Global chipmakers reduced investment in 2024, the second consecutive year of decline in global semiconductor investment from vendors.
According to a report from Nikkei, the reduction is due to weak demand and overcapacity in semiconductors for electric vehicles (EVs) and smartphones. This is despite a rise in demand for AI-based semiconductors and a rise in AI-enabled phones.
The report found that the 10 leading semiconductor companies in the U.S., Europe, South Korea, Taiwan, Japan and China had an aggregate 2% decline year-over-year to $123.3 billion. In 2023, due to a drop in demand for smartphones, chipmakers scaled back investments despite demand increasing for AI.
This coincides with a report from SEMI that found about 70% of global chip fab capacity is currently utilized. Falling below the 80% threshold is regarded as unhealthy in the semiconductor manufacturing market.
Big cutters
Among chipmakers, Intel reduced its investment to $25 billion, about 20% lower than the initial projected figure. Samsung Electronics also reduced semiconductor-related investments for 2024 by about 1% to $35 billion. This is the first investment reduction in five years from Samsung, according to market research firm TrendForce.
Automotive semiconductor investment seems to be a focal point of the decline in investment due to a slowdown in EV demand in Europe and the U.S.
The report did indicate that the Chinese pure-play foundry Semiconductor Manufacturing International Corp. (SMIC) is on track to maintain a record capital expenditure level from 2023 into 2024.