In the first half of 2025, driven by explosive AI technology development and domestic consumer subsidies stimulating device replacement demand, the semiconductor cycle has clearly emerged from its trough and entered a recovery phase.
According to TrendForce statistics, the combined revenue of the world's top ten foundry manufacturers in Q2 2025 reached 41.718 billion yuan, representing a 14.6% quarter-over-quarter increase. However, it's noteworthy that while the industry overall has entered a recovery period, internal differentiation has intensified, with TSMC's dominant position continuing to strengthen while the market share of other major players is being eroded.
In Q2 2025, TSMC recorded revenue of $30.24 billion, with its global market share increasing by 2.6 percentage points quarter-over-quarter to 70.2%, while the remaining nine major manufacturers all experienced varying degrees of market share decline.
Market analysts believe that the demand explosion for AI and HPC has shifted the competitive focus in foundry manufacturing from traditional "advanced processes" to "advanced packaging." Three-dimensional packaging technologies such as CoWoS and SoIC have become scarce bottlenecks determining AI chip shipment volumes. TSMC's absolute leadership in both advanced processes and advanced packaging, along with its unparalleled comprehensive service capabilities, will deepen customer relationships and further strengthen the company's competitive moat.
Meanwhile, Chinese foundry manufacturers continue to scale up mature process production, carving out a path through pricing and depreciation pressures. In earlier years, affected by weakness in the consumer electronics supply chain, mature process products experienced severe inventory accumulation. However, in the first half of 2025, inventory clearing was essentially completed, pricing pressure eased, and domestic foundry manufacturers saw varying degrees of recovery in both revenue and profitability.
Looking at revenue growth rates for the first half of 2025, SMIC > Hua Hong > Nexchip Semiconductor Corporation, with year-over-year revenue growth of 23.14%, 19.09%, and 18.21% respectively. From a gross margin perspective, Nexchip Semiconductor Corporation > SMIC > Hua Hong, with gross margins of 25.76%, 21.91%, and 17.57% respectively. SMIC's gross margin improved by 8 percentage points compared to the same period last year, while both Hua Hong and Nexchip Semiconductor Corporation achieved 1-2 percentage point improvements in gross margins.
The distinctive characteristics of the three companies are becoming increasingly apparent.
SMIC demonstrates strong momentum in scaling mature process nodes, with capital expenditure reaching $3.3 billion in the first half of 2025, maintaining its expansion pace of adding 50,000 12-inch wafer capacity annually.
Hua Hong focuses on specialty processes such as power semiconductors, with Q2 revenue from analog and power management growing 59.3% year-over-year, with its proportion increasing by 7.4 percentage points to 28.5%.
Nexchip Semiconductor Corporation leverages its leading position in display driver IC foundry services to actively expand into CIS and MCU markets, with initial success in diversification efforts.
In the first half of 2025, Nexchip Semiconductor Corporation's new products including OLED, CIS, and logic chips were gradually introduced to the market. For OLED, the company's 40nm high-voltage OLED display driver chips have achieved mass production, while 28nm OLED display driver chips are expected to enter risk production by the end of 2025.
For CIS, Nexchip Semiconductor Corporation's CIS products currently cover 90-55nm processes, with 55nm CIS products widely used in smartphone main cameras, auxiliary cameras, and front-facing camera applications. During the reporting period, the company's 55nm full-process stacked CIS chips achieved mass production.
Additionally, for logic chips, Nexchip Semiconductor Corporation continued 28nm logic chip tape-outs during the reporting period, while 55nm logic chips achieved small-batch production.
From a revenue structure perspective, categorized by process nodes, 55nm, 90nm, 110nm, and 150nm accounted for 10.38%, 43.14%, 26.74%, and 19.67% of main business revenue respectively. The 40nm process began contributing to revenue, and the subsequent ramp-up of 40nm OLED DDIC may drive revenue structure optimization and potentially further improve profitability.
Categorized by application products, DDIC, CIS, PMIC, MCU, and Logic accounted for 60.61%, 20.51%, 12.07%, 2.14%, and 4.09% of main business revenue respectively, with CIS and PMIC products showing continuously increasing revenue proportions.
It is recommended to continue monitoring the company's investment conversion in the OLED DDIC field. According to Omdia data, OLED DDIC shipments reached 835 million units in 2024, with Q1 and Q2 2025 OLED DDIC shipments of 185 million and 201 million units respectively. Omdia forecasts that OLED DDIC shipments will reach 1.084 billion units by 2030, representing a compound annual growth rate of approximately 4.5%.
Comments