The market for semiconductor fabrication materials witnessed significant growth in 2024, prompted by increasing investments in semiconductor fabrication plants, restoration of the supply chain post-pandemic, and continuous technological innovations. The biggest trend was the geopolitical realignment of semiconductor production, with leading economies, including the USA, China, and the EU, ramping up local production through strategic subsidies and trade agreements.
Meanwhile, new materials such as EUV (Extreme Ultraviolet) resists, next-generation photoresists and high-purity chemicals gained widespread adoption. Additionally, semiconductor nodes dipped below 5 nm, necessitating the use of specialized fabrication materials. The rapid adoption of AI-based chip designs, automotive-grade semiconductors, and 3D packaging have also driven demand for custom fabrication materials.
Demand for ultra-high-purity materials will continue rising even in 2025 and beyond, primarily for applications in AI accelerators, quantum computers, and high-end automotive chips. Chip foundries will expand in Asia, North America, and Europe, driven by government tax incentives aimed at enhancing semiconductor self-reliance and industry growth.
Manufacturing at 2 nm and below will require new materials such as HKMG dielectrics, carbon nanotube transistors, and graphene-based interconnects, which will be critical as the industry advances toward 2035. A forceful emphasis will also be on sustainability, with greener fabrication materials becoming more desirable.
Industry Forecast Table
| Metric | Value |
|---|---|
| Industry Size (2025E) | USD 53.2 billion |
| Industry Value (2035F) | USD 99.0 billion |
| CAGR (2025 to 2035) | 6.4% |
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A recent industry survey conducted by FMI on the semiconductor fabrication materials industry includes global trend analysis and industry estimates for the segment through 2026. Survey respondents include industry experts in the semiconductor fabrication materials industry sector, such as suppliers, distributors, and end users. They expressed optimism as 83% of them foresee demand for next-generation semiconductor materials increasing, which will be driven primarily by AI, quantum computing, and cars, the findings showed. Most stakeholders mentioned that material innovation would be a key driver of competitiveness over the next decade.
Supply chain resilience was another major theme, with over 70% of respondents indicating that various persistent challenges persisted in purchasing raw materials: geopolitical disruption and price fluctuations. Industry participants are actively exploring regionalized supply chains and alternative sourcing strategies to mitigate risks while leveraging governmental incentives and strategic alliances to ensure high-purity material availability.
Furthermore, sustainability is in overdrive, with 65% of companies surveyed putting effort toward the creation of eco-friendly fabrication materials. Future industry trends emphasize reduced water consumption, recyclable chemicals, and low-carbon manufacturing processes. The respondents unanimously agreed that sustainability efforts are compliance tools that also add brand value over time.
| Country | Key Policies, Regulations & Mandatory Certifications |
|---|---|
| United States | The CHIPS and Science Act of 2022 provides USD 52 billion in subsidies for research, development, and semiconductor manufacturing. Advanced semiconductor exports to China are governed by Export Administration Regulations (EAR). The Environmental Protection Agency (EPA) regulates hazardous chemicals used in manufacturing. |
| United Kingdom | The UK Semiconductor Strategy (2023) proposed to invest £1 billion in chip development in the country. Companies need to comply with UK REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals) for materials safety. |
| France | €5 billion will be dedicated towards investments in semiconductors through the France 2030 Plan. Required: EU RoHS (restriction of hazardous substances) and REACH compliance The French Environmental Code governs the waste disposal process from the manufacturing factories. |
| Germany | The European Chips Act funds chip manufacturing with Germany in the lead. The ISO 50001 certification is utilized for energy management. |
| Italy | The Italian National Recovery and Resilience Plan (NRRP) previously financed semiconductor investments. REACH, RoHS and WEEE apply in the EU. The environmental management of fabrication plants adheres to ISO 14001 standards. |
| South Korea | It also provides various tax benefits and infrastructure support for domestic production under the K-Semiconductor Strategy. K-REACH, Korea Regulation: Companies must comply with K-REACH-Korea's version of the EU regulation on the registration, evaluation, authorization, and restriction of chemicals. ISO 9001 KS Q is a standard for quality assurance in semiconductors. |
