The global semiconductor industry is experiencing a remarkable resurgence, with sales projected to reach $588 billion in 2024, marking an 18.7% year-on-year increase. This growth is fueled by strategic investments in advanced technologies and the booming demand for AI chips. The Americas lead regional growth with a 40.1% increase, while the generative AI chip market is expected to exceed $50 billion. Despite geopolitical tensions and export restrictions, particularly affecting China, the industry shows resilience. Companies are focusing on advanced packaging techniques and strengthening cybersecurity measures to navigate challenges and capitalize on emerging opportunities in this dynamic market.
The Semiconductor Industry Association (SIA) reported that global semiconductor sales reached $51.3 billion in July 2024, an 18.7% increase from July 2023’s $43.2 billion. This also represents a 2.7% rise from June 2024’s total of $50.0 billion. The growth trend has continued for the fourth consecutive month, underlining the industry’s strong recovery. SIA President and CEO John Neuffer highlighted the significant year-on-year growth, especially in the Americas, which saw a 40.1% increase in sales.
Regional variances
Regionally, the semiconductor market exhibited mixed results. Besides the Americas’ impressive performance, China saw a 19.5% increase, and the Asia Pacific/All Other region grew by 16.7%. However, Japan and Europe experienced declines of -0.8% and -12.0%, respectively. Month-to-month figures were also varied; while sales grew in the Americas (4.3%), Asia Pacific/All Other (3.9%), Japan (3.3%), and China (0.9%), Europe saw a slight dip of -0.5%.
Equipment billings on the rise
Global semiconductor equipment billings also showed robust growth. According to SEMI, billings increased by 4% year-over-year to $26.8 billion in Q2 2024. This marks a 1% rise quarter-over-quarter. For the first half of 2024, total equipment billings amounted to $53.2 billion. SEMI President and CEO Ajit Manocha attributed this growth to strategic investments in advanced technologies and regional efforts to bolster chipmaking ecosystems.
The demand for advanced technologies, particularly generative AI chips, is a major growth driver. Deloitte predicts that sales of generative AI chips will exceed $50 billion in 2024, accounting for around 8.5% of total chip sales. This market is expected to reach $400 billion by 2027. The industry’s focus on AI is also seen in Intel’s new R&D center in Japan, which aims to enhance EUV lithography technologies.
Geopolitical tensions and export restrictions
Despite the positive trends, the semiconductor industry faces significant challenges due to geopolitical tensions and export restrictions. The U.S. has imposed new restrictions on semiconductor technologies to China, citing national security concerns. These measures have affected the supply of critical equipment, causing tensions between the U.S., China, and their allies. China has warned of economic retaliation against countries like Japan if further restrictions are enacted.
In response to these challenges, countries are forming strategic partnerships to strengthen their semiconductor supply chains. For instance, India and Singapore signed a Memorandum of Understanding (MoU) to enhance market resilience. Additionally, Taiwan has launched the Silicon Photonics Industry Alliance to address AI’s energy efficiency challenges and set global standards for silicon photonics and co-packaged optics (CPO).
Market outlook and future trends
The semiconductor market is expected to continue its upward trajectory. Deloitte forecasts global semiconductor sales will reach $588 billion in 2024, a 13% increase from 2023. The memory chip market, which saw a 31% decline in 2023, is anticipated to recover to 2022 levels. Advanced packaging techniques and smart manufacturing practices will be crucial for maintaining growth. The industry is also focusing on cybersecurity to protect valuable intellectual property and ensure operational resilience.
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