China’s share of the global industrial area is projected to increase to 29% by 2027, representing a 2% growth from 2023. Conversely, Taiwan’s share is expected to decrease from 46% in 2023 to 43% in 2027. This development comes as semiconductor manufacturers adopt a “China + 1” or “Taiwan + 1” production strategy, reshaping the global foundry and assembly/test industry.
For many years, Taiwan has been the dominant player in semiconductor manufacturing, producing over 60% of the world’s semiconductors. However, China has recently gained ground in this sector. According to a report by IDC, the global semiconductor landscape will undergo significant changes due to geopolitical tensions and shifts in semiconductor policies. These factors have prompted manufacturers to adopt a production plan that includes either China or Taiwan as an additional manufacturing hub. This new strategy has led to regional developments in the semiconductor industrial chain, moving away from global cooperation towards multi-regional competition.
Major industry players have made strategic moves in response to these developments. TSMC, Samsung, and Intel are leading the advanced processes in the US, which will have an impact on the foundry field. Meanwhile, China’s semiconductor industry has rapidly grown due to domestic demand and national policies.
Based on IDC’s projections, China’s overall industrial area share will continue to increase, reaching 29% by 2027. In contrast, Taiwan’s market share is expected to decline to 43% by 2027, while the US will make gains in the advanced process segment, with a projected share of 11% for 7nm and below by 2027.
The drive for technological self-sufficiency in China has sparked efforts by the US and Europe to restrict China’s access to semiconductor manufacturing equipment. The European Union is currently assessing export control measures for critical technologies, including semiconductors and artificial intelligence. China’s mainland chip foundries are expected to increase their share of mature 12-inch wafer production capacity to 26% by 2026, indicating progress in achieving technological independence.
In terms of semiconductor assembly and testing, IDC predicts that leading integrated device manufacturers (IDMs) in the US and Europe are investing more in Southeast Asia. Offshore semiconductor assembly and test (OSAT) companies are shifting their focus from China to countries like Malaysia and Vietnam. IDC forecasts that Southeast Asia, particularly Malaysia and Vietnam, will advance in OSAT and reach a 10% global share by 2027. Taiwan’s share, on the other hand, is expected to decrease to 47% in the same year.
In conclusion, the global semiconductor industry is undergoing significant changes with China’s increasing share of the industrial area and Taiwan’s declining share. Geopolitical tensions, shifts in semiconductor policies, and efforts towards technological self-sufficiency are reshaping the landscape. Major players are adapting their strategies accordingly, and Southeast Asia is emerging as a key region for semiconductor assembly and testing.