Advanced Chips vs Legacy Chips

Today, advanced semiconductors dominate most of the chip headlines, creating the illusion that Legacy chips have faded into the background and are no longer the focus. However, the importance of Legacy chips is undeniable. For example, 95% of the supply in the automotive industry relies on Legacy chips, and the automotive chip industry is expected to grow by 11% in the coming years, while the growth of Legacy chip manufacturing is projected to be only 2% during the same period. The demand for these chips far exceeds the supply globally.

Expensive advanced chips attract the majority of investment from chip manufacturers and account for the largest share of their profits, leaving little incentive for them to increase the production of Legacy chips or establish new factories based on older technology. According to Fortune magazine, nearly three-quarters of the global Legacy chip manufacturing capacity is located in mainland China and Taiwan. It is not surprising that as China faces severe economic sanctions on advanced chips and manufacturing equipment, it chooses to double down on investment in Legacy chips.

China is currently rapidly establishing Legacy chip factories at an astonishing pace. Experts predict that in the coming years, the number of factories opened in China will surpass the total in the rest of the world. This will give China almost complete control over the Legacy chip market and provide it with significant leverage to exert strong control over other chip buyers worldwide. Ignoring Legacy chips will lead to disaster. Without proper supply, a nation’s economy will be impacted, as will its security and chip autonomy.

Global supply chain challenges require dynamic solutions. While advanced chips capture worldwide attention, Legacy chips should not be overlooked. In fact, China’s expansion in this field strongly demonstrates their importance. Looking ahead, chip companies and industry leaders cannot ignore this crucial area.