Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to drive growth in the global pure-play wafer foundry industry next year, Taipei-based market information advisory firm TrendForce Corp (集邦科技) said on Thursday.

The chipmaker is expected to benefit from its efforts to develop an advanced 3-nanometer process, on which it is scheduled to start mass production later this year, TrendForce senior semiconductor analyst Joanne Chiao (喬安) said at a technology forum in Taipei, adding that chips made using the process should command a higher profit margin.

Although the global pure-play wafer foundry industry has been undertaking inventory adjustments due to weakening demand, TSMC is expected to weather headwinds on the back of an increase in product prices, with the 3-nanometer process expected to make a significant contribution to its sales next year, when the firm is estimated to see its revenue rise 7 to 9 percent from this year, Chiao said.

A trial run of the 3-nanometer process began last year, while its 5-nanometer process is the latest technology for which it has launched mass production. Chips made using the technology accounted for 21 percent of TSMC’s total sales in the second quarter of this year.

An upgrade of the trialed process, dubbed 3-nanometer enhanced, is expected to first be used for commercial production next year.

On the back of TSMC’s growth, the global wafer foundry industry is expected to grow about 2.7 percent next year, moderating from an expected 28 percent increase this year, TrendForce said.

The global wafer foundry industry has been at a cyclical peak since 2020, when sales grew 24 percent from a year earlier, and year-on-year growth even hit 26.1 percent last year, Chiao said.

Demand weakness in the global wafer foundry sector has been a result of rapid inflation worldwide and China’s “zero COVID-19” policy, while US sanctions on the exportation of IC and related production equipment to China are expected to have an adverse effect on the global semiconductor industry, she said.

Although many countries are pushing for projects to build their own fabs, Taiwan’s lead over its peers in sophisticated process development should ensure its dominance in the global market for the foreseeable future, Chiao said.

However, as an increasing number of fabs are expected to start producing chips, an increase in supply is expected to present semiconductor producers with new challenges, she added.

Meanwhile, TrendForce Center for Research Operations chief operating officer Locke Chang (張小彪) said he remains cautious about the business outlook for global chip manufacturing next year.

There is no sign that inflation in the US and Europe can be brought under control in the near future, and China’s economy has been slowing amid its strict COVID-19 restrictions, which have created uncertainties in the global economy, Chang said.
 

• Link: Taipei Times