Semiconductor Industry Faces Slowing Expansion and Structural Shifts by 2025

The global semiconductor industry is projected to slow down in 2025, with only 18 new wafer fabs opening, compared to 42 in 2024. The new projects will focus on large-scale production lines for advanced processes in AI chips and high-performance computing, and mature processes for automotive and IoT markets. Taiwan Semiconductor Manufacturing Company (TSM) is leading in the US with its 2nm Arizona fab, while China will add three fabs focused on mature processes to bolster its chip self-sufficiency strategy.

The global semiconductor industry is projected to slow down in 2025, with only 18 new wafer fabs opening, compared to 42 in 2024. This slowdown is expected to focus on large-scale production lines for advanced processes in AI chips and high-performance computing, as well as mature processes for automotive and IoT markets Samsung takes a scalpel to its 2nm wafer price tag, bringing it down to $20,000 — Korean chipmaker now undercuts rival TSMC by 33%^[2].

Taiwan Semiconductor Manufacturing Company (TSM) is leading in the US with its 2nm Arizona fab, which is expected to produce 2nm and A16 process chips by 2029. This expansion is part of TSM's broader strategy to increase its market share and maintain its position as the world's largest semiconductor foundry US commerce head says chip deal with Taiwan pending^[3].

Meanwhile, China is also ramping up its chip self-sufficiency strategy by adding three fabs focused on mature processes. This move is part of China's broader initiative to reduce its dependence on foreign chip imports and bolster its domestic semiconductor industry Samsung takes a scalpel to its 2nm wafer price tag, bringing it down to $20,000 — Korean chipmaker now undercuts rival TSMC by 33%^[2].

The slowdown in the semiconductor industry is partly due to the ongoing global chip shortage, which has led to increased demand for chips and a corresponding increase in prices. However, the slowdown is also a result of the industry's focus on advanced processes, which require significant capital investment and time to develop.

In addition to the slowdown in the number of new fabs, the semiconductor industry is also facing increased scrutiny from governments around the world. In the US, for example, President Donald Trump's administration has proposed a policy mandating a 1:1 ratio of domestically produced semiconductors to imported ones. This policy, which is still under discussion, aims to drastically cut US dependence on foreign chips and inject hundreds of billions into American fabs Trump plans new 1:1 ratio for semiconductor chip imports^[1].

The proposed policy has sparked mixed reactions from the industry. While some companies, such as Intel and GlobalFoundries, stand to gain from the policy, others, such as TSMC and Samsung, may face export squeezes and increased tariffs. The policy also raises questions about how to equate the value and complexity of different types of chips, as well as how to enforce the policy and deal with non-compliance Trump plans new 1:1 ratio for semiconductor chip imports^[1].

Overall, the semiconductor industry is facing a period of significant change and uncertainty. While the slowdown in the number of new fabs is a concern, the industry's focus on advanced processes and the increased scrutiny from governments around the world also present opportunities for growth and innovation.