In the era of rapid development of global technology, the semiconductor industry is moving towards a new peak. According to the latest forecast of the World Semiconductor Trade Statistics Organization (WSTS), the global semiconductor market will reach $697.1 billion in 2025, a year-on-year increase of 11%. This growth not only demonstrates the strong momentum of the semiconductor industry, but also heralds a major shift in the global economy and technology.
Ⅰ Technological innovation: the strong rise of AI chips
The rapid development of artificial intelligence technology has become an important driving force in the semiconductor industry. The popularity of generative AI in particular has significantly boosted market demand. High-performance computing capabilities have become a core competency in all fields, and the semiconductor industry is meeting this demand through technological innovation.
Growth of GPUs and AI-specific chips
1. Computational Semiconductor Market Growth: The computational semiconductors market for AI learning and inference is expected to grow by 17% by 2025, significantly higher than the previous forecast of 10%.
2. Technology upgrades: High-performance chips, including graphics processing units (GPUs) and AI acceleration chips (such as TPUs), are accelerating into the application scenarios of generative AI and large-scale language models.
The market driver of AI
Generative AI requires powerful computing power, and this demand has directly stimulated the market for high-performance chips for AI training and inference. Nvidia, for example, achieved about two-fold sales growth in 2023, mainly due to the hot sales of its AI chips, such as the H100. This trend is expected to continue in the coming years, driving the entire semiconductor industry to new heights.
Figure: The semiconductor market size will soar to $697.1 billion in 2025
Ⅱ Market Transformation: From Smartphones to AI Data Centers
The growth of the smartphone market has slowed down
Smartphones have long been the main market for the semiconductor industry, but as the market has become saturated, its contribution to the industry's growth has weakened significantly. Global smartphone shipments in 2023 fell by 5% year-on-year, forcing the semiconductor industry to find new growth engines.
The rise of AI data centers
AI data centers are becoming a core driver of the semiconductor market, especially in the Americas, where sales are expected to grow by 15%.
1. High-performance processor demand: AI data centers need high-performance processors that support massively parallel computing, such as AMD's EPYC family and Intel's Xeon chips.
2. Demand for memory chips: The demand for high-capacity memory and storage devices in data centers continues to grow, making HBM (High Bandwidth Storage) and NAND flash memory key products.
Market potential
AI data centers are not only a new driver of semiconductor growth, but also a technological cornerstone for future innovation. Continued investment from tech giants such as Amazon, Microsoft, and Google suggests that this area will be the focus of semiconductor technology development in the coming years.
Ⅲ Geopolitical Implications: Supply Chain Restructuring and Opportunities
Geopolitical factors are reshaping the global semiconductor supply chain, especially the technology game and export controls between China and the United States.
Technological limitations in the United States
1. The U.S. technology blockade of Chinese semiconductor companies has limited China's ability to access advanced chips and manufacturing equipment, creating new uncertainties in global supply chains.
2. But it has also prompted China to accelerate its own R&D and production. For example, Huawei's recently released Mate series chips use an advanced 7nm process, demonstrating the potential for technological breakthroughs in China.
Regionalized supply chain trends
In response to geopolitical risks, global companies are realigning their supply chains:
1. U.S. & Allies: Increase investment in local and friendly countries to build safer supply chains. For example, TSMC's wafer fab in Arizona, USA, is expected to come on stream in 2024.
2. China's internal circulation: China has gradually reduced its dependence on external technologies through policy support to promote domestic substitution.
Global cooperation and competition
Despite heightened geopolitical tensions, the high complexity of the semiconductor industry dictates that global collaboration remains the dominant trend. The advantages of countries such as Japan and South Korea in the field of materials and equipment make them occupy a key position in the new supply chain landscape.
Ⅳ Market demand: Emerging sectors are driving growth
In addition to AI technology, emerging fields such as 5G/6G communication technology and smart cars have also injected continuous growth momentum into the semiconductor industry.
Electric Vehicles & Power Semiconductors
1. Surge in demand for power semiconductors: The need for efficient power conversion in electric vehicles is driving the widespread adoption of WBG semiconductors such as SiC and GaN. These materials are widely used in inverters and charging systems for electric vehicles due to their high power density and ability to operate at high temperatures.
2. Market growth data: According to market research institutions, the global automotive semiconductor market size has reached $50 billion in 2023 and is expected to exceed $70 billion in 2025.
Intelligent driving and SDV
1. Hardware and software decoupling: The software-defined vehicle (SDV) trend is driving the need for high-performance processors, microcontrollers, and memory. The automotive SoC market is expected to grow at an average annual rate of more than 12%.
2. Smart sensors: Autonomous driving requires higher-precision radar and camera modules, all of which are supported by advanced semiconductor processes.
5G/6G communications
The global popularization of 5G technology and the advancement of 6G technology have put forward higher requirements for RF devices, millimeter-wave chips and high-performance network processors. This will further expand the market share of semiconductors in the communications sector.
Ⅴ Conclusions and prospects
The global semiconductor market is undergoing a structural transformation from smartphones to AI data centers, which is affected by emerging technologies, market demand, and geopolitical factors. In 2025, the global market size will reach $697.1 billion just a starting point, and an even bigger breakthrough is expected to be achieved in 2030, when the market size may exceed $1 trillion, with a compound annual growth rate of 8%.
Industry opportunities
1. The full-scale explosion of AI chips: The demand for computing power driven by generative AI will continue to increase, driving the innovation of high-performance computing chips.
2. Growth in emerging fields: Emerging markets such as electric vehicles, 5G/6G, and intelligent driving provide broad development space for semiconductor companies.
3. Reshaping regionalized supply chains: Geopolitical challenges are forcing companies to adjust their strategies, but they are also creating new opportunities for regional cooperation.
Industry challenges
1. Technical threshold: The R&D cost of high-end chips and advanced processes is rising, and only companies with top R&D capabilities can occupy a leading position in the fierce competition.
2. Supply chain uncertainty: Global technology lockdowns and policy changes have put forward higher requirements for industry stability.
Look Forward
In this era full of opportunities and challenges, the semiconductor industry will not only promote the progress of global technology, but also become the core engine of economic growth. With the continuous expansion of AI technology and emerging application scenarios, semiconductor companies need to remain forward-looking in technological innovation and strategic layout to seize the initiative in the next round of growth.
