Time: 2024.06.06
The World Semiconductor Trade Statistics (WSTS) said in its forecast that the global semiconductor market is expected to achieve 16% growth in 2024 to $611 billion, up 16% from the previous year.
The revision is part of WSTS's adjusted 2024 spring forecast, reflecting strong performance in the past two quarters, especially in the computing end market.
The Americas semiconductor market will reach $168.062 billion in 2024 and $192.941 billion in 2025.
The Asia-Pacific semiconductor market will reach $340.877 billion in 2024 and $382.961 billion in 2025.
In 2024, two major integrated circuit categories are expected to drive full-year growth with double-digit growth: logic devices will grow by 10.7% and memory will grow by 76.8%. Other categories, such as discrete devices, optoelectronics devices, sensors and analog semiconductors, are expected to see single-digit declines.
The Americas and Asia Pacific are expected to grow by 25.1% and 17.5%, respectively. Europe is expected to grow by 0.5%, while Japan is expected to decline by 1.1%.
WSTS predicts that the semiconductor market will grow by 12.5% in 2025, reaching a valuation of $687 billion. This growth is expected to be driven mainly by the memory and logic sectors, which are expected to soar to more than $200 billion each in 2025, with the memory sector growing by more than 25% over the previous year and the logic sector growing by more than 10%. All other sectors are expected to achieve single-digit growth rates.
All regions will continue to expand in 2025. The Americas and Asia Pacific are expected to maintain double-digit growth.
Analysts are bearish on chips and have significantly lowered their growth forecasts: from 16% to 4.9%
Future Horizons founder and analyst Malcolm Penn lowered his 2024 global chip market growth forecast to 4.9% from the previous 16%.
Penn said he was forced to make major adjustments after global chip sales data "plummeted" in the first quarter. Penn asked himself whether sales in the first quarter of 2024 could be compared to a "fender bender" car accident or a train wreck, and concluded that it was the latter. "It's a farewell to the good times ahead," he said.
Penn said he had been concerned about the market growth figures of 16% plus or minus 4% in January, even though he reported them in January. His concern at the time was that the recovery was driven by an increase in the average selling price of chips, but there was no increase in unit shipments. He further pointed out that unit shipments remained flat and a full recovery could not be carried out without new demand.
Penn's other point is that the current boost in chip market growth is the result of a comparison with the weak market in early 2023. This comparison will begin to ease in 2H24. He believes that the automotive and industrial markets have rebuilt inventories and that underlying demand is now driven by the still uncertain global economic outlook. Penn also said he thinks it’s too early to expect a consumer electronics rebound driven by replacement cycles starting in 2024.
He told attendees of a market analysis seminar that he now finds his concerns justified.
“The ASP-led recovery is unusual. In fact, it has never happened in 50 years. Unit growth is nonexistent. Fab capacity utilization is mostly in the 70% to 75% range. The bulk of the chip market is not Nvidia GPUs and AI applications,” he said.
Even TSMC, the master of chip production, recently cut its semiconductor industry forecast for 2024. There is still hope that AI chips for smartphones and PCs will stimulate a refresh cycle for consumer electronics spending in 2H24, but Penn expressed skepticism, saying AI in smartphones feels like no big deal.
Weak automotive and industrial spending reflected in the current Japanese and European chip markets is weighing on the market. “We can’t claim an economic recovery until IC units resume growth,” he said.
Penn believes that continued economic and political uncertainty in 2024, coupled with an election at the end of the year, could shorten what is essentially a short-lived “spreadsheet recovery.” Penn said he now expects ASPs to adjust in 2H24.
There are some better signs ahead, Penn said, but there are also some red flags.
The industry is finally cutting back on capital spending. He said capital spending peaked in the first quarter of 2023 and that weak capex could last all year. That is, unless you’re in China, where companies are buying every piece of chipmaking equipment they can get. Of course, U.S. export controls prohibit them from using much of the chipmaking equipment.
“China accounts for just under half of global (semiconductor) capital spending, or 47.2%. China’s capex is a clear signal,” Penn said. He said he expects Chinese chip production to grow 60% over the next three years and double in five years. “China is preparing to do exactly the same thing they did in electric vehicles, batteries, and solar panels; flood the market and take market share.”
Penn said he currently expects market growth in 2024 to be between a low of 3.5% and a high of 8.0%, with a possible outcome of 4.9%, or a market size of $553 billion.
Penn is now a pessimistic forecaster, and most semiconductor market analysts still predict that the annual growth rate of the global chip market in 2024 will be between 13% and 20%. SIA Executive John Neuffer said while releasing the first quarter 2024 chip market data that double-digit annual growth is expected in 2024.
