Taiwan semiconductor sector output forecast to hit new high in 2024

Taipei, Feb. 19 (CNA) The production value of the local semiconductor sector is expected to hit a new high in 2024, rising more than 15 percent from a year earlier on the back of solid demand for artificial intelligence applications and the fading impact of inventory adjustments, the government-sponsored Industrial Technology Research Institute (ITRI) forecast Monday.

A research report released by ITRI's Industrial Economics and Knowledge Center (IEK) showed the output of Taiwan's semiconductor sector is forecast to total NT$5.01 trillion (US$160 billion), up 15.4 percent from 2022, when the output of the sector fell 10.2 percent from a year earlier to NT$4.34 trillion due to inventory adjustments on global demand weakness.

According to the IEK, the IC manufacturing segment, which is the largest in the entire semiconductor sector in terms of output, is expected to generate about NT$3.1 trillion in production value in 2024, up 16.6 percent from a year earlier, the strongest growth among the four major segments - IC manufacturing, IC design, IC packaging and IC testing.

Inside the IC manufacturing segment, pure play wafer foundry operators are expected to post NT$2.91 trillion in output in 2024, up 16.6 percent from a year earlier.

The forecast echoes the guidance given by Taiwan Semiconductor Manufacturing Co. (TSMC) at an investor conference held in mid-January, saying the world's largest contract chipmaker will see its sales grow 21-26 percent from a year earlier in 2024, on the back of strong global demand for its advanced 3 nanometer process on the rising popularity of emerging technologies such as AI and high-performance computing devices.

The output of the IC design, IC packaging and testing segments is expected to hit NT$1.26 trillion, NT$436.2 billion and NT$214.6 billion, respectively, up 14.6 percent, 11.0 percent and 12.6 percent from a year earlier, the IEK said.

Despite expected year-on-year growth of more than 15 percent in 2024, the IEK said the production value of the local semiconductor sector will fall 5.2 percent from a quarter earlier to NT$1.14 trillion in the first quarter of this year, as the industry enters a traditionally slow season.

However, first-quarter output will rise 13.1 percent from a year earlier on a relatively low comparison base over the same period of last year, when inventory adjustments dragged down shipments, the IEK said.

During the January-March period, the local IC design, manufacturing, packaging and testing segments are expected to report a 0.2-5.8 percent sequential decline in output, but their output will post 4.7-18.5 percent increases from a year earlier, the IEK added.

In 2023, the IC design, manufacturing, packaging and testing segments posted NT$1.097 trillion, NT$2.66 trillion, NT$393.1 billion, and NT$190.6 billion, respectively, in production value, down 11.0 percent, 8.8 percent, 15.6 percent, and 12.8 percent, from a year earlier, according to the IEK.