Semiconductor market to double within 10 years

Recently, TechInsights conducted long-term forecasts for the semiconductor and device market:

2024 is projected to be a record-breaking year in terms of industry revenue.

The entire semiconductor market is expected to reach its previous peak in 2022.

Over the next decade, the market is anticipated to grow by more than double, generating revenue exceeding one trillion US dollars.

2023: Challenging Start, Strong Finish

TechInsights points out that 2023 is a challenging year for the industry. Despite a surge in consumer spending driven by lockdowns in previous years, semiconductor demand is weak, there is oversupply, and the global economy is facing difficulties, collectively resulting in a robust economic downturn.

The rise of Artificial Intelligence (AI) has captured public interest. As AI access becomes more democratized, there is a strong demand for chips supporting this revolution. Logic chips used for generative AI primarily target data centers used by cloud computing providers. The order quantity is in the thousands, not the billions of integrated components (IC) required for the mobile phone market. While cloud AI represents a small fraction of the market in terms of quantity, it reflects broader changes occurring in the industry. Despite a general decline in integrated circuit shipments, the Average Selling Price (ASP) has significantly increased.

The recovery narrative revolves around revenue, not shipment quantities. TechInsights' tracking shows that, despite a 2% continuous decline in IC shipments in the second quarter, IC market revenue grew by 10% in the third quarter of 2023. The increasing average selling prices of advanced use cases like AI offset the decline in consumer electronics.

2024 Recovery to Strengthen

We anticipate this recovery to continue until the end of this year and strengthen over time until 2024. TechInsights predicts that with the recovery of consumer confidence and increased spending on electronic products, shipments will resume growth. Consumer electronics revenue is expected to grow by 5%, stimulating an 11% increase in IC shipments. Coupled with enhanced average selling prices, 2024 is expected to be a record-breaking year. Calculated by revenue, we expect the IC market to grow by 17% year-on-year.

Long-term Outlook

In the coming years, we anticipate double-digit growth to persist until 2026. The industry has not experienced consecutive three years of double-digit growth since 1993 to 1996, driven then by the early development of the internet. This time, multiple factors are at play, including Artificial Intelligence, electric vehicles, and the replacement cycle of consumer electronics purchased during lockdowns.

By 2033, we project semiconductor revenue to double, surpassing one trillion US dollars. In other words, if the semiconductor industry were a country, it would be the world's 20th-largest economy, slightly ahead of Switzerland. It is not surprising that governments worldwide are investing to attract semiconductor companies and ensure supply chain security for various products. This is an industry experiencing rapid economic growth.