Foundry Market Expected to Experience Healthy Growth of 20% by 2025

The foundry industry is anticipated to observe a notable 20% increase in revenue by the year 2025, attributed to a strong demand for AI technologies that will benefit prominent players like TSMC, as well as the gradual recovery of non-AI semiconductor applications. For leading-edge nodes such as 3nm and 5/4nm, the industry utilization rate (UTR) displays robust performance throughout 2025, while mature nodes struggle with a slow recovery due to weak cyclical demand.

Projections indicate that the industry’s revenue compound annual growth rate (CAGR) will remain consistent at 13-15% from 2025 to 2028, with long-term growth prospects driven by advancements in leading-edge nodes like 3nm and 2nm, along with the implementation of advanced packaging technologies.

The global foundry industry concluded the year 2024 with a remarkable 22% year-over-year growth, signifying a robust rebound and expansion phase following the year 2023. This growth surge was primarily fueled by the escalating demand for leading-edge nodes, propelled by the rapid integration of AI applications in data centers and edge computing. Key market players such as TSMC were able to capitalize on this momentum with substantial contributions from nodes like 5/4nm and 3nm, supported further by advancements in packaging solutions such as CoWoS.

Looking into the future, it is expected that the foundry industry will sustain approximately 20% revenue growth in 2025, propelled by a continuous surge in AI demand that will benefit industry leaders like TSMC. Additionally, the gradual recovery of non-AI semiconductor applications in areas like consumer electronics, networking, and IoT sectors is anticipated to offer further support to the industry’s upward trajectory, reinforcing its long-term viability.

Within the current landscape, the UTR for leading-edge nodes, specifically 3nm and 5/4nm, remains robust in 2025 due to strong AI demand from major players like NVIDIA, along with significant smartphone demand from industry giants such as Apple, Qualcomm, and MediaTek. In contrast, the UTR recovery for mature nodes, including 28/22nm and above, is experiencing a slower pace attributed to subdued demand across segments like consumer electronics, networking, automotive, and industrial sectors. The recovery of 8-inch UTR is anticipated to lag behind compared to mature 12-inch nodes, mainly due to its exposure to automotive and industrial applications. It is expected that inventory adjustments within the automotive segment will continue through the first half of 2025, causing delays in sector recovery. Moreover, elevated inventory levels at global IDMs like Infineon and NXP may lead to a decrease in outsourcing orders to mature node foundries, adding pressure to mature node UTR. Overall, mature node foundries are predicted to encounter a modest UTR recovery in comparison to TSMC throughout 2025.

Looking ahead, the global foundry industry is positioned for sustained growth, estimating a revenue CAGR of 13-15% from 2025 through 2028. This prolonged expansion will be supported by progress in leading-edge nodes, such as 3nm, 2nm, and lower, as well as the continued adoption of advanced packaging technologies like CoWoS and 3D integration. These technological advancements are anticipated to drive industry growth in the upcoming 3-5 years, fueled by escalating demand for high-performance computing and AI applications. TSMC is expected to maintain its leadership position, influencing industry trends and leveraging its technological superiority.