The direction of the semiconductor industry in 2025 has become the focal point of industry insiders.
Although the specific trajectory of 2025 remains uncertain, insights can be drawn from research institutions’ capital expenditure forecasts and the planned capital expenditures of major chip giants.
01
Institutions’ Pessimistic Forecast for 2025 Semiconductor
In November last year, TechInsights released a report stating that semiconductor equipment order activity was declining. While AI-driven demand remains strong, escalating geopolitical tensions and weak demand in non-AI sectors have negatively impacted semiconductor manufacturing sentiment. In production, the outlook for discrete devices, analog devices, and other semiconductor segments has worsened, prompting manufacturers to adopt a more cautious approach until broader market demand recovers.
In its latest update, TechInsights lowered the projected year-on-year growth rate of semiconductor capital expenditures for 2025 to 7%, down from the previous 13% forecast.
Recently, Semiconductor Intelligence (SC-IQ) analysts projected that the global chip market would grow 19% in 2024 but slow to 6% in 2025, as AI-driven demand is also expected to decelerate while other sectors remain weak. This makes SC-IQ one of the most optimistic firms in the short term but one of the most pessimistic regarding 2025.
02
Capital Expenditure Plans of Leading Chipmakers
Several leading chipmakers have released their 2024 financial reports, along with their capital expenditure plans for 2025.
✅ TSMC’s Capital Expenditures Continue to Surge
In the ever-evolving semiconductor industry, TSMC remains in the spotlight. Recently, TSMC announced that its 2025 capital expenditures will range between $38 billion and $42 billion, with a median of $40 billion, marking a 34.41% year-on-year increase. About 70% of this investment will go toward advanced process development, while 10%–20% will be allocated to advanced packaging.
By comparison, TSMC’s 2024 capital expenditures amounted to $29.76 billion, reflecting a 34% growth.
This suggests that despite industry headwinds, TSMC’s growth momentum remains strong. Why is TSMC continuing aggressive investments when many research institutions hold a pessimistic view of 2025? The following analysis will provide further insights.
✅ Samsung’s Foundry Capital Expenditure Slashed by 50%
Unlike TSMC, Samsung Electronics has taken a different approach. The company announced that it would cut its 2025 foundry capital expenditure by 50% to ₩5 trillion ($3.5 billion), down from ₩10 trillion ($7 billion) in 2024.
Between 2021 and 2023, Samsung’s foundry business spent approximately ₩20 trillion annually on capacity expansion and R&D. However, its 2024 Q3 financial report indicated that Samsung would adopt a more conservative capital expenditure strategy, reducing spending in 2025 to focus on maintaining existing production infrastructure.
In 2025, Samsung’s foundry investments will mainly focus on Hwaseong’s S3 fab and Pyeongtaek’s P2 fab. The S3 fab will transition part of its 3nm production to 2nm, utilizing existing production lines rather than making large-scale new investments. Meanwhile, the P2 fab will install a 1.4nm pilot line with a monthly capacity of 2,000–3,000 wafers. Additionally, there will be minor investments to expand facilities in Taylor, Texas.
✅ Intel Continues to Cut Capital Expenditures
Turning to Intel, its 2025 total capital investment is expected to be around $20 billion, lower than the initially estimated $20–23 billion. The net capital expenditure is projected at $8–11 billion, primarily due to further capacity adjustments in Ohio and Ireland and offsetting government incentives and tax credits.
Intel had already significantly reduced its capital expenditures in 2024, initially planning $25–27 billion, a 20%+ reduction from previous estimates.
✅ Micron Significantly Increases 2025 Capital Expenditures
Micron previously projected $8 billion in 2024 fiscal year capital expenditures and expects a substantial increase in 2025.
For 2025, Micron plans $13.5–14.5 billion in capital spending, with the majority allocated to HBM production, facilities, backend manufacturing, and R&D investments.
✅ Texas Instruments Maintains Steady Capital Expenditures
Texas Instruments has experienced peak capital expenditures over the past three years. In 2024, it spent $4.8 billion, with plans for $5 billion in 2025. By 2026, the company expects capital expenditures to range between $2 billion and $5 billion, adjusting based on revenue and growth forecasts.
✅ STMicroelectronics Slightly Reduces Capital Expenditures
STMicroelectronics reported $2.53 billion in net capital expenditures for 2024 (non-GAAP) and expects $2–2.3 billion in 2025.
03
Two Key Signals from Chip Giants: Cost Cutting & AI Investment
It is evident that cutting capital expenditures has become a common strategy among major chipmakers. Even industry giants like Intel and Samsung are not immune to the semiconductor cycle downturn.
However, a crucial observation emerges: despite overall spending reductions, chipmakers have clear investment priorities. Companies that continue increasing capital expenditures are generally benefiting from AI-driven growth.
✅ AI Semiconductors: The Key Investment Area
TSMC and Micron stand out as major AI beneficiaries.
- TSMC: Holds 95%+ of orders for chips below 5nm.
- TSMC’s AI chip revenue surged 300% in 2024, with:
- 3nm chips contributing 18% of revenue.
- 5nm chips accounting for 34%.
- 3nm + 5nm surpassing 50% of total revenue.
AI chips primarily use 7nm and below nodes, demanding extreme precision in semiconductor manufacturing. TSMC maintains a dominant position in this field, while other foundries focus more on non-AI markets like consumer electronics and automotive chips.
Samsung, despite having a small share in advanced nodes, is more vulnerable to market downturns, leading to major capital expenditure cuts in 2025.
TSMC also plans to mass-produce 2nm wafers in late 2025 while expanding 3nm capacity in Taiwan. The company’s Arizona fab has started 4nm production, and its second and third fabs are progressing. Its Japan fab is set to begin mass production by late 2024.
- Micron: Increasing capex to meet AI-driven demand for HBM.
- HBM shipments are expected to grow 70% YoY in 2025.
- AI data centers and processors require high-bandwidth, low-latency memory.
- Micron is prioritizing investments in 1β and 1γ DRAM nodes and reducing NAND investment.
04
Apart from AI, 2025 Offers Few Positive Signals
In 2025, demand from generative AI data centers will continue growing, while EVs and smartphones remain sluggish. Some predict that non-AI semiconductor markets won’t recover until late 2025 or beyond.
- AI chips are expected to face persistent supply constraints.
- Microsoft plans to invest $80 billion in AI data centers by mid-2025.
- GPU and HBM demand remains strong, while general-purpose chips see slower recovery.
- PC and smartphone semiconductor oversupply may ease by Q2 2025.
Overall, the semiconductor market lacks strong recovery momentum post-July 2025, with government-backed fab expansions potentially causing oversupply. From 2025 to 2027, 108 new semiconductor fabs are expected worldwide.
For cutting-edge semiconductor insights, industry trends, and technology updates, stay tuned!
Related:
- SEMICON China 2025: Explore the future of chip industry
- Semiconductor Funding Drops Amid Investor Concerns
Disclaimer:
- This channel does not make any representations or warranties regarding the availability, accuracy, timeliness, effectiveness, or completeness of any information posted. It hereby disclaims any liability or consequences arising from the use of the information.
- This channel is non-commercial and non-profit. The re-posted content does not signify endorsement of its views or responsibility for its authenticity. It does not intend to constitute any other guidance. This channel is not liable for any inaccuracies or errors in the re-posted or published information, directly or indirectly.
- Some data, materials, text, images, etc., used in this channel are sourced from the internet, and all reposts are duly credited to their sources. If you discover any work that infringes on your intellectual property rights or personal legal interests, please contact us, and we will promptly modify or remove it.
