Chip Industry Investments Kept Flowing In 2024 Even As Some Projects Stalled

The chip industry made significant capital investments this year to build new fabs and facilities or expand existing premises. A number of sites were dedicated to SiC, GaN, DRAM, HBM, along with packaging and assembly by OSATs, and essential gases, chemicals, and other components. More than a dozen R&D centers were also established for 8-inch wafers, EUV, and advanced packaging. Investments came from both companies and government sources, and many CHIPS Act awards have now been finalized.

SEMI noted that the semiconductor industry is expected to start 18 new fab construction projects in 2025, including three 200mm and fifteen 300mm facilities, with most expected to begin operations from 2026 to 2027.

Joint ventures (JVs) had a strong showing in 2024 as a way to mitigate the risk of a big investment. For example:

• Apollo invested $11 billion for a 49% equity interest in a JV related to Intel’s Fab 34 in Ireland.
• Vanguard International Semiconductor (VIS) and NXP formed the VisionPower Semiconductor Manufacturing Company (VSMC) JV for a 300mm fab in Singapore, and recently broke ground.
• CG Power, Renesas, and Stars Microelectronics joined forces to create an OSAT in Gujarat, India.
• Foxconn and HCL teamed up on an OSAT in Uttar Pradesh, India.
• Tower and Adani set up a JV to build a fab in Panvel, India.
• Tata Electronics and Powerchip Semiconductor Manufacturing Corporation (PSMC) partnered (though a JV was not mentioned) to build India’s first AI-enabled fab, in Gujarat.
• Hana Microelectronics and PTT created a JV to construct Thailand’s first SiC chip factory, with support from the Thailand Board of Investment.
• The Japan Advanced Semiconductor Manufacturing (JASM) JV announced plans for a second fab. TSMC is the majority owner, with Sony, DENSO, and Toyota as partial owners.
• Established in 2023, the European Semiconductor Manufacturing Company (ESMC) JV received an additional €5 billion in government funding. TSMC is the majority owner, with Bosch, Infineon, and NXP.
• The Rapidus consortium (not JV) of Denso, Kioxia, MUFG Bank, NEC, NTT, SoftBank, Sony, and Toyota received more funding from the Japanese government ($3.9B approved and $1.3B proposed).

(See the Table below for over 100 notable chip industry facility/fab investments in 2024, including some announcements previously covered in our series on government funding.)

Understanding the supply chain
National security remained a hot-button topic this year, and many projects involved a combination of industry investment supported by government funding.

In Amkor’s case, CHIPS Act funding of $400M will support its $2B multi-phase investment into an advanced semiconductor packaging and test campus in Peoria, Arizona, following earlier developments in Vietnam, and in Portugal with GlobalFoundries.

“We were investigating and working with the government before the CHIPS Act, but the cost of building, cost of labor, and the ongoing labor cost, is just too high in the U.S. to offer a return for our shareholders without the CHIPS Act funding,” said David McCann, senior vice president at Amkor Technology. “It’s been an enabler. We probably would not have proceeded without this funding.”

The process began several years ago with discussions between the company and government officials about the supply chain, from fab to assembly and test, to box builder or EMS (electronic manufacturing services company) that puts the packages onto a PC board and builds the final product for the end customer, said McCann.

It also took time to decide what technology to dedicate the facility to.

“We will focus on advanced packaging, but it didn’t start that way,” he said. “As we looked at the financial landscape and being able to have a feasible financial structure for years, it really needs to be advanced packaging, and the types of advanced packaging will need to change over time. If you look at the packaging industry, we have a new generation of packaging required by next-generation silicon every few years.”

The first step in the application process for CHIPS funding is Pre-App. “After the Pre-App, we submitted a preliminary memorandum of terms (PMT), and finally the Direct Funding Authorization (DFA),” said McCann. “These define package types, high-level site design and construction objectives, and the ramp to production.”

A financial model also is included, he said. “We have to show the government the total cost, total employment, our market, and prospective customers. We have to show what we expect that financial model to look like over a long period of time. We need to demonstrate viability for a 30-year project. The CHIPS Office is a good steward of taxpayer money. They’ve hired good people from an aspect of understanding advanced packaging. We have benefited a lot by not being the first to win funding, and the education that they’ve received from TSMC and others. They’ve come to the plate knowing that they need an assembly test company and an understanding of our industry, and that’s helped us a lot.”