| Japan | The Japan Semiconductor Strategy is a USD 6.8 billion fund designed to develop the next generation of chip manufacturing. JEITA regulates semiconductor materials, while JIS (Japanese Industrial Standards) compliance is mandatory. For energy efficiency, plants with ISO 50001 certification are required. |
| China | One of the key aspects of the Made in China 2025 policy is the push for semiconductor self-sufficiency. China RoHS 2.0 (the new version of the China RoHS) and SEMI China Standards control material safety and the environment. The CCC (China Compulsory Certification) mark is mandatory to obtain for semiconductor products. |
| Australia & New Zealand | The Critical Technologies Policy identifies semiconductors among national priorities. The Australian Dangerous Goods Code (ADG Code) requires chemical shipping compliance. ISO 14001 and ISO 9001 certifications for semiconductor manufacturers. |
| India | The Semicon India Program offers USD 10 billion in incentives to boost chip production in our nation. Ceramic cap materials are governed by the E-Waste (Management) Rules, 2022, and BIS certification. Comprehensive management systems for workplace safety are regulated by ISO 45001. |
The semiconductor materials industry in the USA is predicted to grow at a CAGR of 6.8% in the period from 2025 to 2035, after the passage of the CHIPS and Science Act, which has a budget of USD 52 billion dedicated to promoting domestic production of semiconductors. This initiative has seen the US government further its agenda to reduce reliance on overseas manufacturers, especially China's manufacturing of chips, and encourage the local manufacturing of chips.
Top players such as Intel, TSMC, and Samsung are investing heavily in state-of-the-art fabs, which increases demand for high-purity chemicals, silicon wafers, and advanced lithography materials. The strict EPA regulations are driving forward the sustainability of the industry, forcing innovation in eco-friendly semiconductor material.
The UK Semiconductor Fabrication Materials Industry Grows at a CAGR of 5.9% Fostering ultimate development along the UK semiconductor strategy and a greater focus on R&D investments. The government had previously pledged £1 billion to support domestic semiconductor innovation and supply chains. This industry is filled with start-ups and research institutions that work on compound semiconductors and photonics materials. For any manufacturer, compliance with UK REACH and ISO 45001 is critical. However, the UK has been hampered in its ability to scale up production, as most chip manufacturing occurs in Europe, the USA, and Asia.
The industry for materials used in semiconductor fabrication in France will pursue a CAGR of 6.2% for the time period 2025 to 2035. It is seeing investments in semiconductor manufacturing as part of the France 2030 Plan and the European Chips Act, with the government allocating € 5 billion for the sector. Big semiconductor companies, including STMicroelectronics, are expanding their capacity, increasing the demand for photoresists, advanced deposition materials, and silicon wafers.
Reinforcing EU decisions, France is also making sustainability regulations stricter: REACH and RoHS compliance will be mandatory. Among the greatest challenges is weaning European manufacturers off their dependence on Asian suppliers of raw materials, leading France to devise regionalized supply chains.
Germany’s semiconductor fabrication materials industry is estimated to grow at a CAGR of 6.5%, driven by the European Chips Act, which will inject €43 billion into semiconductor production. This initiative is expected to boost domestic demand for high-purity gases, silicon carbide (SiC) substrates, and specialty chemicals, with major players like Infineon, GlobalFoundries, and Bosch leading the charge. Germany’s government mandates DIN ISO 50001 energy-saving standards, pushing semiconductor fabrication plants to adopt low-carbon materials. The strong automotive semiconductor industry in Germany is another key driving force in this country, especially in the field of power electronics and next-generation chip packaging materials.
Italy’s semiconductor fabrication materials industry to grow at a 5.8% CAGR between 2025 and 2035. Italy is a well-established player in the European semiconductor ecosystem, particularly in power semiconductors and MEMS (Micro-Electromechanical Systems). These resources are committed in the European Community through the National Recovery and Resilience Plan (NRRP), which provides subsidies for semiconductor R&D (and manufacturing) to meet EU RoHS, REACH, and WEEE directives. Demand for specialty materials, etching gases, and deposition precursors is driven in large part by Italy's STMicroelectronics. But the nation still relies on imports for key semiconductor materials, causing supply chain problems.
