Semiconductor Market Trends

Main Article: Semiconductors (Global Market)

2024: IDC Global Microchip Market Top Trends

The artificial intelligence and high performance computing (HPC) boom is having a significant impact on the global chip market. GPU-based accelerators and specialized accelerators for AI tasks are becoming more and more popular. At the same time, semiconductor production technologies are being improved. IDC analysts in a review dated December 12, 2024 named 8 main trends in the global microchip market.

1. Rapid growth amid AI adoption

According to IDC, costs in the semiconductor products sector will rise by 15% in 2025. At the same time, sales of memory chips will increase by more than 24% - mainly due to the growing penetration of high-bandwidth products HBM3 and HBM3e, which are used as part of AI accelerators. Sales of other chips will show an increase of about 13% due to the high demand for solutions for server equipment, smartphones, communication systems, etc.

2. Designing chips in the Asia-Pacific region

Demand for such services is growing against the background of stabilizing the level of stocks of semiconductor products, increasing sales of personal devices and the spread of AI systems. An increase in 2025 is expected at around 15%.

3. TSMC's Strong Position

TSMC's share of the chip manufacturing market (Foundry 1.0) is expected to grow from 59% in 2023 to 64% in 2024 and 66% in 2025. This contract manufacturer will continue to significantly outperform competitors such as Samsung, SMIC and UMC.

4. High Demand for Advanced Manufacturing Technologies

Due to the rapid introduction of AI technologies, the need for advanced chips manufactured using modern technological methods (less than 20 nm) is increasing. Overall, silicon wafer production is projected to increase by 7% in 2025. Average capacity utilization is expected to remain above 90%, and the AI-driven semiconductor boom will continue.

5. Production of products according to standards from 22 to 500 nm

Demand for such products is projected to improve in 2025 after inventory adjustments. These chips are widely used in various fields - from consumer electronics and automotive equipment to industrial control systems and all kinds of equipment.

6. Introduction of 2nm technology

It is expected that 2025 will be a decisive year for this technology. TSMC is actively implementing the 2nm process technology at its Hsinchu and Kaohsiung facilities. The company expects the 2nm technique to attract more customers than the 3nm technology. In addition, a similar technical process is being introduced by the South Korean Samsung.

7. Chip Packaging and Testing

The IDC study notes that against the background of the formed geopolitical situation, the landscape of chip packaging and testing is transforming. Analysts believe that in 2025 it China will continue to strengthen its position in the relevant segment. Taiwanese players will demonstrate their advantages in packaging high-performance products, such as GPUs for AI tasks.

8. Advanced Packaging Technologies

We are talking about the methods of FOPLP (Fan-Out Panel Level Packaging) and CoWoS (Chip on Wafer on Substrate. As the functionality and performance of semiconductor chips continue to improve, advanced packaging technologies are becoming increasingly important.

Conclusions

To summarize, IDC expects double-digit growth in the global semiconductor industry in 2025, however, the industry will have to consider many factors, including geopolitical risks, the global economic situation, interest rates and demand in the final market.^[1]

2023: IDC Top 8 Chip Market Trends

Factors such as the rapid development of the artificial intelligence industry, the demand for high-performance computing (LDC), the stabilization of demand for smartphones and personal computers, as well as the steady growth of the automotive industry will contribute to the strengthening of the global semiconductor product market in 2024. This is stated in the IDC study, the results of which were published on December 21, 2023. Analysts highlight eight main trends in the microchip market.

1. The volume of the semiconductor products industry will grow by 20% in 2024

At the end of 2023, revenue from the sale of microchips on a global scale, according to IDC estimates, will decrease by about 12% compared to the previous year. At the same time, the decline in the memory segment will exceed 40%. In 2024, the growth, according to analysts, will be more than 20% against the background of an increase in prices for products in certain categories, as well as due to the demand for expensive NVM memory.

In 2024, revenue growth from the sale of microchips will be more than 20%

2. Automotive Systems Market Development

Increasing demand for microchips in general is driven by the increasing adoption of advanced driver assistance systems (ADAS) and next-generation on-board infotainment systems. In these areas, the CAGR (compound percentage CAGR) to 2027 is expected at 19.8% and 14.6%, respectively. As a result, such products in 2027 will account for 30% and 20% of total revenue in the field of automotive microchips.

