Foundry Services Market

Foundry Services Market Outlook (2023 to 2033)

Global Foundry Services Market sales revenues totaled US$ 117.4 billion in 2022. Over the next decade, foundry services demand will increase at 5.2% CAGR. The global foundry services market size will expand from US$ 124.6 billion in 2023 to US$ 206 billion by 2033.

Electronics application is likely to generate maximum revenue-generation opportunities for foundry service providers. As per the latest report, electronics segment will progress at over 5% CAGR from 2023 to 2033.

Key Trends Shaping Market Expansion:

• Rising demand for foundry services in electronics & communication applications is driving the market
• Burgeoning demand for semiconductor chips to boost the global foundry services industry
• Growing inclination towards outsourcing chip or IC manufacturing will elevate foundry services demand
• Increasing adoption of consumer electronic devices to uplift market development
• Rising popularity of foundry model, especially across emerging nations such as China and India will boost sales revenue
• Surging number of fabless companies will create new growth avenues for the market
• Establishment of new facilities by key players and increasing investments in research & development will bode well for the market
• Increasing demand for semiconductor foundry services will support market expansion.
• Penetration of IoT and AI will support market development in long-term run

Foundry services refer to the fabrication and testing of products such as semiconductor wafers and die, and other related services provided to customers.

In simple words, semiconductor manufacturing services provided by a foundry firm to its third-party customers on the manufacture of integrated circuits, discrete semiconductors, etc. designed by such customers are called foundry services.

Amid skyrocketing demand for semiconductors and electronic products and focus on reducing production costs, the foundry model has gained immense traction globally. It is a microelectronics designing and manufacturing model consisting of a foundry and an integrated circuit design operation.

Integrated device manufacturers such as Intel and Texas Instruments design & manufacture integrated circuits. Fabless companies on the other hand only design devices. While pure play foundries or foundry service providers such as UMC and GlobalFoundries manufacture devices only for other businesses without designing them.

Rising number of fabless firms outsourcing their chip fabrication process will boost the global market. In recent years, there has been a sharp rise in fabless semiconductor companies and the trend is likely to further escalate through 2033.

Fabless companies such as Qualcomm, Nvidia, and AMD only design devices. For manufacturing their designed devices, they use foundry services. Thus, rise in fabless firms worldwide will create lucrative revenue-generation opportunities for foundry service providers.

Leading foundry service companies are investing billions of dollars in research and development. They are committed to driving advancements in leading-edge semiconductor technology.

Foundry service providers offer a wide range of manufacturing services to meet end users’ unique product needs. They allow industries to eliminate the need for expensive production facilities. By using foundry services, end users can streamline their processes and focus on their core business.

Rapid growth of industries such as consumer electronics, automotive, telecommunication, etc. will play a key role in boosting the global foundry services market.

Similarly, rising focus on reducing production costs and eliminating need for establishing expensive production facilities will elevate foundry services demand.

Leading companies are using various strategies to improve their revenues and expand their customer base. For instance, in July 2022, to produce chips using Intel Foundry Services’ advanced process technologies, Intel and Media Tek partnered.

In February 2022, new Infosys Metaverse Foundry was launched by Infosys. This new foundry will help the company to accelerate its ability to evolve and execute strategies for virtual-physical interconnections.

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2018 to 2022 Foundry Services Sales Outlook Compared to Demand Forecast from 2023 to 2033

The global foundry services market will thrive at a CAGR of 5.2% between 2023 to 2033. It will create an absolute $ opportunity of US$ 81.4 billion through 2032. Overall demand for foundry services grew at 6.1% CAGR during the historical period from 2018 to 2022.

The principal end users of foundry services are the telecom, computer and networking, consumer electronics, and automotive industries. The global market for foundry services will be driven by the rising use of communication and consumer electronics.

Because more fabless companies are outsourcing their chip production, the global market for foundry services is likely to expand quickly during the assessment period.

Additionally, automation, machine learning, and analytics are becoming more and more the emphasis of foundries. Demand for these technologies is being fueled by their advantages. This includes optimizing the production process and increasing yield without compromising quality.

Vendors are anticipated to accept larger production contracts due to improved production capacity and reduced pricing, leading to significantly more supply and filling supply gaps in various areas.

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Which Factors are Responsible for Fueling Demand for Foundry Services?

Key factors that are increasing demand for foundry services are the increasing demand for consumer electronics and advancements in technology.

The need for foundry services has increased along with the demand for consumer electronics such as smartphones, tablets, laptops, and other gadgets. To produce the chips and other components utilized in these devices, foundry services are required. This will continue to increase market demand for foundry services.

New technologies are continually being created, and the semiconductor industry is always changing. These emerging technologies include artificial intelligence, 5G wireless technology, and driverless cars, which require foundry services to be manufactured.

To reduce costs and increase productivity, several semiconductor manufacturers are outsourcing their manufacturing to foundries. As a result, there is now more demand for foundry services.

The production of the chips and other components used in solar panels, wind turbines, and other renewable energy technologies needs foundry services; Hence, expansion of renewable energy sector will uplift foundry services demand.

