Fuelled by AI demand and advanced packaging, the global semiconductor foundry 2.0 market surged 19% in Q2 2025, with TSMC tightening its leadership position.
The global semiconductor foundry 2.0 market posted a 19% year-on-year (YoY) revenue increase in the second quarter of 2025, according to a report by Counterpoint Research. This growth was driven by strong demand for advanced process nodes, packaging, swift AI adoption, and pull-in orders linked to China’s subsidy programme. Momentum is expected to carry into Q3 with mid-single digit sequential growth.
Taiwan Semiconductor Manufacturing Company (TSMC) retained its dominance in pure foundry. Its market share rose from 31% in Q2 2024 to 38%. The company contributed three-quarters of the revenue growth in foundry 2.0, supported by rapid ramp-up of 3nm, high utilisation in 4/5nm driven by AI GPUs, and expansion of its CoWoS packaging capacity. Analysts expect these factors to remain key drivers into the second half of 2025.
The outsourced semiconductor assembly and test (OSAT) sector recorded an 11% revenue rise, up from 5% in Q2 2024. Taiwan’s Advanced Semiconductor Engineering (ASE) contributed the most to growth, while King Yuan Electronics Company (KYEC) registered the steepest increase at over 30%, fuelled by AI GPU demand.
Analysts believe advanced packaging will deliver new growth momentum for OSAT companies as AI GPUs and AI ASICs sustain high order volumes into 2026.
Non-memory integrated device manufacturers (IDMs) returned to positive territory, with revenue climbing 2% year-on-year after a 9% decline in the same quarter last year. Texas Instruments led with a 16% rise. Demand from the industrial sector is showing signs of recovery, though automotive orders remain weak. The report expects an upturn in automotive semiconductors later in 2025.
Commenting on the trend, Counterpoint Senior Analyst William Li said advanced packaging is becoming critical for boosting chip performance. TSMC, with its technology leadership and customer relationships, is expected to remain a front-runner in both advanced nodes and packaging.
Senior Analyst Jake Lai added, “The traditional peak season for consumer electronics, the accelerating AI applications/orders, and the existing subsidy policy in the Chinese market will be major drivers in Q3. We expect the foundry utilisation rate in advanced process nodes in Q3 2025 and wafer shipments across pure-foundry vendors will continue to grow.”
