The Global Semiconductor Industry Landscape 2024
The semiconductor industry is currently experiencing a significant divide between advanced and mature process chips, largely driven by the soaring demand for AI-related technologies. Advanced chips, particularly those used in AI applications, are in high demand, leading to skyrocketing prices. Companies like Nvidia, which has solidified its dominance in this sector, are struggling to meet the overwhelming demand. This shortage has created a disparity where large tech firms with substantial capital can secure the necessary chips, while smaller startups face long waiting times and challenges accessing these crucial resources.
Meanwhile, mature process chips—those produced with 28-nanometer and larger technologies—are seeing a price war as Chinese foundries aggressively cut prices to remain competitive. This trend has forced other global players, including those in Taiwan and South Korea, to reduce their prices as well. Even industry leader TSMC has had to adjust its pricing strategy to remain attractive amid the sluggish demand for mature process chips.
Experts predict that while the AI chip market will continue to be highly lucrative, the intense competition and supply challenges will shape the semiconductor landscape for the foreseeable future. The combination of high demand for advanced chips and price pressures in the mature process segment could lead to consolidation and further shifts in market dynamics.
Key Takeawaysa
- AI demand is driving a spike in prices for advanced process chips, leading to market shortages
- Mature process chips are embroiled in fierce global price competition
- SMIC's 12-inch wafer production line is running at full capacity but faces significant competitive pressure
- 28-nanometer technology serves as a boundary in semiconductor processes, distinguishing mature from advanced processes
- SMIC needs to adjust pricing flexibly and collaborate with its customers to tackle market competition
Analysis
The surge in AI demand has led to a shortage of advanced process chips, causing prices to spike and affecting tech giants and startups alike. The price war for mature process chips has intensified, putting profit pressure on manufacturers like SMIC. The 28-nanometer technology has become a focal point of competition, and despite SMIC's full production capacity, it needs to flexibly price its products to respond to market fluctuations. Short-term semiconductor supply chain tensions are expected to persist, with technology upgrades and capacity expansion being crucial in the long run. The industry landscape will also be significantly influenced by policy support and technological innovation across different countries.
Did You Know?
- Advanced Process Chips
- Definition: These refer to chip manufacturing technologies in semiconductor fabrication processes with a line width smaller than 28 nanometers. Due to their more complex and sophisticated manufacturing processes, these chips are typically used in high-performance computing, artificial intelligence, and other fields with extremely high computational demands.
- Market Status: The rapid development of AI technology has led to a sharp increase in demand for advanced process chips, resulting in a shortage of supply and soaring prices.
- Mature Process Chips
- Definition: These denote chip manufacturing technologies in semiconductor fabrication processes with a line width of 28 nanometers or above. These chips boast mature technology, high production yield, relatively low costs, and are widely used in consumer electronics, automotive electronics, and other mass markets.
- Market Status: The market for mature process chips is fiercely competitive, with a global price war, necessitating manufacturers to maintain cost advantages and seek differentiated competitive strategies.
- SMIC
- Company Overview: SMIC is China's largest wafer foundry, primarily engaged in the manufacturing and sale of semiconductor chips, equipped with advanced semiconductor manufacturing technology and equipment.
- Market Challenges: While SMIC's 12-inch wafer production line continues to run at full capacity, it is facing intense market competition. The company needs to flexibly adjust its strategies and collaborate with customers to address market dynamics and ensure sustained competitiveness.