The global semiconductor foundry market generated record revenues of 320 billion dollars in 2025, growing 16 percent year on year as sustained demand for artificial intelligence processors powered gains across chip manufacturing, advanced packaging, and assembly, according to a full-year tracker published Monday by Counterpoint Research.
The report, which uses Counterpoint’s expanded “Foundry 2.0” definition that encompasses pure-play foundries, non-memory integrated device manufacturers (IDMs), outsourced semiconductor assembly and test (OSAT) companies and photomask suppliers, marks the sector’s strongest annual performance on record. Double-digit growth was primarily driven by steady demand for AI graphics processing units (GPUs) and AI application-specific integrated circuits (ASICs) across both advanced manufacturing processes and advanced packaging, with pure-play foundries led by Taiwan Semiconductor Manufacturing Company (TSMC) anchoring momentum and key OSAT vendors benefiting from spillover orders.
TSMC remained the dominant force, with full-year revenues growing 36 percent year on year, although growth moderated in the fourth quarter of 2025 to 25 percent, down from the 40 percent-plus rates seen earlier in the year, reflecting a higher comparison base and typical consumer electronics seasonality. Counterpoint Senior Analyst Jake Lai said the conversation around TSMC is shifting from wafer capacity toward system-level integration, noting that front-end scaling constraints are pushing bottlenecks toward the back end. “Advanced packaging, particularly CoWoS, is becoming a key differentiator and will likely be one of the main variables driving TSMC’s performance into 2026,” Lai said.
Non-TSMC pure-play foundries delivered a more modest 8 percent year-on-year gain. Among the standout performers were Chinese vendors, with SMIC posting 16 percent growth and Nexchip recording 24 percent year-on-year expansion, both supported by domestic localisation programmes and government subsidy policy. Counterpoint Research Director Tom Kang said Samsung, which had a mixed year in 2025, is positioned to accelerate from this point, with solid demand for its 4-nanometre node and the ramp of 2-nanometre designs expected to attract higher-value AI and mobile orders.
The OSAT segment grew 10 percent year on year, driven by advanced packaging demand. ASE and SPIL were the biggest contributors to growth, with Broadcom and other AI chip designers forced to seek advanced packaging capacity outside TSMC as the foundry’s internal CoWoS allocation remains concentrated on NVIDIA’s Blackwell and Rubin GPU platforms. Counterpoint projects that industry capacity for advanced packaging could expand by roughly 80 percent year on year in 2026 as customers lock in long-term agreements with OSAT vendors.
Among non-memory IDMs, the inventory correction cycle that weighed on the segment through 2024 has largely run its course. Texas Instruments posted a 13 percent rebound in 2025 and Infineon grew 5 percent, with the recovery expected to provide a more stable baseline heading into 2026.
Counterpoint Senior Analyst William Li framed the structural shift plainly: “Advanced packaging is no longer just a supporting step but is becoming a gating factor for AI deployment. OSAT vendors are structurally better positioned than in past cycles, with growth visibility extending over multiple years.”