South Korea is another of the higher growth industries for semiconductor fabrication materials, with a forecast CAGR of 7.2%. For instance, the K-Semiconductor Strategy offers tax benefits, R&D subsidies, and other assistance to multinational companies wishing to set up shop in Korea-further entrenching the country's position as an international semiconductor hub. Industry giants such as Samsung and SK Hynix are leading advancements in lithography, EUV resists, and next-generation wafer technologies.
K-REACH is regulating compliance with environmental safety, and the increasing pressure for 3D stacking of chips and AI processors is driving the need for high performance. Korea's government is also backing homegrown semiconductor material production to reduce its dependencies on imports.
It is anticipated that Japan’s semiconductor fabrication materials industry to expand at a CAGR of 6.4% between 2025 and 2035. Japan provides the likes of JSR, Sumitomo Chemical, TOK, et al., which manufacture photoresists, wet chemicals, and the most sophisticated etching materials. Under the Japanese semiconductor strategy, the government has pledged USD 6.8 billion to bolster the industry. JEITA standards and JIS apply to material manufacturers. Japan advances next-generation chip fabbing technologies as the demand for high-k/metal gate (HKMG) and graphene-based materials grows ever higher.
Due to aggressive government subsidies under the Made in China 2025 initiative, China’s semiconductor fabrication materials industry is expected to witness the highest CAGR of 7.5%. The company is striving to achieve self-sufficiency in semiconductors and is investing significantly in local fabrication facilities and materials. The China RoHS 2.0 and SEMI China Standards govern material safety and environmental impact. As Chinese companies like SMIC and Yangtze Memory Technologies grow, there is a stronger need for advanced lithography materials, CMP slurries, and deposition precursors. Additionally, USA trade restrictions on EUV technology and high-end semiconductor materials further shape the industry's trajectory.
The semiconductor materials industry in Australia and New Zealand is projected to thrive at a CAGR of 5.7% during 2025 to 2035. Semiconductors are identified as a critical technology by the government of Australia, and they are seeking local development of advanced material and semiconductor research capabilities. For semiconductor suppliers, it is essential to comply with the Australian Dangerous Goods Code (ADG code) and to achieve ISO 9001 & 14001 certifications. While Australia is not a major semiconductor manufacturing hub, it has a strong mining industry and abundant key raw materials, including rare earth metals and high-purity silicon, positioning it as a crucial player in the global semiconductor supply chain.
India will see a 6.9 percent compound annual growth rate in its semiconductor fab materials industry from 2025 to 2035, helped by the Semicon India Program, which offers USD 10 billion in incentives to locate semiconductor plants. The country is quickly developing its chip manufacturing ecosystem, with upcoming fabs from Vedanta-Foxconn and ISMC. BIS certification and E-Waste Management Rules, 2022 ensure compliance with regulations. As India focuses on developing local wafer fabrication and packaging technology, the associated demand for photoresists, wet chemicals, and specialty gases is also increasing. However, supply chain constraints and shortage of skilled manpower remain chief concerns.
Chemicals and gases account for the largest industry segment of materials used in semiconductor manufacturing, as they are an essential component in wafer cleaning, etching, and deposition. More accuracy is needed as the technology nodes get smaller. This creates a strong need for highly pure wet chemicals like hydrogen peroxide, sulphuric acid, and hydrocarbons. Photoresists are another leading segment, especially given the increasing prevalence of EUV lithography for sub-5nm chip fabrication. Some of the fastest-growing segments include advanced metals such as cobalt, ruthenium, and copper, which are used for interconnects and transistor contacts.
As more businesses use 3D packaging and chiplet architectures, the need for specialized materials like low-k dielectrics and advanced solder materials is rising quickly. Sustainability concerns are also driving demand for environmentally friendly gases like dry etching substitutes, as well as recyclable cleaning chemicals. Asia-Pacific is the largest market for these materials, given the concentration of semiconductor factories in China, Taiwan, South Korea, and Japan, while the USA and Europe are championing localized supply chains.