3. AI in the field of personal electronic devices

In 2024, IDC believes, AI technologies will be actively introduced into various personal user devices. Among them are smartphones, wearable gadgets and computers. And this will lead to an increase in the need for microchips with AI functions.

4. Asia-Pacific growth

As the market situation stabilizes, Asia Pacific microchip sales are expected to increase by 14% in 2024 compared to the previous year. Chip companies continue to actively develop technologies by introducing AI into client devices and automotive equipment.

5. Increase demand for advanced manufacturing processes

In 2023, the work of semiconductor products enterprises was seriously affected by inventory correction and weak demand. As a result, capacity utilization has decreased significantly, especially for mature processes. In 2024, against the backdrop of market recovery and a large need for AI chips, demand for microchip manufacturing services is expected to grow - primarily for the most advanced technologies.

AI technologies will be actively introduced into various personal user devices

6. Growth in China's production capacity

Under sanctions from the Chinese USA authorities, they are actively stimulating the development of their own semiconductor industry. It is predicted that in 2024 this will have an impact on the work of foreign enterprises for the production of semiconductor products.

7. Integrated Circuit Enclosure

As the functionality and performance requirements of semiconductor chips continue to increase, advanced packaging technologies are becoming increasingly important. The 2.5/3D chassis market is expected to demonstrate a CAGR of 22% between 2023 and 2028.

8. Growing demand for CoWoS packaging of chips

IDC believes that in 2024, due to the rapid expansion of the global AI market, the demand for chip packaging services using the CoWoS (Chip on Wafer on Substrate) method will significantly increase. The demand for packaging using CoWoS technology is increasing from Nvidia and other industry participants designing AI chips.^[2]

2019: Accenture: Trends in semiconductor manufacturers

On December 25, 2019, Accenture summed up a survey of companies operating in the semiconductor industry and highlighted 5 technology trends that will determine the near future of the industry.

DARQ technologies (blockchain, artificial intelligence, XR-enhanced reality and quantum computing) will dramatically change the semiconductor manufacturer market in the next 3 years. This is the opinion of 60% of industry executives. "87% of manufacturers are already experimenting with one or more DARQ technologies," the report said.

The popularity of technologies among industry representatives was distributed as follows: artificial intelligence (77% of respondents see the future for it), XR (73%), blockchain (55%). A competitive advantage in using DARQ technologies will be the creation of ecosystems and partnership with startups that help "drive" innovation, the authors of the study are sure.

Ecosystem activities are essential to the development of the industry, but at the same time, they increase business risks. Only 23% of semiconductor companies reported knowing about the responsible relationship to ensure the information security of partners in the ecosystem.

To compete successfully, companies need to know their customers better, anticipate their needs even before they arise, the results of the study show.

The survey showed that 94% of industry representatives agree that the volume of consumer data (digital demography) will open up new opportunities for semiconductor industry enterprises.

81% of respondents believe that the presence of digital demographics will expand the opportunities for the sale and delivery of semiconductors. 71% expect the volume of user data to increase significantly in the next 2 years.

According to the authors of the study, instant adjustment to the needs of the customer will become a criterion for the success of the industry in the future. 90% of survey participants agree with this. However, 54% of semiconductor company executives responded that they had roughly equal priority between individual and overall approaches in providing products and services.

"The industry makes an innovative product, but most of its players do not offer advanced solutions for employees," the report said. Thus, 71% of the surveyed managers admitted that the level of digital maturity of their employees is higher than the enterprises they represent. At the same time, the industry is experiencing a significant shortage of personnel, reaching 10 thousand jobs in the world.

According to Rinat Maksutov, head of Accenture's New Technologies practice in Russia, domestic players in the semiconductor industry expect a digital transformation in the development of new products and, as a result, entry into new markets.

"Among the key barriers to the company's transformation are noted: lack of targeted funding, lack of necessary personnel and digital platforms, as well as the need to introduce new models of interaction with customers, and increase the efficiency of organizations. Among the possible risks is a drop in demand and increased competition. Many representatives of the Russian industry are already using solutions such as 3D printing, IoT, Big Data and so far are the least active in using XR and blockchain, " noted Rinat Maksutov, head of Accenture's New Technologies practice in Russia

He notes that manufacturers have a chance to jump on the transformation train and modify their solutions.

Notes