The semiconductor market is set to return to growth in a big way in 2024 as it grows some 20.2% year-over-year after a dramatic downturn in 2023, according to new research from International Data Corp (IDC).
Chip revenues are expected to rise to $632.8 billion during 2024, that’s up from a forecasted $526.5 billion this year, IDC said. The revenue in 2023 is down 12.0% from the revenue garnered in 2022 by the semiconductor market when it had revenues of $598 billion.
IDC gave several reasons for the growth in revenues in 2024 including:
- Inventory levels normalizing
- Large flagship product introductions
- Improved memory average selling prices
- Improved DRAM bit volume
- Introduction of new artificial intelligence (AI) PCs
- Introduction of new AI smartphones
"We upgraded our Market Outlook to growth as the semiconductor market returns to sustained growth," said Rudy Torrijos, research manager for worldwide semiconductor supply chain technology intelligence at IDC. "While inventory levels remain elevated with suppliers, visibility has clearly improved in the channel and with OEMs in key market segments. We see revenue growth matching end user demand beginning in 1H24. As a result, we expect capex to improve subsequently initiating a new investment cycle within the supply chain."
Capacity pricing
While semiconductor revenue is expected to soar next year, IDC forecasts wafer capacity pricing to remain flat as foundries improve utilization rates and demand returns from fabless vendors.
Capital expenditures are forecast to improve by the second half of 2024 with revenue shipments matching end demand. IDC said semiconductor inventive and subsidy programs across numerous regions — such as the CHIPS and Science Act in the U.S. and the European Chip Act — will help stimulate investments across the global supply chain.
Accelerated recovery
"Overall, IDC expects the total semiconductor industry to decline by 12% in 2023, which is an improvement from our September outlook. Revenues will continue to recover gradually and accelerate in 2024," said Mario Morales, group vice president of semiconductors and enabling technologies at IDC. "The semiconductor market reached a bottom and has begun to grow on a quarter-over-quarter basis.”
Morales said DRAM average selling prices are improving, a good early indicator of recovery, and IDC sees control capacity additions and utilizations rates driving the recovery even more.
Demand for AI servers and AI end-point devices will drive chip content for the next two to three years. This will fuel a new upgrade cycle across enterprises. IDC forecasts AI silicon, hardware chips dedicated to AI applications, will account for about $200 billion in semiconductor revenues by 2026.
The full research can be found in IDC’s Worldwide Semiconductor Technology Supply Chain Intelligence report.
