Eight major trends will shape the semiconductor market in the upcoming year of 2024, IDC said in its forecast report.
Galen Zeng, Senior Research Manager at IDC Asia Pacific, highlighted the key drivers and changes anticipated for the semiconductor industry.
#1 Semiconductor Sales Market Recovery
After a challenging period marked by supply chain inventory depletion and a decline in market demand, IDC projects a significant recovery in the semiconductor sales market in 2024. The memory market’s reduction in production and the rise in demand for AI chips are expected to be the prime drivers, propelling the market towards an annual growth rate exceeding 20 percent.
#2 Automotive Semiconductor Market’s Evolution
The automotive sector’s shift towards intelligence and electrification will play a pivotal role in semiconductor market growth. Advanced Driver Assistance Systems (ADAS) and Infotainment systems will command a substantial share of the automotive semiconductor market, driven by a compound annual growth rate of nearly 20 percent and 15 percent, respectively, by 2027.
#3 AI Integration into Personal Devices
The influence of AI, primarily confined to data centers, is expected to expand into personal devices like smartphones, PCs, and wearables. This anticipated integration is foreseen to introduce innovative applications, fueling increased demand for semiconductors and advanced packaging.
#4 Asia-Pacific IC Design Market Growth
Despite a sluggish performance in 2023 due to inventory adjustments, IC design companies in the Asia-Pacific region are projected to rebound strongly in 2024. Investments in AI technology for client devices and automotive applications are anticipated to drive a 14 percent annual market growth.
#5 Rise in Demand for Advanced Processes in Foundries
Following a slump in demand and capacity utilization rates in 2023, the foundry industry is poised for recovery driven by the resurgence in consumer electronics and AI demand. Efforts from major players like TSMC, Samsung, and Intel are expected to further bolster the market.
# 6 China’s Production Capacity and Competitive Pricing
China’s aggressive expansion of production capacity, coupled with preferential pricing strategies, is set to intensify competition, particularly in mature process technologies. This move might pressure non-Chinese foundries and impact supplier bargaining power.
# 7 Growth of 2.5/3D Packaging Market
Advanced packaging technologies, essential for meeting evolving chip requirements, are expected to witness a robust growth trajectory. The 2.5/3D packaging market is projected to grow at a CAGR of 22 percent from 2023 to 2028, signaling its increasing importance in the semiconductor package testing market.
# 8 Expansion of CoWoS Supply Chain Capacity
The surge in AI-driven server demand, reliant on TSMC’s CoWoS advanced packaging technology, is driving a significant gap between supply and demand. An estimated 130 percent increase in CoWoS capacity by the latter half of 2024, along with more vendors entering the supply chain, is anticipated to bolster AI chip supply, fostering further AI adoption.