Semiconductor Foundry Market

Rising demand for 5G wireless and Internet of Things solutions

A significant growth focus for semiconductors in the forthcoming years will be internet-connected devices that utilize sensors and software to gather and analyze data. For instance, smart factories may help you keep an eye on the activities on the shop floor and ensure that every machine is running as efficiently as possible, freeing up space on the floor and assisting companies in reducing spending. A smartphone app can be used to manage the lights and appliances in a user's house due to the emergence of smart homes.

Users of IoT devices would be able to remotely check on security aspects of their homes, such if windows are unlocked or leaking smoke.

Mobile telecommunications networks nowadays operate at significantly higher speeds, reliability, and latency due to the switch to 4G and the upgrading to 5G. For all Internet-connected devices to receive the data they require from 5G, high-speed connections are required. For a future market, 5G phones have been developed by manufacturers of mobile phones. The market for semiconductor foundries is predicted to expand as a result of the increased demand for semiconductors brought on by these new, smart phones. According to Statista, the semiconductor industry market is valued 422.34 billion and in 2022 the number reached USD 618 billion.

As a result, the rising semiconductor market is anticipated to create the lucrative opportunity for the market during forecast period.

However, the semiconductor foundry market is growing quickly. The semiconductor foundry industry is being driven by this factor as semiconductor foundries step up their efforts to produce automotive chips in expectation of an increase in semiconductors used in autonomous driving. Semiconductor foundry services will be advantageous to numerous sectors. Some of the major industries that require semiconductor foundry services are telecom, computer and networking, consumer electronics, and automotive.

The demand for effective semiconductor foundry services is rising in response to the growing popularity of mobile, network-capable gadgets with internet access and multimedia capabilities. IoT systems analyse data to help users connect various items to the internet and make decisions. They therefore operate in a range of industries, such as electronics, retail, and the medical and automotive sectors. The Semiconductor Foundry Market is also being driven by government support from a number of countries for the improvement of semiconductor technology.

For instance, in 2021, the President Moon Jae-in of South Korea launched a new national semiconductor industrial policy aiming at ensuring the country's leadership in the chip industry by 2030 according to the data of Semiconductor Industry Association, which is driving the growth for the market over the forecasted period. The plan includes up to 50% tax credits for R&D and 16% for manufacturing, as well as USD 886 million in long-term financing, USD 1.3 billion in government R&D investments, streamlined regulations, and improved infrastructure.

According to SIA, the proposed tax advantages for Korean chip companies might total USD 55-USD 65 billion over the next three years.

The Global Semiconductor Foundry Market Industry is poised for substantial growth, with projections indicating a market size of 64.7 USD Billion in 2024 and an anticipated increase to 127.2 USD Billion by 2035. This growth trajectory suggests a compound annual growth rate (CAGR) of 6.34% from 2025 to 2035, highlighting the industry's resilience and adaptability in the face of evolving technological demands. The expansion of semiconductor foundries is likely to be driven by various factors, including the increasing demand for consumer electronics, advancements in automotive technology, and the proliferation of IoT applications. These dynamics collectively underscore the importance of the semiconductor foundry sector in shaping the future of technology.

The rollout of 5G technology is a critical driver for the Global Semiconductor Foundry Market Industry, as it necessitates advanced semiconductor solutions to support high-speed connectivity and increased data transmission. The demand for 5G infrastructure is expected to accelerate, prompting foundries to enhance their production capabilities to meet the requirements of telecom operators and device manufacturers. This expansion is anticipated to contribute to a compound annual growth rate (CAGR) of 6.34% from 2025 to 2035. As 5G networks become more prevalent, the semiconductor foundry sector will play an essential role in enabling the next generation of communication technologies.

The Global Semiconductor Foundry Market Industry is significantly influenced by advancements in automotive technology, particularly with the rise of electric vehicles (EVs) and autonomous driving systems. As automotive manufacturers increasingly integrate sophisticated semiconductor solutions for enhanced performance and safety, foundries are positioned to meet this growing demand. The automotive sector's transition towards electrification is expected to drive substantial growth, with projections indicating that the market could reach 127.2 USD Billion by 2035. This shift not only underscores the importance of semiconductor foundries in the automotive supply chain but also highlights their role in facilitating innovation in vehicle technology.

