Foundries Post Mixed Results For Q4 ‘24
Updated: GF lost money; SMIC's profits fall; TSMC lowered its forecast due to a recent earthquake in Taiwan.
By Mark LaPedus
The earnings season is here again. And foundry vendors are reporting mixed financial results for the fourth quarter of 2024. The outlook among foundry vendors is also mixed for the first quarter of 2025 and beyond.
So far, TSMC, UMC, Intel, Samsung, SMIC and others have reported their respective financial results for the fourth quarter of 2024 (See below). Intel continues to lose money in the foundry business. GlobalFoundries lost money in the latest quarter.
Based on the conference calls from foundry vendors, AI remains a hot market. The non-AI chip sectors, such as automotive, consumer and industrial, remain sluggish at best. In terms of sales, the worldwide semiconductor industry is expected to reach $697 billion in 2025, up 11.2% over 2024, according to the World Semiconductor Trade Statistics (WSTS) organization.
Nonetheless, the foundry industry can be split into two groups: pure-play foundries and IDM (integrated device manufactures) foundries. Pure-play foundries manufacture chips for other companies in large facilities called fabs. They don’t design or sell their own chip products. TSMC, SMIC, UMC, GlobalFoundries, Tower and others are pure-play foundry vendors.
Intel and Samsung are IDM foundries. Both design and sell their own chips. They also provide foundry services for other companies.
Here are the latest financial results from the leading foundry vendors:
TSMC
On Jan. 16, 2025, TSMC, the world’s largest foundry vendor, reported its fourth-quarter results. The company beat Wall Street’s expectations amid robust demand from its AI-related foundry customers, namely AMD and Nvidia.
TSMC reported sales of US$26.88 billion in the fourth quarter of 2024, an increase of 37.0% year-over-year and up 14.4% from the previous quarter. For the fourth quarter, TSMC reported a net income of US$11.592 billion, an increase of 57.0% year-over-year and up 15.2% from the previous quarter.
In the fourth quarter of 2024, shipments of 3nm accounted for 26% of the company’s total wafer revenue, 5nm accounted for 34%, and 7nm accounted for 14%. Advanced technologies, defined as 7nm and below, accounted for 74% of total wafer revenue.
For 2024, TSMC reported sales of US$90.08 billion, up 30% over 2023. For 2024, the company reported a net income of US$36.491 billion, compared to US$26.856 billion in 2023.
“2024 was a mixed year of recovery for the global semiconductor industry. AI-related demand was strong, while other applications saw only a very mild recovery, as macroeconomic conditions weighed on consumer sentiment and the end-market demand,” said C.C. Wei, chairman and chief executive of TSMC, in a conference call.
Going forward, TSMC’s sales are expected to be between US$25.0 billion and US$25.8 billion in the first quarter of 2025. The company expects its 2025 capital spending budget to be between US$38 billion and US$42 billion. In 2024, the company’s capital spending reached US$29.8 billion.
“We expect 2025 to be another strong growth year for TSMC, and forecast our full-year revenue to increase by close to mid-20s% in U.S. dollar terms,” Wei said. “Revenue from AI accelerators, which we now define as AI GPU, AI ASIC, and HBM controller for AI training and inference in the data center, accounted for close to mid-teens percent of our total revenue in 2024. Even after more than tripling in 2024, we forecast our revenue from AI accelerators to double in 2025, as the strong surge in AI-related demand continues.”
Here are other highlights from TSMC’s Q4 2024 conference call:
*Arizona fab. TSMC provided an update on its new leading-edge fab in Arizona. “Our first fab has already entered high-volume production in 4Q ‘24, utilizing N4 process technology with a yield comparable to our fabs in Taiwan,” Wei said.
*TSMC’s first fab in Japan. “Our first specialty technology fab in Kumamoto has started volume production at the end of 2024, with very good yield. Construction of our second specialty fab is scheduled to begin this year,” Wei said.
*2nm, A16 process update. In 2025, TSMC plans to begin making chips using a new transistor structure called gate-all-around (GAA) at the 2nm node. TSMC’s 2nm process is called N2. “N2 is well on track for volume production in second half of 2025 as scheduled, with a ramp profile similar to N3,” Wei said.
