The US Department of Commerce has released details of its updated CHIPS and Science Act, imposing stricter investment restrictions on advanced and mature processes in China, North Korea, Iran, and Russia for the next ten years. The restrictions will significantly limit China’s semiconductor development over the next decade.
According to TrendForce, he CHIPS Act primarily impacts TSMC, which has been expanding in both China and the US. VIS and PSMC are capturing orders rerouted from Chinese foundries as IC design companies shift orders to Taiwanese foundries. This trend is expected to ensure major recovery for foundries currently impacted by inventory adjustment and low capacity utilization rates, particularly from 2H23 to 2024.
Expansion plans for memory production will focus on South Korea and the US, with China’s share of global DRAM capacity projected to decline YoY, dropping from 14% to 12% by 2025. China’s share of global NAND Flash capacity is also expected to decrease from 31% to 18% by 2025.
The updated CHIPS Act will lead to the formation of two distinctive production regions: Chinese factories focusing on meeting domestic demand and factories outside China serving other markets.