The global semiconductor industry is set to reach a new milestone in 2024, when the total chip production capacity will surpass 30 million wafers per month (wpm) for the first time, according to a report by SEMI, a global industry association. The report, which covers the period from 2022 to 2024, predicts a 6.4% increase in global capacity in 2024, following a 5.5% rise in 2023.

The growth will be driven by the rising demand for chips in various applications, such as artificial intelligence (AI), high-performance computing (HPC), and electric vehicles (EVs), as well as the recovery in the end-market demand after the COVID-19 pandemic. The report also cites the increased government support and incentives for chip manufacturing in key regions, such as China, Taiwan, Korea, and the U.S., as a major factor for the capacity expansion.

“Resurgent market demand and increased government incentives worldwide are powering an upsurge in fab investments in key chipmaking regions and the projected 6.4% rise in global capacity for 2024,” said Ajit Manocha, SEMI President and CEO. “The heightened global attention on the strategic importance of semiconductor manufacturing to national and economic security is a key catalyst of these trends.”

The report shows that the global semiconductor industry plans to start operations of 82 new volume fabs, or chip factories, in the next three years, with 11 projects in 2023 and 42 projects in 2024. These fabs will produce chips with wafer sizes ranging from 300mm to 100mm, with the majority of them using 300mm wafers, which can produce more chips per wafer than smaller sizes.

China Leads Semiconductor Industry Expansion

Among the regions, China is expected to lead the semiconductor industry expansion, with 18 new fabs starting operations in 2024. The report forecasts that China will increase its chip production capacity by 12% year-over-year (YoY) to 7.6 million wpm in 2023 and by 13% YoY to 8.6 million wpm in 2024, boosted by government funding and other incentives. China’s share of global capacity will rise from 20% in 2021 to 23% in 2024, according to the report.

Taiwan is projected to remain the second-largest region in terms of chip production capacity, with five new fabs starting operations in 2024. The report estimates that Taiwan will increase its capacity by 5.6% YoY to 5.4 million wpm in 2023 and by 4.2% YoY to 5.7 million wpm in 2024. Taiwan’s share of global capacity will decline slightly from 19% in 2021 to 18% in 2024, according to the report.

Korea ranks third in chip production capacity, with one new fab starting operations in 2024. The report predicts that Korea will increase its capacity by 5.4% YoY to 4.9 million wpm in 2023 and by 4.1% YoY to 5.1 million wpm in 2024. Korea’s share of global capacity will remain stable at 16% from 2021 to 2024, according to the report.

Japan is expected to place fourth in chip production capacity, with four new fabs starting operations in 2024. The report forecasts that Japan will increase its capacity by 2% YoY to 4.6 million wpm in 2023 and by 2.2% YoY to 4.7 million wpm in 2024. Japan’s share of global capacity will drop from 16% in 2021 to 15% in 2024, according to the report.

The report also shows that the Americas will increase its chip production capacity by 6% YoY to 3.1 million wpm in 2024, with six new fabs starting operations. Europe & Mideast will increase its capacity by 3.6% YoY to 2.7 million wpm in 2024, with four new fabs starting operations. Southeast Asia will increase its capacity by 4% YoY to 1.7 million wpm in 2024, with four new fabs starting operations.

Foundry Segment Continues Strong Capacity Growth

By segment, the report indicates that the foundry segment, which provides chip manufacturing services to other companies, will continue to be the largest and fastest-growing segment in the semiconductor industry. The report projects that the foundry segment will increase its capacity to 9.3 million wpm in 2023 and a record 10.2 million wpm in 2024, accounting for 33% of the global capacity in both years.

The memory segment, which produces chips that store data, such as DRAM and NAND, will slow down its capacity expansion in 2023, due to weak demand in consumer electronics, such as PCs and smartphones. The report estimates that the memory segment will increase its capacity by 2% YoY to 3.8 million wpm in 2023 and by 5% YoY to 4 million wpm in 2024, accounting for 13% and 14% of the global capacity, respectively.

The discrete and analog segments, which produce chips that perform specific functions, such as power management and signal processing, will accelerate their capacity expansion in 2023 and 2024, driven by the demand for vehicle electrification. The report forecasts that the discrete segment will increase its capacity by 10% YoY to 4.1 million wpm in 2023 and by 7% YoY to 4.4 million wpm in 2024, accounting for 14% and 15% of the global capacity, respectively. The analog segment will increase its capacity by 11% YoY to 2.1 million wpm in 2023 and by 10% YoY to 2.4 million wpm in 2024, accounting for 7% and 8% of the global capacity, respectively.