TSMC Arizona also received CHIPS Act funding ($6.9B) on the back of huge company investment ($50B). Amkor and TSMC then built on that momentum with a unique partnership in which TSMC’s front-end fab will contract turnkey advanced packaging and test services from Amkor, with a goal of accelerating overall product cycle times. The companies will jointly define the specific packaging technologies, such as TSMC’s Integrated Fan-Out (InFO) and Chip on Wafer on Substrate (CoWoS).

“We think it is important for our common end customers,” said McCann. “In this supply chain, our customer will engage with TSMC on fab, and then TSMC may engage with us for assembly and test to provide those package parts back to them to sell. Alternatively, our common end-customer can come to us. Thus, AI customers, high-performance computing customers, and mobile customers will be able to buy a CoWoS or an InFO package in Taiwan, and a similar package from Amkor in the U.S. to de-risk their supply chain. They can qualify one, and the second qualification is really minimal. It’s up to us and TSMC to make sure that we do a good job at executing similarity. It enables business that we would not have had otherwise.”

Even with the many industry and government investments announced this year, complete on-shoring of the supply chain is not financially feasible, said McCann.

“Even if there was unlimited money, the scale of trying to do that is impossible,” he said. “Relying on friendly countries is a feasible thing. In Amkor, we already have gone through our suppliers, thinking about what is sourced from problematic countries, and made sure we didn’t have anything from an equipment, material, or chemical that was single-sourced from such suppliers. That’s important to us. It’s important to the government for the security of supply chain. They sure don’t want to support an investment in this country and have us impacted by an embargoed commodity. Relying on something from Europe or South Korea should be absolutely fine, and we’re going to have to do that. There’ll be some movement of the rest of the supply chain to the United States, but it will be slow.”

Amkor has about 500 primary suppliers worldwide of chemicals, equipment, materials, etc., and the company has started encouraging its top suppliers to locate to the U.S.

“We’re doing that through the Arizona Commerce Authority and the Greater Phoenix Economic Council,” said McCann. “We engage them, we support their visiting delegations, and we share resources, trying to encourage relocation. ACA and GPEC want to see more jobs, more construction, more companies here. We don’t think it’s required to have all of our suppliers close by, but it will be a benefit. So we’re concentrating on a few top suppliers and aligning with ACA and GPEC to help us to lower the barriers for foreign companies to move here, helping them understand how to navigate permitting and land purchase and all these things. That’s difficult enough for a U.S. company. Think of the challenges with not being able to speak the language or never working with entities here.”

Shutdowns, delays, and updates
It was not all good news across the chip industry this year, however. Intel had its much-publicized setbacks, including a possible two-year delay to its fab in Germany, layoffs in the U.S., and the sudden retirement of its CEO.

Also in Germany, Wolfspeed ultimately canceled its plans to build a fab in the country with support from ZF. The chips were mostly going to be aimed at EVs, which has seen a slowdown in demand. Prior to Wolfspeed’s cancellation, it was reported that ZF planned to pull out of the project.

While Arizona drew CHIPS Act investments into companies such as TSMC and Amkor, Microchip announced it would shutter its Tempe wafer fabrication facility. The fab’s production will be moved to its Oregon and Colorado factories, aiming to save $90 million. The company also will pause its CHIPS Act application.

Samsung reportedly delayed the introduction of ASML manufacturing equipment to its Texas plant, and the operational start date was postponed to 2026.

In Japan, Taiwan’s PSMC had intended to build a fab with SBI Holdings, but abandoned the plan in favor of building India’s first fab with Tata. SBI is said to be looking for a new partner.

Hyperscalers
Adjacent to the semiconductor industry and hungry for chips are the hyperscalers which poured money into cloud, AI, and other data centers around the world. Investments were aimed at infrastructure, workforce, and sometimes cybersecurity.

These investments do not appear in the table below, but here are a few highlights:

• Microsoft will put €3.2B into Germany; $1.7B into Indonesia; $2.9B into Japan, €4B into France; $2.2B into Malaysia; $3.3B into Wisconsin; and ~$3.2B into Sweden.
• Amazon Web Services will invest £8B (~$10.6B) in the UK; $11B in Indiana; and €7.8B in the European Sovereign Cloud in Germany, and Amazon will invest another €10B in Germany for cloud, logistics, and R&D.
• Google is setting up a Paris-based AI hub to host around 300 researchers and engineers; $1B in Thailand for data centers; $850M in Latin America; $3.3B in North Carolina; $900M in Nebraska, and much more.

Table of 2024 investments

The following table lists prominent new facility/fab investments announced in 2024 since our last report ran, but there are many more beyond this list. Some items contain changes to previously announced plans. Some also appeared in our series on government funding. The table is currently presented alphabetically according to company or organization, but it can also be sorted by country or other features.