Recognizing the semiconductor industry's significance for fostering innovation and economic progress, several governments throughout the world are offering financial support to the sector. The demand for foundry services is boosted by this assistance, which takes the form of tax credits, subsidies, and other incentives.

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Which Factors are Restraining Growth in the Foundry Services Market?

Factors restraining the market are the high cost of production and the complexity of manufacturing. The expense of setting up and running a foundry is very expensive, and consumers frequently pay more for foundry services as a result.

This makes it difficult for certain businesses to pay for these services. Hence, it limits expansion of foundry services industry to a large extent.

Instead of outsourcing to foundries, several semiconductor companies have opted to invest in their internal production facilities. This lowers the market's size and reduces the need for foundry services.

The manufacture of chips and other components in the complicated semiconductor industry demands a high degree of knowledge and specialized tools. Because of this intricacy, it is challenging for certain businesses to enter the industry, which reduces competition and growth of the market.

Based on customer-provided designs, foundries frequently produce components. The ownership and protection of intellectual property have become complicated as a result, which reduces certain businesses' desire to employ foundry services.

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Country-wise Insights:

Will Demand for Foundry Services Continue to Escalate in the United States?

The United States foundry services market is projected to witness robust growth through 2033. This is due to rapid expansion of industries such as telecommunication, semiconductors, etc.

Foundry service sales revenues increased at 3% CAGR in the USA market from 2018 to 2022. However, with rising focus of industries on outsourcing their product production, foundry service demand in the United States will rise at 4.9% CAGR through 2033.

The USA foundry services industry is set to cross a valuation of US$ 35.2 billion by 2033. It will generate an absolute $ growth of US$ 13.3 billion between 2023 and 2033.

Several USA-based foundry service companies are using various strategies to strengthen their presence. For instance, in July 2021, to support United States semiconductor manufacturing, GlobalFoundries unveiled its plan to build an advanced manufacturing facility in upstate New York.

What Makes China an Undisputed Leader in the Global Foundry Services Market?

As per Persistence Market Research, China will continue its monopoly in the global foundry service industry. This is attributable to burgeoning demand for electronic products and booming semiconductor sector.

China foundry services market is likely to expand at 6.6% CAGR through 2033. From 2018 to 2022, China market grew at 8.1% CAGR. By the end of 2033, total market valuation in China will reach US$ 54.2 billion.

When it comes to electronic or semiconductor manufacturing, China leads from the forefront. The country is home to various leading foundry service providers, semiconductor manufacturers, and electronics companies.

Strategies adopted by China-based companies are also playing a key role in fueling market expansion. For instance, recently, a strategic partnership between Shanghai Huahong Grace, a Chinese company, and Rambus Inc. was launched.

The partnership aimed to collaboratively develop cutting-edge memory and interface technologies for applications in next-generation computing and data centers. The two businesses want to work together to produce high-speed memory products including DDR5, HBM3, and GDDR6.

Category-wise Insights:

Which Type of Foundry Services Will Generate Lucrative Revenues for the Market?

As per Persistence Market Research, 12inches segment is projected to witness significant growth. This is due to rising popularity of 12-inch foundry services.

Technology for 12-inch offers various benefits. For metal interconnects, they frequently utilize copper, whereas older technology used aluminum due to its higher resistivity. This enables higher current densities and the avoidance of electromigration.

In addition, 12-inch technologies provide more metal layers, which, when combined with the smaller transistors, enable an increase in routing and transistor density. This leads to a reduction in die size or higher functionality for a given unit price.

The CAGR for 12 inches type was around 5.9% from 2018 to 2022. Over the next ten years, 12-inch segment will thrive at around 5.1%. Hence, most foundries will shift their focus to 12-inch wafer production capacity.

Which Application Will Dominate the Global Foundry Services Industry?

Most of the foundry services demand is forecast to emerge from electronics sector. This is attributable to rising demand for smartphones as well as high-performance computing devices. This includes tablets, PCs, servers, 5G base stations, etc.

The electronics segment exhibited a CAGR of 5.7% from 2018 to 2022. Between 2023 and 2033, the target segment will expand at 5%. It will create lucrative opportunities for foundry service providers.

Competitive Landscape:

Leading foundry service providers are offering various services to customers for increasing sales. They are also showing interest in adopting strategies such as mergers, acquisitions, & partnerships.

Recent Developments:

• In February 2022, to help foundry customers bring their silicon products from idea to implementation, a new ecosystem alliance was launched by Intel Foundry Services.
• In February 2020, for automotive and IoT applications, industry's first production-ready eMRAM on 22FDX was delivered by Global Foundries. Designers may expand their current microcontroller unit and IoT architectures to leverage the power and density advantages of technology nodes below 28nm with the help of GF's eMRAM. It was created as a substitute for high-volume embedded NOR flash (eFlash).
• In September 2022, using UMC’s 22nm process technology, new high-reliability persistent SRAM (P-SRAM) memory devices were introduced by Avalanche Technologies and United Microelectronics Corporation (UMC).

Scope of the Report:

Foundry Services Market Segmentation:

By Type:

• 8 inches
• 12 inches

By Application:

• Communication
• Electronics

By Region:

• North America
• Latin America
• Europe
• Asia Pacific
• Middle East and Africa