[News] Global Chipmakers Reduce Investments for 2nd Year in a Row as EV and Smartphone Demand Stalls

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According to a report from MoneyDJ, citing Nikkei, global leading semiconductor companies have reduced their investment due to weak demand and overcapacity in semiconductors for electric vehicles (EVs) and smartphones despite the robust demand for AI-related semiconductors. Notably, this marks the second consecutive year of decline in global semiconductor investment by chip giants.

Decline in Semiconductor Investment for 2024

The Nikkei report compiles investment plans from the 10 leading semiconductor companies across the U.S., Europe, South Korea, Taiwan, Japan, and China. The report states that investment plans for each company’s fiscal 2024 represent an aggregate 2% decline year-on-year to USD 123.3 billion, a downgrade of USD 9.5 billion from the initial projection (a 6% annual increase to USD 132.8 billion), marking the second consecutive year of declining investments.

As highlighted by Nikkei, chipmakers scaled back their investments in fiscal 2023 due to a drop in demand for smartphones and other devices following the pandemic-driven surge. The slowing Chinese economy also impacted the industrial semiconductor market. Despite earlier plans to increase investment in fiscal 2024 in anticipation of a recovery, demand outside of AI applications remains subdued.

On the other hand, citing the International Semiconductor Industry Association (SEMI), the report notes that approximately 70% of global chip fabrication capacity is currently utilized, falling below the 80% threshold regarded as healthy.

Investment Cuts by Key Players

The report highlights that Intel has reduced its investment to USD 25 billion, over 20% lower than the initially projected figure of more than USD 30 billion. Similarly, Samsung Electronics’ semiconductor-related investments for 2024 fell by 1% to around USD 35 billion, a USD 2 billion reduction from earlier estimates. This marks Samsung’s first investment reduction in five years, primarily driven by weak demand for PCs and smartphones.

Chipmakers are cutting back on investments in automotive semiconductors due to a slowdown in EV demand in Europe and the U.S. For example, Infineon Technologies, the world’s leading producer of power semiconductors, reduced its investment to USD 2.9 billion in the fiscal year ending September, down 8% year-on-year from its original forecast of USD 3.5 billion, as highlighted by Nikkei.

Meanwhile, Semiconductor Manufacturing International Corp. (SMIC), China’s largest contract chipmaker, was on track to maintain its record capital expenditure levels from 2023 into 2024, as mentioned by Nikkei.

Robust Investments in AI-Related Semiconductors

By contrast, companies focusing on AI-related semiconductors continue to invest heavily. TSMC, the leading foundry, is committing over USD 30 billion to increase its AI semiconductor production capacity. Similarly, SK hynix plans to invest approximately USD 70.2 billion in its semiconductor business through 2028 to expand AI memory production, as indicated by the report from Nikkei.

The momentum driven by AI is likely to continue in 2025. Ahead of TSMC’s earnings call on Thursday (16th), a report from Economic Daily News notes that TSMC’s capital expenditures in 2025 is expected to rise to between USD 34–38 billion, potentially reaching a record high.

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