Chipmakers Reduce Investment Plans by A$15.36 Billion

The leading global semiconductor companies are significantly reducing their planned capital expenditures amid declining demand from makers of electric vehicles (EVs) and smartphones.

According to the World Semiconductor Trade Statistics, the global semiconductor market was valued at **A$1.01 trillion** in 2024, marking a **19%** increase from the previous year.

Investment projections for the fiscal year 2024 show a collective decline of **2%** from last year, bringing the total planned expenditure down to **A$199.21 billion**. This represents a drop of approximately **A$15.36 billion** from estimates made earlier in May, as reported by Nikkei Asia.

**Intel**, which has faced considerable challenges recently, announced a cut in its investment to **A$40.39 billion** from an earlier estimate exceeding **A$48.47 billion**. The company reported a staggering record net loss of **$16.6 billion (A$26.82 billion)** for the third quarter, as its chip foundry operations have suffered substantial losses.

**Samsung Electronics** has also reduced its semiconductor investments for 2024 by **1%**, totalling around **A$56.55 billion**. This marks the first reduction in their investments in five years. The company has been struggling to keep pace with **SK Hynix** in the development of high-bandwidth memory for artificial intelligence (AI) and faces challenges in enhancing yield rates in its foundry business.

Current data reveals that about **70%** of global chip fabrication capacity is in use, which is roughly **10%** below levels considered healthy by industry standards as stated by SEMI.

The Taiwanese chip foundry **Taiwan Semiconductor Manufacturing Co. (TSMC)**, which plays a crucial role in producing AI graphics processing units for **Nvidia**, has projected its capital spending for 2024 at over **A$48.5 billion**. Meanwhile, **SK Hynix** plans to invest **103 trillion won (A$113.5 billion)** over the next five years in sectors like AI memory chips.

The recent restrictions imposed by the United States on chip exports to China are believed to be impacting investments aimed at boosting production.

This week, **Nvidia** publicly criticized the Biden administration’s latest restrictions regarding the export of American technology to over **150 countries**. Ned Finkle, vice president of government affairs at Nvidia, stated, "The Biden Administration now seeks to restrict access to mainstream computing applications with its unprecedented and misguided 'AI Diffusion' rule, which threatens to derail innovation and economic growth worldwide."

Finkle further added, "While cloaked in the guise of an 'anti-China' measure, these rules would do nothing to enhance US security. This sweeping overreach would impose bureaucratic control over how America's leading semiconductors, computers, systems, and even software are designed and marketed globally. Attempting to rig market outcomes and stifle competition—the lifeblood of innovation—threatens to squander America’s hard-won technological advantage."

semiconductors, investment, technology