The 10 top global semiconductor companies are cutting billions of dollars in planned capital spending as they are forced to contend with softening demand from EV makers and smartphone manufacturers.
The global semiconductor market was valued at A$1.01 trillion in 2024, according to the World Semiconductor Trade Statistics, up 19% year-on-year.
Investment plans for each of the company’s fiscal 2024 show an aggregate 2% decrease year-over-year to A$199.21 billion, an approximately A$15.36 billion decrease from their May estimates, reported Nikkei Asia.
Intel which has been struggling and has seen its share price decrease by nearly 60% over the last year has cut its investment to A$40.39 billion from the initial figure of over A$48.47 billion. It logged a record quarterly net loss of $16.6 billion (A$26.82 billion) for the three months through September as losses in its chip foundry business mounted.
Samsung Electronics’ semiconductor investments for 2024 decreased 1% to about A$56.55 billion, the first decline in five years.
It has fallen behind SK Hynix in the development of high-bandwidth memory for AI, while also struggling to improve yield rates for its most advanced chips in its foundry business.
Approximately 70% of chip fabrication capacity is in use worldwide, according to industry group SEMI – around 10% less than what is considered healthy.
Chip foundry Taiwan Semiconductor Manufacturing Co., which holds a near-monopoly on production of AI graphics processing units for Nvidia, estimated its 2024 capital spending at more than A$48.5 billion. SK Hynix meanwhile plans to invest 103 trillion won (A$113.5 billion) over the five years through 2028 in areas such as memory chips for AI.
The US’ recent series of curb on chip exports to China is also believed to be contributing to lowering investments towards production.
This week, Nvidia came out with a strong statement against the Biden administration’s latest restrictions on the export of American technology to more than 150 countries.
“The Biden Administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided “AI Diffusion” rule, which threatens to derail innovation and economic growth worldwide,” said Ned Finkle, vice president of government affairs at NVIDIA.
“While cloaked in the guise of an “anti-China” measure, these rules would do nothing to enhance US security.
“This sweeping overreach would impose bureaucratic control over how America’s leading semiconductors, computers, systems and even software are designed and marketed globally. And by attempting to rig market outcomes and stifle competition — the lifeblood of innovation — the Biden Administration’s new rule threatens to squander America’s hard-won technological advantage.”