Wafer fabrication is the largest segment of the semiconductor industry, consuming the highest volume of semiconductor materials. This technology involves different processes like photolithography, etching, doping, and deposition, and all require various types of specialty chemicals, gases, and thin-film materials. As semiconductor nodes continue to shrink below 5 nm and approach 2 nm, the need for advanced wafer fabrication materials continues to increase. As the demand for 3D ICs, heterogeneous integration, and advanced chiplet architectures grows, so too is packaging becoming the fastest segment. High-performance substrates, underfill materials, and thermal interface compounds are increasingly used in fan-out wafer-level packaging (FOWLP) and silicon interposers. Testing materials also play a major role, as complex semiconductor designs require robust failure analysis and reliability testing. As governments across the world, from the USA to Europe to India, continue to push for onshore fabrication, new fabs are being erected at a record pace, driving material demand at all steps of fabrication.
Over the years, the sub-10nm nanometre technology node has been at the forefront of semiconductor production, with industry leaders including TSMC, Samsung, and Intel focusing on 5nm, 3nm, and beyond 2nm processes. These nodes require ultra-pure materials, including EUV photoresists, advanced deposition chemicals, and low-k dielectrics. The 1-5 nm range is the fastest-growing segment, with high activity in GAA FET transistors, stacked nanosheets, and 3D chip structures.
Despite this trend, the micrometre (µm) node segment is still relevant, especially in automotive, industrial, and IoT applications, where chips do not have to be highly miniaturized but are required to be power- efficient and reliable. As AI-edged computing and sensor-based technologies become more prevalent, demand for larger node semiconductors in the 28nm to 90nm interval remains strong. Non-silicon materials at the 100 nm+ range are in high demand because of their use in power electronics for electric vehicles, renewable energy, and defence. These materials are based on silicon carbide (SiC) and gallium nitride (GaN).
The largest segment of the semiconductor fabrication materials industry belongs to memory chips, supported by the growing demand for RAM and NAND flash memory in smartphones, data centers, and AI applications. 3D NAND and next-gen DRAM technologies have remained the focus point of industry leaders, including Samsung, SK Hynix, and Micron, driving demand for CMP slurries, etchants, and high-k materials. Logic chips (CPUs, GPUs, and AI accelerators) are also a leading segment, with the rapid adoption of EUV lithography for sub-5nm logic chips.
Optoelectronics, including image sensors, photonic ICs, and advanced display technology, is the growth leader. Sensors have a strong demand due to their applications in automotive safety systems, biomedical fields, and industrial automation. Power electronics, particularly SiC and GaN-based chips, are also growing at a rapid pace due to the EV revolution and integration of renewable energy. Moving to electrification and energy-efficient systems means a lot for the industries, which will create growth opportunities, especially for power semiconductor manufacturing.
| 2020 to 2024 | 2025 to 2035 |
|---|---|
| The COVID-19 pandemic disrupted supply chains, resulting in chip shortages. | It is estimated that more investments will go into localized semiconductor supply chains to reduce reliance on imports. |
| Continued strong demand for semiconductor materials driven by 5G applications and AI to impact full-year. | The yield of advanced post-EUV technologies such as 3nm, 2nm, and AI-based semiconductor architectures drives the need for advanced materials. |
| There is a heavy dependence on Asian suppliers, particularly in China, Taiwan, South Korea, and Japan. | USA, European, and Indian governments are pouring money into domestic semiconductor production. |
| The advent of EUV photoresists for 7nm and 5nm nodes was enabled by advances in lithography. | Performance material requirements increase for Gate-All-Around (GAA) and 3 nm and below for stacked nanosheets. |
| High, specifically automotive constellation + IOT chipsets in 28nm-90nm. | The expansion of electric vehicles (EVs) and improved energy efficiency are driving significant growth in power electronics (SiC & GaN) and automotive chips. |
| USA-China trade tensions culminated in export restrictions on advanced semiconductor materials. | Countries seek greater technological independence, leading to regional supply chains and strategic alignments. |
| AI-based chip designs further raised the need for high-bandwidth memory (HBM) and advanced interconnect materials. | Demand for AI chips explodes, and multi-chipset packaging and 3D IC integration go mainstream. |
| Sustainability concerns led to the development of greener semiconductor materials. | Strong push from regulation for low-carbon fabs, recyclable semiconductor materials. |
The international macroeconomic drivers affecting the semiconductor fabrication materials industry are deep and complex, including factors such as technological innovation, geopolitical events, supply chain policy, and green initiatives. Between 2020 and 2024, the sector navigated challenges such as supply chain disruptions, trade tensions, and inflationary pressures, which led to increased material costs and regionalization strategies. However, the rapid expansion of 5G, AI, cloud computing, and automotive electronics fueled consistent demand for high-performance semiconductor materials.
