The installed wafer fab capacity has also seen an uptick, reaching 40.5 million wafers per quarter (in 300mm wafer equivalent) in Q2 2024. This figure is expected to rise by 1.6% in Q3 2024. Notably, foundry and logic-related capacity demonstrated stronger growth at 2.0% in Q2 2024, with a projected increase of 1.9% in Q3 2024. This growth is attributed to the capacity build-up for advanced nodes, highlighting the industry’s push towards more sophisticated manufacturing processes.

Memory capacity, while showing more modest growth at 0.7% in Q2 2024, is forecast to see a 1.1% increase in Q3 2024. This growth is supported by the strong demand for HBM and improving memory pricing conditions, underscoring the critical role of memory in the current technological landscape.

Interestingly, all regions tracked in the report saw increases in installed capacity during Q2 2024. China remains the fastest-growing region, despite mediocre fab utilisation rates. This continued expansion in China reflects the country’s strategic focus on bolstering its domestic semiconductor industry, even in the face of global challenges and trade tensions.

The improving demand has had a positive impact on inventory levels, with IC inventories declining by 2.6% year-over-year in the first half of 2024. This reduction in inventory suggests a healthier balance between supply and demand in the semiconductor market.

Capital expenditure in the semiconductor industry, while conservative in the first half of 2024 with a 9.8% year-over-year decrease, is expected to turn positive starting in Q3 2024. This shift is driven by the growing demand for AI chips and the rapid adoption of HBM. Memory CapEx is projected to lead this growth at 16% quarter-on-quarter, while non-memory related capital expenditures are expected to increase by 6% quarter-on-quarter.

“The entire semiconductor supply chain is recovering this year as the market prepares for a surge in 2025,” comments Boris Metodiev, Director of Market Analysis at TechInsights, which produced the report in partnership with SEMI. “AI is certainly continuing to drive high value ICs to the market, while also supporting CapEx for capacity expansion of AI chips and especially HBM. As consumer demand recovers, and new technologies like AI are pushed to the edge, unit volumes and especially revenues will recover and support the broader semiconductor manufacturing sector.”