China, South Korea, Taiwan to continue lead global chip race for next 3 yrs

China, South Korea and Taiwan are leading the global semiconductor manufacturing race as these countries have lined up big chip-making plans for the next three years, the global industry association SEMI said in its latest report. Countries globally are expected to collectively spend around $400 billion on chip manufacturing in the next three years.

China is projected to maintain its position as the top spending region on 300mm equipment globally until 2027, investing over $100 billion in the next three years driven by its national self-sufficiency policies. However, spending is anticipated to gradually decrease from a peak of $45 billion in 2024 to $31 billion by 2027.

South Korea is projected to rank second and invest $81 billion in the next three years to further its dominance in memory segments including DRAM, high-bandwidth memory (HBM), and 3D NAND Flash. Taiwan is forecast to spend $75 billion on 300mm equipment over the next three years, ranking third as the region’s chipmakers build some new fabs overseas. Leading-edge logic below 3nm is the primary driver of Taiwan fab investments, says the report.

The Americas is projected to invest $63 billion from 2025 to 2027, while Japan, Europe & Mideast, and South East Asia are expected to spend $32 billion, $27 billion, and $13 billion, respectively, over the three-year period. Notably, these regions are anticipated to more than double their equipment investment in 2027 compared to 2024 due to policy incentives earmarked to alleviate concerns about the supply of crucial semiconductors.

India does not find a mention in the report, though the country is working towards becoming a global chip hub. In a research report by TeamLease Services in May, India soared to $34.3 billion in 2023 and is forecasted to surge to $100.2 billion by 2032, demonstrating a compound annual growth rate (CAGR) of 20.1% from 2023 to 2032.

This year in March, PM Narendra Modi laid the foundation stone of three semiconductor projects worth about ₹1.25 lakh crore. These projects include a semiconductor fabrication facility at the Dholera Special Investment Region (DSIR), Gujarat; Outsourced Semiconductor Assembly and Test (OSAT) facility at Morigaon, Assam; and the Outsourced Semiconductor Assembly and Test (OSAT) facility at Sanand, Gujarat.

During the Semicon India event this month, PM Modi said the government will do everything possible to make India a "semiconductor powerhouse". "Today's India gives an assurance to the world that when the chips are down, you can bet on India...India's semiconductor industry is equipped with 'special diodes' ...here our energy flows in both directions -- you (businesses) invest and create value, while the government provides stable policies and ease of doing business."

The SEMI report, meanwhile, finds out that robust spending by countries is being driven by the regionalisation of semiconductor fabs and the increasing demand for artificial intelligence (AI) chips used in data centres and edge devices.

“The magnitude of the expected ramp of global 300mm fab equipment spending in 2025 sets the stage for a record-setting three-year period of semiconductor manufacturing investments,” said Ajit Manocha, SEMI President and CEO. “The world’s ubiquitous need for chips is boosting spending on equipment for both leading-edge technologies addressing AI applications and mature technologies driven by automotive and IoT applications.”

The 300mm fab equipment spending is projected to grow by 4% to $99.3 billion in 2024 globally, and further increase by 24% to $123.2 billion in 2025, surpassing the $100 billion level for the first time. Spending is forecast to experience 11% growth to $136.2 billion in 2026 followed by a 3% increase to $140.8 billion in 2027.

Currently, Taiwan is the largest producer of chips in the world, followed by South Korea, China and the U.S.