From 2025 to 2035, the industry will be driven by government subsidies and global industrial policies. As China steps up its semiconductor self-reliance push, the USA, Europe, and India are pouring money into onshore semiconductor fabrication to limit dependence on China, Taiwan, and South Korea. The advancement of AI, quantum computing, and next-generation wireless technologies (6G) will push the demand for advanced fabrication materials even further. Sustainability is another strong catalyst, as semiconductor fabs shrink their carbon footprints and adopt green materials and processes. Aspects like supply chain constraints and geopolitical uncertainty will temper growth - but the industry will remain on a steady upward trajectory thanks to advances in technological miniaturization, power-saving chip designs and expanding production capacity for semiconductors in general.
Some of the prominent players in the semiconductor fabrication materials industry include strategic pricing competitiveness, constant innovation, and expansion in the global industry. BASF, Merck, and Dow are reiterating pricing flexibility, offering competitive prices while maintaining high-quality materials. Innovation is also necessary for high-end chemicals, photoresists, and EUV-compatible materials, prompting these players to allocate a significant portion of their R&D budget to stay ahead of technological advancements. Strategic collaborations with semiconductor manufacturers and expansion into developing industries in Asia-Pacific and North America take precedence in their growth strategies. Moreover, the companies are capitalizing on the trend toward sustainability-constructing sustainable materials that can adapt to evolving environmental regulations.
Applied Materials, Inc.
Industry Share: ~20-25%
Applied Materials, a industry leader in semiconductor manufacturing materials, remains at the forefront with its advanced materials engineering solutions and continued investment in R&D. The company has a strong presence in deposition, etching, and wafer-level packaging technologies.
ASML Holding NV
Industry Share: 15-20%
ASML remains a dominant player in the semiconductor materials space, largely due to its monopoly on extreme ultraviolet (EUV) lithography tools. Its presence in this industry is extended even further through partnerships with leading foundries like TSMC and Samsung.
Lam Research Corporation
Industry Share: ~10-15%
Lam Research has a strong industry presence in fabrication materials, particularly in etch and deposition machines. Its focus on innovation combined with customer-driven solutions has strengthened its foothold in the industry.
Tokyo Electron Limited (TEL)
Industry Share: ~10-15%
Tokyo Electron, in Q1 2024, announced a partnership with a leading photoresist supplier to develop next-generation EUV photoresists. This development aims to address challenges such as line-edge roughness and defects in nodes smaller than 3 nm while strengthening TEL's position in the materials ecosystem.
TEL is a global leader in semiconductor production equipment and materials, headquartered in Japan. Its growth can be attributed to its leadership in coater/developer systems and thermal processing tools (see below for details).
KLA Corporation
Industry Share: ~5-10%
KLA excels in providing process control and yields management solutions (technology and a company that gives KLA a leading position in the semiconductor industry). Its next-generation nodes, essential inspection, and metrology equipment buoy its industry share.
Entegris, Inc.
Industry Share: ~5-10%
Entegris is a provider of advanced material handling and purification solutions for the semiconductor industry. As there is increased demand for high-purity materials for advanced chip manufacturing, its industry share is growing.
Breakthrough in Packaging Technologies
In 2024, new materials and equipment focused on advanced packaging technologies, including hybrid bonding and fan-out wafer-level packaging, were introduced by Applied Materials. This advancement is a significant step toward heterogeneous integration for AI and high-performance computing (HPC), which drive demand for advanced processing and storage solutions. Applied Materials' innovations are likely to boost its leadership in the materials sector.
The Rollout of ASML’s High-NA EUV Lithography
As of early 2024, ASML managed to successfully ship its first high-NA EUV lithography systems to TSMC, Intel, and similar mega foundries. These systems enable the production of chips below 2 nm-a major step forward in semiconductor manufacturing. The deployment has fortified ASML's reign over the lithography space and catalyzed demand for materials compatible with fabrication.
