Global foundry revenue rose 12% YoY in Q1 2024, but dropped 5% QoQ; TSMC's market share rose 1% YoY to 62%, Samsung rose 2% YoY to 13%, and SMIC rose 1% to 6%
- The foundry industry is experiencing a relatively slow recovery with 5% QoQ decline in Q1 2024, citing a softer recovery of general end market.
Context & Ripple Effects
The quarter followed a return to growth among the top foundries in late 2023, when top-10 foundry revenue rose year over year in Q3. Q1's sequential decline shows that recovery had not yet broadened across general end markets.
TSMC's 62% share is an early marker of a concentration pattern later reflected in projections of TSMC extending its global foundry lead through 2024. Samsung and SMIC also gained share year over year, but from much smaller bases.
First-order effects
- A 5% sequential industry revenue decline keeps foundry utilization and customer order visibility under pressure despite 12% year-over-year growth.
- TSMC, Samsung and SMIC each increase year-over-year share, with TSMC retaining a 62% market position while the overall market recovery remains soft.
Second-order effects
- Foundry customers can retain leverage in negotiations and inventory planning while broad end-market demand is recovering unevenly, rather than rush to secure capacity.
- Competitors must balance capacity and pricing against the risk that TSMC's scale advantage becomes more consequential in a slow-demand environment.
Third-order effects
- If share gains continue through cyclical recoveries, leading-edge foundry production may become more concentrated around TSMC, raising the strategic importance of credible alternative capacity.
- The quarter illustrates the uneven foundry-cycle recovery: aggregate revenue can improve year over year while near-term orders and utilization still contract sequentially.
The trend: The foundry market is moving through a cyclical recovery in which demand normalization and supplier concentration can advance at the same time.