Nations ramp up chip investment as AI demand surges and supply chains shift
The semiconductor plant being constructed by Samsung Electronics in Taylor, Texas, USA. (Photo provided by Samsung Electronics)
As the global semiconductor market is expected to surpass $1 trillion for the first time in history this year, countries are expanding investments to reorganize the production landscape.
On April 3, Taiwanese media outlet Liberty Times reported that as the global semiconductor competition enters the 1-nanometer (nm, one-billionth of a meter) era, the race for leadership in chip manufacturing is intensifying.
According to the report, TSMC, the world’s largest foundry (semiconductor contract manufacturing) company, is aiming for mass production of its 1.4-nanometer process in the second half of 2028. It also plans to begin mass production of its 1.6-nanometer process in the second half of this year.
Samsung Electronics was reported to be aiming to mass-produce its 1.4-nanometer process by 2029 and introduce a 1-nanometer process before 2030.
Japan’s Rapidus plans to commence development of 1.4-nanometer technology with the goal of mass-producing a 1-nanometer-class process by 2029.
U.S.-based Intel is also reportedly attempting to re-enter the foundry competition by pursuing mass production of its 1.4-nanometer (14A) process in 2028.
The Liberty Times analyzed, “Taiwan, centered on TSMC, produces a variety of semiconductor products, including the world’s most advanced 2-nanometer and 3-nanometer chips,” and that “any disruption in production within Taiwan could send shockwaves throughout the global IT industry.”
The structure is assessed as having a high degree of global supply chain dependency, given that the chip production for major big tech companies like Apple and Nvidia is concentrated at TSMC.
This structure, coupled with the variable of geopolitical risk, is facing growing pressure for change.
While the U.S. government has been emphasizing the need to reduce the supply chain’s dependence on specific regions and expand domestic production, major companies are also showing moves to reorganize their production bases.
The New York Times reported last February, citing industry sources, that concerns held by CEO Elon Musk over geopolitical risks surrounding Taiwan were reflected in Tesla’s push to sign a contract with Samsung Electronics in July of last year for the production of automotive semiconductors at its Taylor, Texas plant.
Responses by country are also accelerating. China has set a goal to raise its semiconductor self-sufficiency rate to 80% by 2030 and is continuing to make large-scale investments.
South Korea is also expanding investment, leveraging its competitive strength centered on memory chips.
Market research firm Semiconductor Intelligence projected this year’s global semiconductor capital expenditure (CAPEX) to be led by TSMC at $54 billion, followed by Samsung Electronics at $40 billion and SK hynix at $27.4 billion.
According to this forecast, Samsung Electronics’ CAPEX growth rate is projected to expand significantly from 1% in the previous year to 20% this year.
Participation from emerging countries is also expanding. India has begun building its production base through policies to attract foreign companies and offer incentives. Saudi Arabia is making a full-scale entry into the AI and semiconductor industries with a planned investment of $100 billion.
Vietnam and Malaysia are strengthening the division of labor in the supply chain by establishing themselves as key hubs for the packaging and testing sectors.
Industry insiders believe that this reorganization will simultaneously stimulate supply chain stability and investment expansion, further accelerating the market’s growth.
Jeon Young-hyun, Vice Chairman and Head of the DS Division at Samsung Electronics, stated at the general meeting of shareholders on the 18th of last month, “With the increase in demand for artificial intelligence (AI) infrastructure, the semiconductor market is expected to grow by more than 30% year-on-year, surpassing $1 trillion,” adding, “An unprecedented phase of growth will continue.”
Kim Eun-jin
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