IDC: Semiconductor Foundry 2.0 Market is Entering the Growth Phase from Recovery with 11% YoY Growth in 2025

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According to IDC ’s Worldwide Semiconductor Supply Chain Tracking Intelligence latest report, the global semiconductor market, following a recovery in 2024, is expected to experience steady growth in 2025. The broadly defined Foundry 2.0 market— encompassing foundry, non-memory IDM, OSAT, and photomask making—is projected to reach a market size of $298 billion in 2025, with year-over-year growth of 11%, signaling a transition from a recovery phase in 2024 to a growth phase in 2025. Over the long term, the compound annual growth rate (CAGR) from 2024 to 2029 is projected to reach 10%. This growth is catalyzed by the continuous rise in AI demand and a gradual recovery in non-AI demand.

The foundry sector remains the core driver of semiconductor manufacturing. Industry leader TSMC (Taiwan Semiconductor Manufacturing Company) leverages its technological edge in advanced nodes below 5nm and advanced packaging CoWoS, securing robust orders for AI accelerator manufacturing. With utilization consistently at full load, TSMC is expected to expand its market share in the Foundry 2.0 market to 37% in 2025.

While other foundry manufacturers face pressure from price erosion in mature nodes, the rebound in demand for consumer electronics—such as smartphones, PCs, notebooks, TVs, and wearables—has driven a projected 4% average increase in utilization for mature nodes. This resurgence fuels a significant expansion of the overall foundry market, expected to grow by 18% in 2025.

Non-Memory IDM Faces Challenges

The non-memory IDM (Integrated Device Manufacturer) sector, hampered by insufficient deployment in AI accelerators, will experience limited expansion in 2025. Intel is aggressively promoting its process technologies, particularly the 18A process alongside Intel 3/Intel 4 processes, which are anticipated to maintain its market share in the Foundry 2.0 market at approximately 6%.

Meanwhile, IDM specializing in automotive and industrial sectors—such as Infineon, Texas Instruments, STMicroelectronics, and NXP—have completed inventory adjustments. However, market demand is expected to remain weak in the first half of 2025, with stabilization projected for the second half. Collectively, these factors limit the overall non-memory IDM sector to a modest growth of 2% in 2025.

OSAT Welcomes AI-Driven Growth

The Outsourced Semiconductor Assembly and Test (OSAT) sector is benefiting from IDMs increasing outsourcing to foundry due to advanced nodes demands, shifting packaging and testing needs to OSAT vendors. While traditional packaging and testing businesses remain lukewarm, the strong demand for AI accelerators has spurred a rise in advanced packaging orders. Vendors such as SPIL (under ASE), Amkor, and KYEC are actively taking on more CoWoS-related orders, collectively driving the overall OSAT industry to an expected growth of 8% in 2025.

“The semiconductor manufacturing chain is entering a new wave of expansion. AI continues to drive demand for advanced nodes and advanced packaging, while traditional application markets gradually recover, presenting the industry with diversified development opportunities,” said Galen Zeng, senior research manager at IDC Asia/Pacific. “However, the industry must navigate multiple variables, including geopolitical risks, national policies (such as China’s consumption stimulus measures, U.S. factory construction subsidies, and potential U.S. chip tariffs), supply-demand fluctuations from new capacity, and the commercialization progress of AI applications. These factors will shape the long-term development trajectory of the semiconductor industry."