Chipmakers Cut Investment Plans by A$15.36 Billion

The top ten semiconductor companies in the world are reducing their planned capital investments as they face decreased demand from electric vehicle (EV) manufacturers and smartphone producers.

According to the World Semiconductor Trade Statistics, the global semiconductor market reached a valuation of A$1.01 trillion in 2024, showing a 19% increase compared to the previous year.

Investment forecasts for the companies in fiscal year 2024 have shown a total decline of 2%, bringing the expected spending down to A$199.21 billion. This represents a significant reduction of about A$15.36 billion from earlier predictions made in May, as reported by Nikkei Asia.

Among the industry leaders, Intel has faced substantial difficulties, witnessing a drastic share price drop of nearly 60% over the past year. The company has revised its investment plans down from over A$48.47 billion to A$40.39 billion. Recently, it reported a staggering quarterly net loss of $16.6 billion (equivalent to A$26.82 billion) in the three months ending in September, primarily driven by mounting losses in its chip foundry segment.

Samsung Electronics has also adjusted its semiconductor investments for 2024, which are now estimated at approximately A$56.55 billion, marking the first decrease in five years. The company is currently lagging behind SK Hynix in the development of high-bandwidth memory solutions for artificial intelligence and is struggling to enhance yield rates for its latest chips produced in its foundry.

According to industry-group SEMI, around 70% of global chip manufacturing capacity is currently being utilized, which is about 10% lower than optimal levels.

Taiwan Semiconductor Manufacturing Co. (TSMC), a dominant player in the production of AI graphics processing units for Nvidia, has projected its 2024 capital expenditures to exceed A$48.5 billion. Meanwhile, SK Hynix plans to invest 103 trillion won (around A$113.5 billion) over the next five years focusing on memory chips aimed at AI applications.

The recent restrictions imposed by the United States on chip exports to China are also thought to be affecting overall investment in semiconductor production. In light of this, Nvidia has expressed strong opposition to the Biden administration's recent export controls impacting American technology available to over 150 nations.

Ned Finkle, Vice President of Government Affairs at Nvidia, stated, "The Biden Administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided 'AI Diffusion' rule, which threatens to derail innovation and economic growth worldwide. While cloaked in the guise of an 'anti-China' measure, these rules would do nothing to enhance US security. This sweeping overreach would impose bureaucratic control over how America's leading semiconductors, computers, systems, and even software are designed and marketed globally. Attempting to rig market outcomes and stifle competition—the lifeblood of innovation—poses a significant threat to squandering America's hard-won technological advantage."

Chipmakers, Investment, Semiconductors