Lam Research Expands CMP Portfolio Through Acquisition
In March 2024, Lam Research acquired a leading supplier of next-generation chemical mechanical planarization (CMP) materials, enhancing its portfolio in wafer surface preparation. The acquisition, valued at USD 2.5 billion, positions Lam Research to take a greater share of the materials industry at future nodes. [Image Source: Semiconductor Today, Mar 2024]
Tokyo Electron Expands its Reach in EUV Photoresist
Tokyo Electron, in Q1 2024, announced a partnership with a leading photoresist supplier to develop next-generation EUV photoresists. It will help with problems like line-edge roughness and defectivity in nodes smaller than 3 nm, and it will also strengthen TEL's position in the materials ecosystem.
AI-Driven Solutions for Metrology by KLA
In 2024, KLA will introduce AI-based metrology solutions to identify defects and optimize processes in real-time. These solutions increase yield and enable the reduction of material loss due to economic factors, aligning with broader sustainability objectives in advanced semiconductor manufacturing.
The semiconductor manufacturing materials industry is poised for significant growth, particularly for those premiering advanced node materials used in 2nm and below fabrication. To keep up with rising demand, companies should prioritize developing EUV-compatible photoresists, high-k/metal gate materials, and next-generation interconnect metals such as cobalt and ruthenium. As the trend toward 3D IC packaging and chipset design continues to grow, there is a huge chance for high-performance bonding materials, underfil materials, and advanced substrates. Furthermore, the adoption of heterogeneous integration and multi-chipset design will create demand for specialty adhesives and low-k dielectric materials, providing chemical and material companies with high-margin growth opportunities.
The big opportunity is the localization of semiconductor supply chains. The USA, Europe, and India are all competing for regional fabs, and suppliers will need to ramp up their production bases in these industries, to secure long-term deals with chipmakers like Intel, TSMC, Samsung, and GlobalFoundries. This includes moving etchants, deposition chemicals, and specialty gas manufacturing into one footprint to head off geopolitical risk. The information was released in October 2023. Obtaining preferred vendor status will also rely on government collaborations and adherence to new regulatory frameworks such as the CHIPS Act, EU Chips Act, and India's Semicon Program, which offer incentives.
Semiconductor fabs will set aggressive carbon reduction targets, with sustainability becoming a key factor in regulatory compliance and competitive differentiation. If industries are serious about ESG, material suppliers must invest in greener formulations, for example, fluorine-free etchants, low-GWP deposition gases, and recycling-packaging materials. As fabs aim to burn less fossil fuel, companies that are first to develop water recycling and waste reduction technology will have a competitive advantage.
To remain competitive, stakeholders must establish R&D partnerships with chip makers, universities, and research institutes to invest in next-generation materials. Next-gen semiconductors will advance with breakthroughs in quantum computing materials, AI-based chip architectures, and 3D NAND. In the future of this evolving industry, the companies that can anticipate these trends and build materials targeted toward new semiconductor architecture will transition from being mere suppliers to strategic partners, securing long-term growth and profitability.
Increasing adoption of AI, 5G, automotive chips, and emerging computing technologies is driving material use.
Initiatives such as the CHIPS Act, EU Chips Act, and India's Semicon Initiative are encouraging domestic manufacturing and de-risking reliance on imports.
EUV photoresists, high-k/metal gate materials, advanced interconnect metals, and low-GWP gases are at the forefront of innovation.
Fabs are driving low-carbon chemicals, fluorine-free etchants, recyclable packaging, and water-efficient production processes.
For transistor scaling, smaller nodes (less than 2 nm) need ultra-pure chemicals, photoresists that work with EUV light, and new deposition materials.
the Industry is segmented into chemicals, gases, metals, and photoresists.
the landscape is segmented into wafer fabrication, assembly, packaging, and testing.
it is bifurcated into nanometers (nm) and micrometers (µm).
it is segmented into memory, logic, optoelectronics, sensors, and power electronics.
it is studied across North America, Latin America, Europe, Asia Pacific, Middle East and Africa (MEA).
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