Although there are some sporadic short orders and rush orders in the second half of 2023, it is still difficult to reverse the first half annual decline of 20%, thus, the semiconductor sales market is expected to still decline by 12% in 2023
The global market intelligence firm IDC has now revealed that with the global demand for artificial intelligence (AI) and high-performance computing (HPC) exploding, coupled with the stabilizing demand for smartphones, personal computers, infrastructure, and resilient growth in automotive; the semiconductor industry is expected to usher in a new wave of growth. Semiconductor products cover logic integrated circuits (IC), analog IC, microprocessor and microcontroller IC, and memories.
Galen Zeng, Senior Research Manager, Semiconductor Research, IDC Asia/Pacific said, "Memory manufacturers' strict control of supply and output has led to increasing prices from the start of November, and the demand for AI across all major applications will drive the overall semiconductor sales market to recover in 2024. The semiconductor supply chain, including design, manufacturing, packaging, and testing, will bid farewell to the downturn in 2023."
IDC forecasts eight trends for the semiconductor market in 2024:
The semiconductor sales market will recover in 2024 with an annual growth rate of 20%
The supply chain inventory depletion process continues due to weak market demand. Although there are some sporadic short orders and rush orders in the second half of 2023, it is still difficult to reverse the first half annual decline of 20%, thus, the semiconductor sales market is expected to still decline by 12% in 2023. After the memory market recession of over 40% in 2023, in 2024 the effect of the reduction in production to push up the price of the product, coupled with the increase in the penetration of high-priced HBM is expected to become a driving force for market growth. With the gradual recovery of smartphone demand and the strong demand for AI chips, IDC expects the semiconductor market to return to a growth trend in 2024, with an annual growth rate above 20%.
ADAS (Advanced Driver Assistance System) & Infotainment Drive Automotive Semiconductor Market Development
Although the growth of the automotive market has remained resilient, the trend of automotive intelligence and electrification is clear and an important driver for the future semiconductor market. ADAS accounts for the largest share of the automotive semiconductor market, with a compound annual growth rate (CAGR) of 19.8% by 2027, accounting for 30% of the automotive semiconductor market in that year. Infotainment accounts for the second largest share of the automotive semiconductor market, with a CAGR of 14.6% by 2027, accounting for 20% of the market in that year, driven by automotive intelligence and connectivity. Overall, more and more automotive electronics will rely on chips, which means the demand for semiconductors will be long-term and steady.
Semiconductor AI Applications Spread from Data Centers to Personal Devices
AI is making a big splash because data centers require higher computing power, data processing, complex large language models, and big data analytics. With the advancement of semiconductor technology, it is expected that more AI functions will be integrated into personal devices starting in 2024. AI smartphones, AI PCs, and AI wearable devices will be gradually launched into the market. It is expected that there will be more innovative applications for personal devices after the introduction of AI, which will positively stimulate the increase in demand for semiconductors and advanced packaging.
IC Design Inventory Depletion Gradually Ends, Asia-Pacific Market Expected to Grow 14% by 2024
Although the performance of IC designers in the Asia Pacific was relatively sluggish in 2023 due to the long inventory rationalization, most vendors remained resilient despite the pressure of the market. Each vendor was active in investing and innovating in order to remain relevant in the supply chain. . In addition, IC design companies continue to cultivate technologies by leveraging the adoption of AI in client devices and automotive. With the gradual recovery of the global personal device market, there will be new growth opportunities, and it is estimated that the overall market will grow by 14% annually in 2024.
Demand for Advanced Processes in Foundry Industry Soars
The foundry industry has been affected by the inventory correction and weak demand environment, as capacity utilization rates dropped significantly in 2023, especially for mature processes technologies above 28nm. However, due to the rebound in demand for some consumer electronics and the demand for AI, 12-inch fabs have been recovering slowly in the second half of 2023, with the recovery of advanced processes being the most obvious. Looking forward to 2024, with TSMC, Samsung, and Intel's efforts, and the gradual stabilization of end-user demand, the market will continue to rise and it is expected that the global semiconductor foundry industry will grow in double-digits next year.
Growth of China's production capacity and intensified price competition for mature processes
Under the influence of the U.S. ban, China has been actively expanding its production capacity. To maintain its capacity utilization rate, the Chinese industry has continued to offer preferential pricing, which is expected to put pressure on "non-Chinese" foundries. In addition, the inventory of industrial control and automotive IC in the second half of 2023 to the first half of 2024 will have to be de-stocked in the short term, as wafer production is primarily concentrated on mature processes, which will continue to put pressure on suppliers and their ability to regain bargaining power.
The CAGR of 2.5/3D Packaging Market is expected to be 22% from 2023 to 2028
As the functionality and performance requirements of semiconductor chips continue to improve, advanced packaging technologies are becoming increasingly important. The 2.5/3D package market is expected to grow at a CAGR of 22% from 2023 to 2028, making it an area of high interest in the semiconductor package testing market.
CoWoS Supply Chain Capacity Expands Twice, Boosting AI Chip Supply
The wave of AI has led to a surge in server demand, which relies on TSMC's advanced packaging technology CoWoS. Currently, there is still a 20% gap between supply and demand for CoWoS. In addition to NVIDIA, international IC design houses are also increasing their orders. It is estimated that the capacity of CoWoS will increase by 130% by the second half of 2024, and more vendors will actively enter the CoWoS supply chain, which is expected to make the supply of AI chips even more robust in 2024, and will be an important growth booster for the development of AI adoption.