TSMC plans to introduce an enhanced version of N2, called N2P, in the second half 2026. Also in the second half of 2026, the company will roll out its next-generation A16 process with backside power delivery.
*CoWoS capacity cuts? To meet demand, TSMC is scrambling to expand its manufacturing capacity for its 2.5D packaging technology, dubbed CoWoS. But reports have surfaced that TSMC’s customers have cut their CoWoS orders. “That’s a rumor. I assure you. We are working very hard to meet the requirements of my customer’s demand. So cuts in the orders, that won’t happen,” he said.
Updated: On Feb. 10, TSMC lowered its forecast for the first quarter due to a recent earthquake in Taiwan. On Jan. 21, Taiwan experienced a 6.4 magnitude earthquake on the Richter scale, followed by several significant aftershocks throughout the Lunar New Year holiday.
“There was no structural damage to our fabs, and the water supply, power, workplace safety systems, and operations are functioning normally. A certain number of wafers in process were impacted and had to be scrapped due to the earthquake and aftershocks,’’ according to TSMC.
“As a result, the revenue forecast for the first quarter of 2025 is now anticipated to be closer to the lower end of the guidance range of US$25 billion and US$25.8 billion. Based on a preliminary assessment, the company estimated related earthquake losses to be approximately NT$5.3 billion, net of insurance claim, and will recognize it in the first quarter of 2025,” according to TSMC. “Despite this, the company maintains first quarter gross profit margin to be between 57% and 59% and operating profit margin is expected to be between 46.5% and 48.5%. The company is making every effort to recover the lost production, and there is no change to our full-year outlook.”
UMC
On Jan. 21, 2025, Taiwan’s UMC, the world’s fourth largest foundry vendor, reported mixed results in the fourth quarter of 2024.
Fourth quarter consolidated revenue was US$1.84 billion, down 0.2% from the previous quarter but up 9.9% from the like period a year ago. Net income was US$259 million in the fourth quarter, down 41.3% from the previous quarter and down 35.6% from the like period a year ago.
Revenue contribution from its 22nm/28nm process technologies slightly decreased to 34% of the wafer revenue, while 40nm contribution grew to 16% of sales. Overall utilization rate in 4Q24 slightly declined to 70%.
Going forward, UMC expects that wafer shipments will be flat in the first quarter of 2025. Capacity utilization is expected to be approximately 70%. The company expects its 2025 capital spending budget to be US$1.8 billion. That compares to US$2.9 billion in 2024.
“Looking into 2025, the semiconductor market is poised for another year of growth, driven by strong demand for AI servers as well as increasing semiconductor content in smartphones, PCs, and other electronic devices,” said Jason Wang, co-president of UMC. “Building on our technology foundation, UMC is also actively expanding our advanced packaging offering to help unleash the potential of AI in the coming years. In conjunction with technology development, our key capacity expansion projects are progressing as planned. Our new Singapore Phase 3 fab will enhance customers’ supply chain resilience, while the 12nm collaboration with our U.S. partner will offer customers a migration path beyond 22nm.”
Last year, Intel and UMC announced plans to collaborate on the development of a 12nm finFET process. Production of the 12nm process is expected to begin in 2027.
Intel
On Jan. 30, 2025, Intel reported its financial results. Intel continues to spill red ink amid lackluster demand for its chips in the marketplace as well as ongoing losses in the foundry business.
Intel reported fourth-quarter revenue of $14.3 billion, down 7% year-over-year. It posted a net loss attributable to the company of $126 million, or minus $0.03 a share, for the quarter.
Intel continues to struggle on the product front. “INTC indicated it plans to cancel its Falcon Shores AI GPU, which was expected to launch of this year, while next-gen server CPU Clearwater Forrest (18A) is being delayed to 1H26,” said John Vinh, an analyst with KeyBanc, in a research note.
The company’s foundry business continues to struggle. In the fourth quarter of 2024, the company’s foundry unit posted sales of $4.5 billion, down 13% from the like period a year ago. The foundry unit posted an operating loss of $2.3 billion for the quarter.
