Powered by booming AI demand, the Foundry 2.0 chip market jumps to $84.8 billion in Q3 2025, led by TSMC’s 41% revenue surge and rising OSAT growth.
Global semiconductor revenues in the emerging ‘Foundry 2.0’ market grew 17% year-on-year (YoY) to $84.8 billion in Q3 2025, thanks to booming artificial intelligence (AI) demand and strong uptake of advanced manufacturing processes.
The sharp rise reflects accelerating investment in high-performance chips and advanced packaging as companies move towards tighter integration of design, manufacturing, assembly and testing.
TSMC led the expansion. Its revenue jumped 41% YoY, powered by a rapid 3nm ramp-up and strong 4nm and 5nm demand from AI customers. The Taiwanese giant benefited from shipments tied to Apple’s flagship smartphones and to AI accelerators supplied to NVIDIA, AMD, and Broadcom.
However, tight utilisation at these advanced nodes is expected to slow sequential growth in Q4, even as its advanced packaging strength continues to support momentum through 2026.
Non-TSMC foundries posted 6% YoY revenue growth in Q3 2025, indicating easing tariff-driven pull-in orders. Chinese foundries outperformed with 12% YoY growth, supported by state subsidies and local policy backing.
Meanwhile, non-memory integrated device manufacturers saw a recovery, recording 4% revenue growth, helped mainly by Texas Instruments, which delivered 14% growth despite ongoing pressures in automotive and industrial segments.
The OSAT (outsourced semiconductor assembly and test) sector maintained strong momentum with 10% YoY growth, driven by robust demand for advanced packaging. ASE/SPIL was the largest growth contributor, supported by FOCoS (Fan-Out Chip on Substrate) solutions and spillover AI packaging orders from TSMC.
Capacity in the segment is expected to expand sharply, with projections of up to 100% growth in 2026 as demand for AI GPUs and AI ASICs continues to rise.
Analysts expect full-year Foundry 2.0 market growth of around 15% in 2025, although near-term upside may be capped by fully loaded 4nm and 5nm capacity and limits in CoWoS packaging availability. The pure-play foundry segment alone is forecast to grow 26% YoY, fuelled by sustained AI chip shipments.
Looking ahead, NVIDIA and Broadcom are expected to play decisive roles in shaping demand for advanced packaging. With TSMC likely prioritising NVIDIA’s advanced AI platforms, OSAT vendors are set to gain from spillover demand, supporting further expansion into 2026.
