US to triple semiconductor manufacturing capacity by 2032, outpacing China in advanced chips

A report published by the US-based Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG) indicates that the United States is poised to significantly expand its domestic semiconductor manufacturing capacity by 2032, surpassing China in the production of advanced chips.

The report forecasts that by 2032, the US will increase its share of advanced chips, specifically those below 10-nanometers used in applications such as the latest smartphones, to 28 per cent, while mainland China’s share in the same category is expected to be just 2 per cent.

Taiwan and South Korea dominated global capacity for production of sub-10-nm chips in 2022, with 69 per cent and 31 per cent share, respectively.

The projected growth in the US semiconductor industry is attributed in part to the Chips and Science Act passed by Washington in 2022, aimed at bolstering the country’s chip manufacturing capacity. Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest chip foundry, has already committed to building a 2-nm plant in Arizona as part of a planned total investment of US$65 billion in the state.

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Despite the anticipated growth in the US, Taiwan and mainland China are expected to maintain leadership in global wafer fabrication capacity, with 21 per cent and 17 per cent share respectively by 2032.

China has been aggressively investing in its domestic semiconductor industry, with over US$142 billion in government incentives aimed at achieving 70 per cent self-sufficiency by 2025. This investment has resulted in a three-fold increase in wafer fab capacity between 2012 and 2022.

Mainland China currently boasts over 3,000 fabless companies, focusing on consumer electronics, industrial control systems, and intelligent devices. However, the report notes that China’s domestic chip designs are less competitive in advanced CPUs, GPUs, and FPGAs, and corresponding higher servers and computer power management.

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Nevertheless, China maintains the lead in global capacity for assembly, test, and packaging facilities, with a 30 per cent share compared to Taiwan’s 27 per cent. The lower construction and skilled labor costs in mainland China and Taiwan are cited as contributing factors to their dominance in this aspect of semiconductor manufacturing.