The Global Semiconductor Foundry Market Industry experiences a robust demand surge driven by the increasing consumption of consumer electronics. With the proliferation of smartphones, tablets, and wearable devices, the need for advanced semiconductor components is paramount. In 2024, the market is projected to reach 64.7 USD Billion, reflecting the industry's pivotal role in supporting technological advancements. As consumer preferences shift towards more sophisticated devices, semiconductor foundries are compelled to innovate and enhance production capabilities. This trend is likely to continue, as the global consumer electronics market expands, further solidifying the foundry sector's significance in the broader technology landscape.

The proliferation of Internet of Things (IoT) applications is a significant catalyst for the Global Semiconductor Foundry Market Industry. As industries increasingly adopt IoT solutions for automation and data analytics, the demand for specialized semiconductor components is on the rise. This trend is evident across various sectors, including healthcare, manufacturing, and smart cities, where IoT devices require efficient and reliable semiconductor technologies. The continuous growth of IoT applications is likely to bolster the foundry market, as companies seek to leverage advanced semiconductor solutions to enhance connectivity and operational efficiency.

Investment in research and development (R&D) within the Global Semiconductor Foundry Market Industry is crucial for fostering innovation and maintaining competitive advantage. Foundries are increasingly allocating resources to develop cutting-edge technologies, such as advanced process nodes and materials, to meet the evolving demands of the semiconductor ecosystem. This focus on R&D is expected to drive growth and enhance production capabilities, ensuring that foundries can deliver high-performance solutions. As the industry evolves, the emphasis on innovation will likely remain a key driver, enabling foundries to adapt to changing market dynamics and technological advancements.

By Region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. North America Semiconductor Foundry market accounted for USD 24.04 billion in 2021 and is expected to exhibit a significant CAGR growth during the study period. This is attributed to the growing rising consumer electronics industry, rising demand for connected devices, rising adoption of Internet of Things, and growing demand in electronic vehicles and autonomous vehicles.

Further, the major countries studied in the market report are: The U.S, Canada, Germany, France, UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 3: SEMICONDUCTOR FOUNDRY MARKET SHARE BY REGION 2021 (%)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Europe semiconductor foundry market accounts for the second-largest market share due to the availability of advanced technology, rising automotive industry, growing government investment in smart city project and connected cars infrastructure development, and growing consumer electronic industry in the region. Further, the Germany semiconductor foundry market held the largest market share, and the UK semiconductor foundry market was the fastest growing market in the European region

The Asia-Pacific Semiconductor Foundry Market is expected to grow at the fastest CAGR from 2024 to 2032. This is due to rising adoption of IOT devices, growing demand in electronics vehicles, and rising government investment in smart city projects that anticipated to support the market growth in the region. Moreover, China semiconductor foundry market held the largest market share, and the India semiconductor foundry market was the fastest growing market in the Asia-Pacific region

Major market players are spending a lot of money on R&D to increase their product lines, which will help the semiconductor foundry market grow even more. Market participants are also taking a range of strategic initiatives to grow their worldwide footprint, with key market developments such as new product launches, contractual agreements, mergers and acquisitions, increased investments, and collaboration with other organizations. Competitors in the semiconductor foundry industry must offer cost-effective products to expand and survive in an increasingly competitive and rising market environment.

One of the primary business strategies adopted by manufacturers in the semiconductor foundry industry to benefit clients and expand the market sector is to manufacture locally to reduce operating costs. In recent years, semiconductor foundry industry has provided semiconductor with some of the most significant benefits. The semiconductor foundry market major player such as Taiwan Semiconductor Manufacturing Company (TSMC) Limited (Taiwan), Vanguard International Semiconductor Corporation (Taiwan), and others are working to expand the market demand by investing in research and development activities.

In March 2022, DENSO Corporation announced that it would invest USD 0.35 billion in Japan Advanced Semiconductor Manufacturing, Inc., TSMC's majority-owned manufacturing division in Kumamoto Prefecture, Japan, according to a statement from Sony Semiconductor Solutions Corporation and DENSO Corporation. DENSO will own more than 10% of the ownership in JASM after this investment.

In January 2022, The Fab L3B building and its facilities were acquired by VIS. The company expects to reach an approximate monthly manufacturing capacity of 40,000 8-inch wafers due to these acquisitions, which have allowed it to boost its production capacities. This makes it possible for the company to meet the steadily rising short- and long-term demand for semiconductors.