Global Semiconductor Market Set for Strong Growth, Driven by AI Demand

Semiconductor Market Poised for Robust Growth

The global semiconductor industry is set for a significant rebound, with projections indicating substantial growth in the coming years. According to a recent report by Gartner, Inc., the market is expected to reach $630 billion in 2024, marking a 19% increase from 2023. This upward trajectory is anticipated to continue, with revenues forecasted to hit $717 billion in 2025, representing an additional 14% growth 1 2.

AI as a Key Driver of Growth

The surge in demand for AI-related semiconductors is playing a pivotal role in driving this growth. Rajeev Rajput, Senior Principal Analyst at Gartner, notes that the market's expansion is primarily fueled by "a continued surge in AI-related semiconductor demand and recovery in electronic production" 1. This trend underscores the increasing importance of AI technologies across various sectors and their impact on the semiconductor industry.

Memory Market and GPUs: Catalysts for Revenue Boost

The memory market and graphics processing units (GPUs) are expected to be significant contributors to the semiconductor industry's revenue growth in the near term.

Memory Market Outlook

The worldwide memory revenue market is forecast to grow by 20.5% in 2025, reaching $196.3 billion 2.
NAND flash memory prices are projected to increase by 60% in 2024, with revenues expected to reach $75.5 billion in 2025 1.
DRAM revenues are anticipated to grow from $90.1 billion in 2024 to $115.6 billion in 2025 2.

GPU Market Projections

After a dip in 2023, GPU revenue is set to rebound, with a projected 27% increase in 2025, reaching $51 billion 1 2.
GPUs continue to dominate the training and development of AI models, further driving their demand.

High-Bandwidth Memory (HBM) Demand Surge

The demand for high-bandwidth memory, a specialized solution for high-performance AI servers, is seeing a steep rise. George Brocklehurst, VP Analyst at Gartner, highlights that "Vendors are investing significantly in HBM production and packaging to match next-generation GPU/AI accelerator memory requirements" 1. HBM revenue is expected to increase by more than 284% in 2024 and 70% in 2025, reaching $12.3 billion and $21 billion, respectively 2.

Shift Towards AI Inference

The market is now transitioning to a return on investment (ROI) phase, where inference revenues need to grow to multiples of training investments. Gartner analysts predict that by 2026, more than 40% of HBM chips will facilitate AI inference workloads, compared to less than 30% today 2. This shift is primarily due to increased inference deployments and limited repurposing of training GPUs.

Challenges and Opportunities

While the overall outlook is positive, the report notes that demand from automotive and industrial sectors continues to be weak 1 2. This presents both a challenge and an opportunity for the semiconductor industry to diversify and strengthen its presence in these sectors.

As the semiconductor industry navigates this period of growth, it is clear that AI technologies will continue to play a crucial role in shaping the market's future. The industry's ability to meet the increasing demand for AI-related components while addressing challenges in other sectors will be key to sustaining this growth trajectory.