Taiwan's Semiconductor Dominance to Wane as Mainland China Gains Ground, IDC Predicts

The global semiconductor manufacturing supply chain is set to see a shift in dominance, with Taiwan predicted to lose ground to mainland China, according to a report by market research firm IDC. Taiwan's share in foundry work and outsourced assembly and test (OSAT) is expected to fall to 43 per cent and 47 per cent, respectively, by 2027. In contrast, mainland China's share in these areas is forecast to rise to 29 per cent and 22.4 per cent, respectively, within the same period. The report attributes these changes to geopolitical shifts and the semiconductor policies of various governments. Helen Chiang, IDC’s Asia-Pacific semiconductor research lead and Taiwan country manager, noted that these shifts are fundamentally changing the semiconductor game. IDC also predicts increased growth in Southeast Asia, particularly in Malaysia and Vietnam, which are expected to achieve a 10 per cent global share in OSAT by 2027. The signing of the Chips and Science Act by the Biden administration and the semiconductor policies of various countries have led chip firms to overhaul their global layout for foundry and assembly and test. The report also highlights that despite US-led efforts to cut mainland China out of the world’s technology supply chains, Beijing’s quest for hi-tech self-sufficiency has progressed. China's mature processes have developed rapidly on the back of domestic demand and national policies. 

In the US, Taiwan Semiconductor Manufacturing Co, Samsung Electronics and Intel Corp are leading advanced manufacturing processes, which will gradually influence the chip production landscape. The Chips Act is expected to make the US's share of foundry work in the advanced 7-nanometre and below processes reach 11 per cent by 2027. Despite facing export controls from the US, Japan and the Netherlands, mainland China’s chip foundries are expected to increase their share in terms of the mature 12-inch wafer production capacity to 26 per cent by 2026, up from 24 per cent in 2022, according to a report by research firm TrendForce.