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Asia’s Semiconductor Hubs Power Innovation
Key semiconductor hubs in Asia
The benefit of location proximity to the development of an industry is often underrated. Even in the age of digitalization, industry clusters are valuable in providing an ecosystem for ideas, talents, and companies to flourish. Below are the key semiconductor hubs in Asia.
Asia semiconductor continues to gain market share globally
We are positive about the long-term growth outlook of the Asia Semiconductor industry. First, industry competitiveness has strengthened over the past 20 years. In key areas like memory, foundry, IC design, and more, many Asia semiconductor companies have managed to become globally competitive. Today the industry stands on a much stronger foundation compared to 20 years ago. Second, the cost advantage in semiconductor manufacturing remains strong in Asia. Key manufacturing hubs in Asia continue to be one of the most cost-effective places to build semiconductor capacity, supported by solid infrastructure and talent pool. Third, increasing market share in downstream players in consumer electronics, auto, and industrial favors local upstream supply chain.
In logic chip manufacturing, for example, Asian companies have grown from small players to global leaders. Two of the three companies with capabilities to produce at/below 10nm are from Asia. TSMC has been leading the industry since the 14nm process. It started mass production of 7nm node in 1Q18, almost two years earlier than the closest competitor Samsung, and over four years ahead of Intel’s most optimistic 7nm progress projection. (Mirae Asset 2021) Samsung, which starts to ramp up on the 7nm process in 2020, has an aggressive timeline (see charts below) to catch up on 5nm and 3nm nodes. The company has 19% market share by revenue as of 2Q20, second behind TSMC. (IC insights 2020)
On the other hand, Intel continues to push back the target for its advanced node migration. The company will likely outsource the production of its most advanced chips to Asia foundries to alleviate the delays.
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