In the third quarter of 2024, Intel’s foundry unit posted an operating loss of $5.8 billion on sales of $4.4 billion.
Meanwhile, for 2024, Intel reported sales of $53.1 billion, down 2% year-over-year. The company posted a net loss of a staggering $18.8 billion, or minus $4.38 per share, in 2024.
Going forward, Intel expects its first-quarter 2025 revenue will range from $11.7 billion to $12.7 billion.
Nonetheless, Intel is still moving full speed ahead with its next-generation process technology. That process, dubbed 18A, represents the company’s initial technology based on gate-all-around (GAA) transistors with backside power delivery.
Intel expects to further strengthen its client roadmap with the launch of Panther Lake, its lead processor product on Intel’s 18A process technology, in the second half of 2025. Process tool installation is underway in Fab 52 in Arizona in support of ramping 18A production this year.
Still, Intel faces a number of challenges going forward, if not some uncertainty. Last month, Pat Gelsinger, chief executive of Intel, was forced out from the semiconductor company amid a series of losses, layoffs and product setbacks. At the time, Intel named David Zinsner and Michelle (MJ) Johnston Holthaus as interim co-chief executives at Intel, while the board conducts a search for a new CEO.
Intel is expected to revamp its strategy, including the possible spinoff or sale of its loss-ridden foundry business.
Samsung
On Jan. 31, 2025, Samsung reported its financial results for the fourth quarter and the fiscal year 2024. The company posted KRW 75.8 trillion (US$52 billion) in consolidated revenue for the quarter ended Dec. 31, 2024, down 4% quarter-over-quarter but up 12% year-over-year.
The company posted KRW 6.5 trillion (US$4.46 billion) in operating profit in the quarter, down 2.7% quarter-over-quarter but up 3.7% year-over-year.
Samsung’s semiconductor unit, called the DS Division, posted KRW 30.1 trillion (US$20.65 billion) in consolidated revenue in the fourth quarter, up 3% quarter-over-quarter and up 39% year-over-year. The unit posted KRW 2.9 trillion (US$1.99 billion) in operating profit in the fourth quarter of 2024, down 1% quarter-over-quarter but up 5% year-over-year.
Samsung’s semiconductor business achieved record high revenues, due to increased sales for high bandwidth memory (HBM) and DDR5 DRAM.
It’s a different story for Samsung’s foundry unit. The company is the world’s second largest foundry vendor, behind TSMC.
In the foundry unit, Samsung’s “earnings decreased due to lower utilization and higher R&D expenses,” according to the company. For the first quarter of 2025, Samsung’s foundry business will experience “persistent weakness due to sluggish mobile demand and (a) fixed-cost burden stemming from lower utilization.”
According to a report from BusinessKorea, Samsung is cutting its capital spending in the foundry unit. The company continues to struggle with its 3nm yields.
SMIC
On Feb. 11, Semiconductor Manufacturing International Corp. (SMIC), the world’s third largest foundry vendor, reported its financial results for the three months ended Dec. 31, 2024.
SMIC saw its profits plunge amid a capacity glut in the mature node segments as well as price pressures in the market.
Revenue was $2.207 billion in the fourth quarter, up 1.7% from the previous quarter and up 31.5% from the like period a year ago. The company’s profit attributable to SMIC was $107.6 million during the fourth quarter, down 27.7% from the previous quarter and down 38.4% from the like period a year ago.
Monthly capacity was 948 thousand standard logic 8-inch equivalent wafers by the end of the year. Total wafer shipments exceeded 8 million. During the fourth quarter, SMIC’s capacity utilization was 85.5%, compared to 90.4% in the previous period.
In 2024, SMIC reported revenues of $8.030 billion, compared to $6.322 billion in 2023.
The company’s first-quarter 2025 revenues are expected to grow by 6% to 8% sequentially. In 2025, SMIC’s capital spending is expected to be roughly flat compared to 2024. The company’s capital expenditures in 2024 was $7.33 billion.