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Global Commodity Intelligence

Q2 2025 | APRIL - JUNE

Market Update: Semiconductor Market's Growth Forecast for 2025

Semiconductor Market Outlook

The global semiconductor market is poised for significant growth in the coming years, despite the fluctuations experienced in recent periods. Gartner projects a robust recovery with semiconductor revenues expected to increase by 19% in 2024, reaching $630 billion, followed by a further 14% growth in 2025, culminating in a total of $717 billion. On the same lines, World Semiconductor Trade Statistics (WSTS) forecasts a 12.5% growth in the global semiconductor market, expecting it to reach an estimated $687 billion in 2025.

This anticipated growth is largely fueled by two main factors, the continued surge in AI-related semiconductor demand and a recovery in electronic production. Regionally, both the Americas and Asia Pacific are expected to maintain their robust double-digit growth on a year-over-year basis. However, sectors such as automotive and industrial continue to show weak demand, which could temper broader market growth.

Memory Market Dynamics

A key driver for this growth is the memory market, which includes both NAND memory and Dynamic Random Access Memory (DRAM). Gartner forecasts that the worldwide memory revenue market will expand by 20.5% in 2025, reaching $196.3 billion. The memory market dynamics are particularly interesting; for instance, NAND memory prices are predicted to soar by 60% in 2024 due to a sustained undersupply.

Similarly, DRAM is set to experience a rebound, driven by improved conditions of undersupply and rising demand for high-bandwidth memory (HBM) and DDR5. This is anticipated to push DRAM revenues up to $115.6 billion in 2025, a significant rise from $90.1 billion in 2024 (Gartner).

High-bandwidth memory (HBM) is another significant area of growth, primarily driven by the demands of high-performance AI servers. Vendors are significantly investing in HBM production to meet the memory requirements of next-generation GPU/AI accelerators. Gartner's analysis suggests that HBM revenue will surge by more than 284% in 2024 and an additional 70% in 2025, eventually reaching $21 billion. Gartner also predicts that by 2026, over 40% of HBM chips will be dedicated to facilitating AI inference workloads, a notable increase from ~ 30% currently.

The Role of GPUs and AI in Market Expansion

Graphics Processing Units (GPUs) have been critical in the training and development of AI models since 2023. These components are expected to see a revenue increase to $51 billion in 2025, marking a 27% rise. This shift highlights the evolving utility and economic impact of GPUs beyond simple hardware components to critical enablers of advanced AI functionalities.

Substantial Investment in Large Fab Equipment

To further strengthen the outlook for the semiconductor industry, significant investments in infrastructure are anticipated. The global semiconductor industry plans to invest a substantial $400 billion in 300mm fab equipment over the next three years. According to SEMI's quarterly 300mm Fab Outlook Report, global spending on 300mm fab equipment is projected to reach a record $400 billion from 2025 to 2027, driven by the regionalization of semiconductor fabs and the escalating demand for artificial intelligence (AI) chips in data centers and edge devices.

This investment is expected to enhance manufacturing capabilities significantly, addressing both the current and future demands for semiconductors. With annual spending projected to grow by 4% to $99.3 billion in 2024, and a 24% increase to $123.2 billion in 2025, this investment sets the stage for a record-setting period of semiconductor manufacturing expansion. The spending is forecast to continue growing, reaching $136.2 billion in 2026 and $140.8 billion in 2027. In the context of regional investments, China is projected to lead followed by South Korea, Taiwan, the United States, and Japan among others.

Strategic Implications & Actions

In conclusion, the global semiconductor market is on a trajectory for sustained growth, supported by technological advances and strategic shifts in demand across various sectors. These trends suggest that companies need to adapt to the shifting demands of AI and memory markets, capitalize on emerging opportunities in high-bandwidth solutions, and navigate the challenges posed by weaker sectors.

The projected growth trajectory for 2025 and beyond has many vendors advising customers to take a long-term view of demand. While current lead times may appear stable, this can change quickly in a growing market, leading to sharp extensions and potential supply chain disruptions. To stay prepared for these shifts, we recommend considering the following strategic approaches:

Enhanced Demand Forecasting: Provide extended and detailed demand forecasts through the end of 2025 on Semiconductor components. Accurate, long-term forecasting will be critical for aligning supplier capacity with your future needs, helping mitigate sudden market fluctuations.
Strategic Inventory Management: Consider safety inventories for critical components throughout 2025 as a safeguard against potential shortages. Regularly monitor and adjust inventory to reflect anticipated demand, balancing availability with cost efficiency.
Multi-Sourcing for Resilience: Where possible, establish multiple vendor sources for standard components. Diversifying suppliers strengthens the ability to address shortages if supply constraints arise.