Shocking Stats on Semiconductor Fab Capacity You Need to Know

The big news stories of 2021 and 2022 all revealed the collective Western realization that semiconductor fabrication capacity had become clustered in one part of the world, creating unnecessary supply chain risk. Instead of allowing the situation to languish, many companies began implementing plans to expand their global footprint in order to ensure sustained production in the event of a future supply chain shock.

With new capacity coming online around the world, where is that capacity being located and what can they actually produce? These are more granular questions which can reveal flaws in a supply chain strategy that relies on foundry capacity or large semiconductor orders shipped directly from manufacturers. Pay attention to the statistics in this article as they illustrate how your next semiconductor might not be as de-risked as you expected.

Stat #1: Most Capacity is for Mid-Range Chips

Most of the new or expanding fabrication capacity is for what would be considered mid-range technology nodes, ranging from 10-40 nm. These nodes are suitable for many small-package ASICs, mid-grade processors, processors targeting the PC market, and some advanced ASICs. It aligns with many consumer and commercial products that do not require highly advanced processors with high compute density.

Not all facilities are brand new, and not all capacity targets the mid-grade technology nodes. Some new capacity focuses on sub-10 nm technology nodes, and some of that new capacity will be implemented in expansions of existing facilities. If we consider anything below 10 nm to be “advanced” then we would arrive at the following list:

In the recent past, TSMC and Samsung have been the main producers of sub-7 nm chips, with most capacity for both being produced outside of their largest end user market (United States). From the above list, this is clearly set to expand through expansions, but new facilities by SE Asian producers will also increase capacity. Just to illustrate the magnitude of private investment in these facilities, Samsung Foundry has 10 facilities planned to be completed over the next 20 years.

Stat #2: US Seeing Biggest Fab Capacity Increase

Many of the companies who were dealing with shutdowns and inability to produce chips in 2020-2022 are US companies. These companies happened to have significant capacity in SE Asia, which is a reflection of the gradual decline of US-based market share of semiconductor manufacturing. With passage of the Chips and Science Act, that situation is likely to change going into the near future.

As of the end of 2023, there are 73 new semiconductor fabs being built or planned to be built, either as expansions to existing facilities but with the majority (50 facilities) being brand new. Of the 50 brand new semiconductor fabrication facilities, 42% of those are being built in the United States.

Stat #3: Significant New Wafer Capacity is Still in SE Asia

While it is true that the US is seeing the lion’s share of fabrication capacity increases, the US is not the only country increasing its capacity. Despite the previous two statistics showing US and EU efforts to attain leadership positions in semiconductor fabrication capacity, there is still significant new capacity being built in Asia, and much of that share is being built in China.

The graph below compiles data on new wafer fabrication capacity (monthly) by company.

Notice that the largest entry in this list is Semiconductor Manufacturing International Corporation (SMIC), China’s largest semiconductor manufacturer. This might seem like it contradicts other statistics, but it reveals a difference in strategy. US companies might be building the largest number of fabs, while Chinese companies are building very large fabrication facilities with high capacity.

This makes sense as the Chinese companies are mostly serving the Chinese market as the country attempts to transition to something closer to a consumer-based economy. Meanwhile, there is a larger diversity of US companies so we would expect the per-fab capacity to be smaller, although in aggregate the new fabrication capacity may be similar to SE Asian counterparts.

Stat #4: US and EU Aim to Dominate By 2030

The passage of the US Chips Act and European Chips Act collectively allocated $100 billion to support investment in new fabrication capacity, as well as research and development. The stated goal of the EU is simple: double semiconductor manufacturing market share in the EU from 10% to 20% in the next decade. The US goal may not be stated so clearly, but one can infer a similarly ambitious goal given the amount of public support pledged to the industry.

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