Outlook for Foundry Market: Strong Growth Expected in 2025, 20% Revenue Increase
In 2024, the global foundry industry experienced a remarkable 22% year-over-year growth, signaling a significant recovery and expansion phase following the challenges of the previous year. This growth surge was largely propelled by the increasing demand for cutting-edge nodes, which was fueled by the rapid adoption of artificial intelligence (AI) applications in data centers and edge computing. Major industry players like TSMC took full advantage of this momentous growth trajectory, with substantial contributions coming from the 5/4nm and 3nm nodes. Furthermore, advancements in packaging technologies, such as CoWoS, played a crucial role in further strengthening the industry’s growth outlook.
Looking towards the future, the foundry sector is poised to achieve approximately 20% revenue growth in 2025, driven primarily by the sustained strong demand for AI applications that continue to benefit key players like TSMC. Additionally, a gradual recovery in non-AI semiconductor applications, encompassing segments like consumer electronics, networking, and the Internet of Things (IoT), is expected to provide further support for the industry’s growth trajectory, consolidating its long-term prospects.
The industry’s utilization rate (UTR) for leading-edge nodes including 3nm and 5/4nm nodes remains robust in 2025, driven by the substantial AI demand from major players like NVIDIA, as well as solid flagship smartphone demand from companies like Apple, Qualcomm, and MediaTek. On the contrary, the UTR recovery for mature nodes (28/22nm and above) has been relatively sluggish due to weak demand in end-market segments such as consumer electronics, networking, automotive, and industrial sectors. The recovery of 8-inch UTR is expected to lag even behind mature 12-inch nodes, mainly due to its significant exposure to automotive and industrial applications. Challenges like inventory correction in the automotive sector and high inventory levels at global integrated device manufacturers (IDMs) like Infineon and NXP are likely to result in reduced outsourcing orders to mature node foundries, adding pressure to the UTR of mature nodes. Overall, it is anticipated that mature node foundries will witness a more modest UTR recovery compared to TSMC in 2025.
Looking beyond 2025, the global foundry industry is set for sustained growth, with a projected revenue compound annual growth rate (CAGR) of 13-15% from 2025 to 2028. This long-term growth trajectory will be underpinned by advancements in leading-edge nodes, such as 3nm, 2nm and below, as well as the increasing adoption of advanced packaging technologies like CoWoS and 3D integration. These innovations are expected to remain the primary growth drivers for the industry over the next 3-5 years, fueled by the rising demand for high-performance computing and AI applications. TSMC is anticipated to maintain its leadership position, shaping industry trends, and leveraging its technological prowess to drive further growth in the sector.