Taiwan and Korea’s Foundry Partnership Faces Shrinking Share

The share of the foundry industry currently held by Taiwan and Korea is expected to undergo significant changes in the coming years, according to a report by TrendForce. By 2027, Taiwan's share is projected to shrink to 41%, while Korea's share will decrease to 10%.

At present, Taiwan dominates the global semiconductor foundry capacity with approximately 46% market share, followed by China with 26%, South Korea with 12%, the US with 6%, and Japan with 2%.

In terms of advanced manufacturing processes, such as 16/14nm and more advanced technologies, Taiwan leads the way with a 68% global capacity share in 2023. The US comes in second with 12%, followed by South Korea with 11%, and China with 8%.

Taiwan also holds a significant share of nearly 80% in EUV generation processes, which include technologies like 7nm and beyond.

While the US is expected to increase its share of advanced process capacity to 17% by 2027, TSMC and Samsung will still account for over half of this capacity as they expand their production sites in the US.

China, on the other hand, is focusing on mature process technologies, particularly 28nm and older. By 2027, China's share in mature process capacity is projected to reach 39%, with potential for further growth if equipment procurement proceeds smoothly.

As Chinese manufacturers rapidly expand their mature process capacities, supported by government subsidies, this could lead to intense price competition in products like CIS, DDI, PMIC, and power discrete. Such competition may impact Taiwan-based foundries like UMC, PSMC, and Vanguard.

Among these companies, Vanguard is expected to be the most affected due to its product line, which includes LDDI, SDDI, PMIC, and power discrete. However, UMC and PSMC will maintain their advantages in the 28/22nm OLED DDI and memory sectors.

In response to chip shortages and geopolitical influences, fabless customers are diversifying their risk by working with multiple foundries. This trend could potentially lead to increased IC costs and concerns over duplicate orders.

Furthermore, customers are now demanding global validation of production lines, even with long-term foundry partners, to enable flexible capacity adjustments.