The global semiconductor industry anticipates a resurgence in demand in the upcoming quarter, fueled by the expansion of artificial intelligence (AI) data centers and the accelerating adoption of electric vehicles (EVs) worldwide.
As Nikkei Asia reports, experts and industry analysts foresee a shift in the "silicon cycle," expecting a significant turnaround that could bolster the global economy.
A new type of 300 millimeter wafer with semiconductor chips and finished microchips of the semiconductor German manufacturer Bosch is pictured in Dresden, eastern Germany on May 31, 2021. - The factory will officially open next week on June 7, 2021.
Companies Increasing AI Adoption
A collaborative assessment by leading entities, including research agencies and specialist trading companies, signals a shift towards heightened semiconductor demand.
Eighty percent of companies globally are projected to integrate generative AI into their operations, marking a substantial leap from the mere 5% adoption rate in 2023, according to a forecast by US research company Gartner.
"AI will be installed in smartphones and PCs. Generative AI-related investment will revitalize and significantly boost the growth of the semiconductor market," highlighted Akira Minamikawa of Omdia, emphasizing the potential impact of AI integration across consumer devices.
With this, semiconductor giants are also ramping production levels in anticipation of this burgeoning demand. C.C. Wei, CEO of Taiwanese chipmaker TSMC, revealed plans to invest further in response to the soaring demand for AI chips, surpassing their current production capacity.
EVs Taking Over
The rise of electric vehicles stands as a pivotal factor driving semiconductor demand.
Automotive titans such as BMW aim to propel EV sales to constitute 50% of their total sales by 2030, while Toyota eyes a global sales target of 1.5 million EV units by 2026.
This surge in EV production is expected to contribute substantially to the semiconductor market's revival.
Read Also: Tesla Surpasses Q4 Delivery Estimates, Achieves Record-Breaking 1.8 Million Vehicles in 2023
Trends to Watch Out For
In tandem with these insights, IDC outlined key trends shaping the semiconductor market landscape in 2024.
Foremost among these trends is the projected recovery of the semiconductor sales market, which is anticipated to witness an annual growth rate exceeding 20%.
The steady growth of automotive intelligence, particularly the Advanced Driver Assistance System (ADAS) and infotainment, promises a sustained demand for semiconductor chips.
The evolution of AI applications from data centers to personal devices emerges as a significant trend, foretelling the integration of AI functionalities into smartphones, PCs, and wearables. This transformation is poised to drive increased semiconductor demand in the consumer electronics sector.
Furthermore, IDC forecasts a promising outlook for the Asia-Pacific IC design market, envisioning a 14% annual growth in 2024. The foundry industry is also set to experience a resurgence, propelled by the demand for advanced processes, and is expected to witness double-digit growth.
Notable Growth
Gartner also projects a noteworthy rebound, forecasting a 16.8% growth in 2024 to reach an impressive $624 billion. This growth trajectory follows a 10.9% decline in 2023, primarily attributed to reduced demand from smartphone and PC markets.
Notably, the CoWoS supply chain capacity expansion by 130% in the latter half of 2024 signals an encouraging surge in AI chip supply.
However, the report also highlights China's expanding production capacity and the ensuing price competition, exerting pressure on non-Chinese foundries in the semiconductor market.
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