2024.0409

Number of words in this article:2045, reading time is about 3 minutes

introduction：全球半导体市场将在2024年增长13.1%。

** Author| ** First Financial Elegance

The U.S. government is issuing large subsidies one after another to attract chip manufacturers to invest in factories in the United States.

On April 8, the U.S. Department of Commerce announced that it would provide Taiwan Semiconductor Corporation (TSMC) with subsidies of up to US$6.6 billion. This will support TSMC in building three new cutting-edge chip factories in Arizona, USA, with an investment of more than US$65 billion.

This is the fifth subsidy issued by the Biden administration under the Chip and Science Act. The U.S. Department of Commerce said it expects to announce more subsidy plans in 2024. Tempted by the bill's $39 billion manufacturing subsidies, the department said it has received more than 630 letters of intent, more than 180 pre-and formal applications for large supply chain projects (NOFO1), and more than 160 small supplier concept plans (NOFO2).

U.S. President Biden said that in recent years, U.S. semiconductor production capacity has dropped from nearly 40% to nearly 10%. The bill aims to revitalize semiconductor manufacturing and jobs in the United States.

In response to relevant questions recently, He Yadong, spokesperson of the Ministry of Commerce of China, said that the semiconductor industry is highly global. After decades of development, it has formed an industrial pattern in which you have me and you have me. This is a result of resource endowments, market rules, etc. The result of the comprehensive effect.

"For some time, the United States has generalized the concept of national security, abused measures such as export controls, and artificially separated the global semiconductor industry chain. The United States provides huge subsidies and tax incentives to the local chip industry. Some provisions force companies to abandon China and join the United States. They are obviously discriminatory, seriously violate market rules and international economic and trade rules, and will distort the global semiconductor industry chain." He Yadong said.

** U.S. chip subsidy plan **

Since the end of last year, the U.S. government has initiated funding for the Chip and Science Act.

The bill provides $52.7 billion for U.S. semiconductor research and development, manufacturing and labor development. This includes $39 billion in manufacturing incentives,$2 billion for traditional chips used in automotive and defense systems,$13.2 billion for R & D and workforce development, and $500 million for international information and communication technology security and semiconductor supply chain activities. The plan also provides a 25% investment tax credit for capital expenditures on semiconductor and related equipment manufacturing.

In December 2023, British defense contractor BAE Systems received its first $35 million subsidy. In January this year, Microchip Technology received US$162 million in January this year. In February, chip maker Global Foundries received $1.5 billion. On March 20, American chip company Intel received direct funding of up to US$8.5 billion. This is the fourth appropriation under the bill and the largest amount so far.

In addition to the proposed direct funding of up to $6.6 billion, the bill's planning office will also provide approximately $5 billion in loans to TSMC's Arizona plant construction. The bill prepared a total of up to $75 billion in loans, after Intel had previously received loans of up to $11 billion.

According to statistics from the American Semiconductor Industry Association (SIA), from May 2020 to March 2024, driven by the Chip and Science Act, 82 new semiconductor ecosystem projects were announced across the United States, including new semiconductor manufacturing facilities (fab), expansion of existing plants, and facilities to supply materials and equipment used in chip manufacturing.

In addition, according to people familiar with the matter, the Biden administration also plans to recently announce more than $6 billion in subsidies to Samsung. The money will be used to build four facilities in Texas, including a $17 billion chip manufacturing plant Samsung announced in 2021, a new factory, an advanced packaging facility and a research and development center.

** A new prosperity cycle? **

The U.S.'s large investment plan is accompanied by a rebound in the global semiconductor market. The World Semiconductor Trade Statistics Organization (WSTS) predicts that after a downturn in 2023, thanks to increased demand for artificial intelligence (AI) chips, the global semiconductor market will grow by 13.1% in 2024, with sales reaching a record $588.36 billion.

Li Xuan, a senior analyst in the technology industry of Haitong Securities, told First Financial News that this round of semiconductor cycle actually began before the epidemic, and since 2020, there has been a market phenomenon where supply exceeds demand. This rise in global semiconductor sales continues until around August 2022, after which sales growth turned negative year-on-year. After about 16-17 months of decline, global semiconductor sales growth fully turned positive year-on-year in the first quarter of this year.

"The current growth is accompanied by destocking and the rise of AI, and we believe that the entire semiconductor industry can achieve restorative growth in 2024." Li Xuan said.

According to WSTS data, in 2023, due to weak demand for memory chips, the market size of global semiconductor sales will fall by 9.4% to US$520.13 billion. But the recovery has begun late last year. For example, Dutch chip-making equipment maker ASML hit a record 9.2 billion euros in orders in the fourth quarter of last year.

WSTS said that in 2024, memory chips will lead the growth of the entire market, and its sales are expected to increase by 44.8% over the previous year. The logic chip market is expected to grow by 9.6%, while the image sensor chip market is expected to increase by 1.7%.

By region, the Americas region is expected to achieve the largest growth in 2024, with an increase of 22.3%. The Asia-Pacific market, where many companies make smartphones and personal computers, is expected to grow by 12%. Product sales in the Japanese market are small, so the growth rate will be only 4.4%.

Li Xuan believes:"This round of memory chip cycles is mainly driven by downstream demand, such as the release of new AI phones and artificial intelligence personal computers (AIPCs). This will eventually lead to the first recovery of the storage industry chain and the packaging and testing industry chain, followed by the midstream design leader and the update of equipment materials."

The American Semiconductor Industry Association (SIA) said in early April that global semiconductor industry sales totaled US$46.2 billion in February 2024, an increase of 16.3% compared with US$39.7 billion in February 2023. Regionally, year-on-year sales increased in China (28.8%), the Americas (22.0%) and Asia Pacific/All Other Regions (15.4%), but year-on-year sales declined in Europe (-3.4%) and Japan (-8.5%).

SIA President and CEO John Neuffer said:"Global semiconductor sales in February were much higher than total sales in the same period last year, with the largest increase since May 2022. Market growth is expected to continue for the rest of the year."

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