TSMC is expected to return to a growth trajectory this year, benefiting from the global semiconductor industry’s recovery, the completion of terminal inventory destocking, and the continuous explosion of AI applications.

According to the report from Economic Daily News, entering 2024, the industry generally holds optimistic views on TSMC’s potential to shake off the operational downturn and restart growth.

TSMC consistently refrains from commenting on analysts’ financial forecasts. When addressing first-quarter outlook issues earlier, the company indicated that it usually provides comments on the business outlook for 2024 during the January earnings conference.

However, TSMC President C.C. Wei mentioned at a supply chain management forum in December of last year that due to external factors such as high inflation and ongoing cost increases, there is still uncertainty for 2024. Nevertheless, with the rapid development of AI applications, 2024 is expected to be a year full of opportunities.

Additionally, during the earnings conference in October of last year, TSMC had forecasted that demand for 3nm technology is better than three months ago, contributing to the company’s healthy growth in 2024.

Industry sources point out that TSMC is expected to benefit this year from the diversified growth in end applications of major customers such as Apple, NVIDIA, and AMD. The global increase in the production value of GPUs is considered the primary driving force.

Simultaneously, the diverse development of customized AI accelerators and Application-Specific Integrated Circuits (ASICs) also contributes to the company’s operations. TSMC’s full-year USD revenue is expected to surpass the USD 80 billion mark for the first time, with a yearly growth rate of approximately 14% to 16%.

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(Photo credit: TSMC)

Major Cloud Service Providers (CSPs) continue to see an increase in demand for AI servers over the next two years. The latest projections of TrendForce indicate a global shipment of approximately 1.18 million AI servers in 2023, with a year-on-year growth of 34.5%. The trend is expected to persist into the following year, with an estimated annual growth of around 40.2%, constituting over 12% of the total server shipments.

NVIDIA, with its key products including AI-accelerating GPU and the AI server reference architecture HGX, currently holds the highest market share in the AI sector. However, it is crucial to monitor CSPs developing their own chips and, in the case of Chinese companies restricted by U.S. sanctions, expanding investments in self-developed ASICs and general-purpose AI chips.

According to TrendForce data, AI servers equipped with NVIDIA GPUs accounted for approximately 65.1% this year, projected to decrease to 63.5% next year. In contrast, servers featuring AMD and CSP self-developed chips are expected to increase to 8.2% and 25.4%, respectively, in the coming year.

Another critical application, HBM (High Bandwidth Memory), is primarily supplied by major vendors Samsung, SK Hynix, and Micron, with market shares of approximately 47.5%, 47.5%, and 5.0%, respectively, this year. As the price difference between HBM and DDR4/DDR5 is 5 to 8 times, this is expected to contribute to a staggering 172% year-on-year revenue growth in the HBM market in 2024.

Currently, the three major manufacturers are expected to complete HBM3e verification in the first quarter of 2024. However, the results of each manufacturer’s HBM3e verification will determine the final allocation of procurement weight for NVIDIA among HBM suppliers in 2024. As the verifications are still underway, the market share for HBM in 2024 remain to be observed.

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(Photo credit: NVIDIA)

In 2019, the U.S. Commerce Department blacklisted Huawei and over 70 of its subsidiaries, restricting China’s advancement in advanced chip development.

However, in August 2023, Huawei unexpectedly launched its new flagship smartphone, the Mate 60 Pro, featuring its self-developed 5G chip, hinting at Huawei’s breakthrough in the U.S. 5G chip restriction.

The release of this new smartphone swiftly dominated the high-end smartphone market in China, with Apple being the primary target. As Huawei plans to expand the market share of its high-end flagship series in 2024, targeting the domestic market in China, the product is poised for direct competition with Apple.

The performance of Apple’s smartphones in the Chinese market next year will be a focal point of industry attention.

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The ongoing reduction in production by major manufacturers throughout this year has gradually restored balance to the market supply and demand. This is beneficial for chip manufacturers to regain control over prices. Signs of a bottoming out and rebound have emerged in the memory market in the third quarter of this year.

TrendForce data reveals that the overall price of DRAM has been declining since 4Q21 and only began to rebound in 4Q23, marking a total decline over 8 quarters. As for NAND Flash, the overall price started declining from 3Q22 and began to rebound from 3Q23, totaling a decline over 4 quarters.

However, despite the recovery in demand, achieving effective destocking and returning to a state of supply-demand equilibrium next year still heavily relies on suppliers exercising restraint in production capacity. If suppliers can control production capacity appropriately, there is a chance for the average memory prices to continue their rebound.

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(Photo credit: Samsung)

Examining the dynamics of advanced semiconductor manufacturing, from research and development to the competition for cutting-edge equipment and securing orders, major players such as TSMC, Samsung, and Intel are constantly in action. Simultaneously, newcomer Rapidus is making a strong entrance. The competition for advanced processes is set to intensify in 2024.

Amidst the global chipmakers’ race to develop 2-nanometer processes, TSMC has once again emerged victorious by securing Apple’s order. The upcoming iPhone 17 Pro, expected to be released in 2025, reportedly will feature TSMC’s 2-nanometer chip. Samsung is also gearing up to launch a 2nm prototype in 2024, reportedly offering discounted prices with the aim of attracting customers such as NVIDIA.

However, industry insiders reveal that TSMC is on the verge of finalizing its clients for future 3nm and 2nm technologies, apart from Apple, AMD, NVIDIA, Broadcom, MediaTek, and Qualcomm are among the clients for TSMC’s 3nm and 2nm processes. The changes in the customer portfolio of TSMC, Samsung, and Intel in 2024 are bound to be the focal point throughout the year.

(Image: TSMC)