even as they navigate a complex market environment. As we look ahead, the industry is poised for further evolution, with opportunities for growth and innovation, particularly from emerging markets like China. Investors and industry watchers should keep an eye on these top players as they adapt and thrive in the dynamic semiconductor landscape.
Frequently Asked Questions
What are semiconductor foundries?
Semiconductor foundries are companies that manufacture semiconductor products for other companies based on the designs provided by their customers. They do not design their own chips.
Which is the largest semiconductor foundry in the world?
TSMC (Taiwan Semiconductor Manufacturing Company) is the largest semiconductor foundry in the world.
What was the performance of GlobalFoundries in 2023?
GlobalFoundries saw its sales fall by 9% to $7.4 billion in 2023, ranking 21st among the top 25 semiconductor suppliers.
How did UMC perform in 2023?
UMC’s revenue fell by 24% to $7.1 billion in 2023, placing it at 22nd in the ranking of the top 25 semiconductor suppliers.
What is the significance of the semiconductor industry in the global supply chain?
The semiconductor industry is crucial in the global supply chain as it provides essential components for various electronic devices, including smartphones, PCs, servers, and more.
How did the semiconductor industry perform overall in 2023?
Despite a difficult downward cycle in 2023, the semiconductor industry showed resilience and strong resistance to falling, with some companies like Nvidia bucking the trend and growing.
