With hopes for 2025, despite seasonal and economic uncertainties, the worldwide semiconductor sector showed a strong 2024 finish with 2 per cent growth, fueled by AI and HPC demand.
The global semiconductor manufacturing sector closed out 2024 with a reassuring fourth-quarter performance and year-on-year (YoY) growth across most key segments, according to a report from SEMI and TechInsights.
After a weak first half of 2024, electronics sales rebounded in the latter part of the year, ending with a 2 per cent annual growth. Sales increased 4 per cent YoY in 4Q24, and although seasonality is expected to moderate expansion, a further 1 per cent YoY rise is forecast for 1Q25.
Besides, integrated circuit (IC) sales grew 29 per cent YoY in 4Q24, driven by heightened demand for high-performance computing (HPC) and data centre memory chips, with a 23 per cent YoY increase expected in 1Q25 as AI adoption continues to fuel the market.
From approximately $105 billion in 1Q23 to $125 billion by 4Q23. This trend continued through 2024, with sales reaching $165 billion in 4Q24 before an expected slight quarter-on-quarter (QoQ) decline to $157 billion in Q1 2025.
The report, however, stated that despite positive momentum from significant investments in artificial intelligence (AI) applications, the outlook for early 2025 remains cautiously optimistic as seasonal trends and broader economic uncertainty could slow short-term growth.
It also revealed a breakdown of IC sales, highlighting that memory ICs have gradually increased in revenue, from $20 billion in early 2023 to a projected $45 billion in late 2024. Meanwhile, logic IC sales, which form the larger share of total IC revenue, grew from $85 billion in 1Q23 to $120 billion by the end of 2024.
Capital expenditures (CapEx) in the semiconductor industry followed a similar trajectory, with declines in early 2024 followed by a strong recovery in the latter half of the year. This resulted in 3 per cent annual growth for 2024. Investment in memory manufacturing led the surge, jumping 53 per cent QoQ and 56 per cent YoY in Q4 2024.
Meanwhile, non-memory CapEx also grew, rising 19 per cent QoQ and 17 per cent YoY in the same period. The momentum is expected to continue into 1Q25, with CapEx forecast to rise 16 per cent YoY, largely driven by investments in expanding high-bandwidth memory (HBM) capacity to support AI-driven applications.
Moreover, Spending on semiconductor capital equipment remained strong, particularly in areas such as leading-edge logic, advanced packaging, and HBM expansion. Wafer fab equipment (WFE) spending rose 14 per cent YoY and 8 per cent QoQ in 4Q24, with total quarterly billings projected at around $26 billion for 1Q25. Although China continued to be a major player in WFE investment, its contributions started to slow towards the end of the year.
In addition, back-end equipment investment surged in 4Q24, with the ‘Test’ segment rising 5 per cent QoQ and a remarkable 55 per cent YoY, while the ‘Assembly and Packaging’ segment grew 15 per cent YoY. Both segments are expected to continue growing 6-8 per cent QoQ in 1Q25.
The industry also saw record wafer fab capacity expansion, surpassing 42 million wafers per quarter (in 300mm equivalent) in 4Q24. This is expected to increase to 42.7 million wafers in 1Q25.
Growth was most substantial in foundry and logic-related capacity, which expanded 2.3 per cent QoQ in 4Q24 and is forecast to increase a further 2.1 per cent in Q1 2025 as demand for advanced node production rises. Plus, memory capacity grew 1.1 per cent in 4Q24 and is expected to remain steady in 1Q25, supported by sustained demand for HBM.
As AI applications continue to shape semiconductor demand, the industry is poised for further expansion in 2025, though economic headwinds and seasonal variations could influence short-term trends.
“As we begin the year, our expectation is for stronger performance in the second half, with semiconductor sales anticipated to remain flat sequentially in the first half, followed by a notable double-digit increase in the latter half,” said Boris Metodiev, Director of Market Analysis at TechInsights.
He further noted, “Inventory challenges persist for discrete, analogue, and optoelectronic manufacturers, which will need to be addressed before we can expect widespread growth to resume.”
