The production value of Taiwan’s semiconductor industry is expected to expand 17.7 percent year-on-year this year to exceed NT$5 trillion (US$154.39 billion) for the first time due to robust demand for artificial intelligence (AI) chips used in servers, premium smartphones and PCs, the Industrial Technology Research Institute (ITRI, 工研院) said yesterday.
The forecast growth would outpace the global semiconductor industry’s 13.1 percent rise this year, with both figures driven by strong demand for memory chips, World Semiconductor Trade Statistics said.
Taiwan’s semiconductor industry’s production value is to expand to NT$5.11 trillion this year, compared with NT$4.24 trillion last year, ITRI said.
Photo courtesy of Industrial Technology Research Institute via CNA
Last year, the local semiconductor industry’s production value contracted 10.2 percent annually due to inventory correction, it said.
“For the full year of 2024, the semiconductor industry’s growth would be driven by high-end AI smartphones, AI PCs and other hardware with AI functions,” ITRI semiconductor industry analyst Terry Fan (范哲豪) told a media briefing yesterday. “For semiconductor manufacturers, that would propel the utilization of advanced process technologies to make AI and high-performance computing chips.”
“Rising AI chip demand also stimulates demand for advanced packaging technologies such as chip-on-wafer-on-substrate and more cost-effective packaging technology, such as fan out panel-level packaging technology,” Fan said.
Local semiconductor manufacturers would have the fastest growth of 20.2 percent annually this year, followed by chip designers (15 percent) and chip packagers and testers (11.4 percent), ITRI data showed.
With the popularity of generative AI applications, more edge devices, such as PCs, equipped with AI functions are to hit the market from the second half of this year, Fan said.
Most of the AI PCs are equipped with neutral process units, allowing users to process data such as voice files directly from the device with lower latency, he said.
To catch the business opportunity, chip suppliers from Intel Corp, Advanced Micro Devices Inc, Qualcomm Inc and MediaTek Inc (聯發科) have launched new chips, he said.
Shipments of AI PCs are to make up about 20 percent of total PC shipments this year, he said, adding that they would climb to 80 percent by 2028.
The AI boom also creates challenges such as high energy costs, former ITRI president Shih Chin-tay (史欽泰) said.
High power use is the “Achilles’ heel” of AI applications, as power consumption increases alongside the greater computing power needed for new-generation AI chips, Shih said.
Taiwan Power Co (Taipower, 台電) has factored in expected energy consumption increases due to AI data centers and related equipment, and supplies should be sufficient through 2028, Minister of Economic Affairs J.W. Kuo (郭智輝) told lawmakers at the legislature in Taipei.
Because of AI-related equipment, electricity use in Taiwan would rise by 3 percent annually, whereas the increase would be only 2 percent if AI machines were to be excluded, Taipower estimates showed.
Strong semiconductor industry growth would also drive growth in Taiwan’s manufacturing industry this year, ITRI said.
The research institute yesterday increased its forecast for the production value of the local manufacturing industry, saying it expected a 6.47 percent annual rise to NT$23.1 trillion.
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