Semiconductor Insights: Highlights from SEMICON SEA 2024 Market and Industry Trends Forum

Philippines, June 2, 2024 — The semiconductor industry is set for a remarkable resurgence by 2025. Data trends indicate that the near-term cyclical downturn has ended, with a bottoming out of the cycle. This recovery is driven by improved end demand and the cessation of inventory normalization. Here are the key takeaways:

Strong Growth Projections:
- Semiconductor sales are expected to experience double-digit growth in 2024 and 2025.
- The equipment and material markets will improve in 2024, followed by robust recovery in 2025.
- China’s investment in mature technology remains strong, with GAA, HBM, and advanced packaging being industry hot spots.
Long-Term Drivers:
- The industry is set to expand to $1 trillion by 2030, driven by AI, high-performance computing, and automotive sectors.
- Investment and capacity growth in semiconductors will diversify geographically over the next few years.

Regional Strengths in Semiconductor Supply Chain

The session highlighted the competitive strengths of various regions in the semiconductor supply chain. Here’s a breakdown:

•••High > ○ Low

Region	IC Design	EDA/IP	IDM	Foundry	Memory	Assembly/Test	Equiptment/Material
Taiwan	●●	●*	●	●●●	●	●●●	●
US	●●●	●●●	●●●	●*	●●	●	●●●
Europe	●	●	●●	●	○	●	●●●
Japan	●	●●	●●	●	●●	●	●●●
Korea	●	○	●●	●●	●●●	●	●
China	●●	●	●	●●	●	●●	●*
SEA	*	○	●	●	●	●●●	●

*Taiwan: EDA/IP – 1.5
*US: Foundey – 1.5
*China: Equipment/Material – 1.5
*SEA – IC Design – .5

Source: SEMI Market Intelligence

Annual Silicon Wafer Shipments Trend by Region

Silicon wafer shipments experienced a 14% decline in 2023 and are projected to decline another 3% in 2024 before rebounding by 19% in 2025.

Asia Pacific: Including Korea, China, and SEA, saw a 16% decline in 2023, expected to remain flat in 2024, and grow by 21% in 2025.
Taiwan: Shipments expected to contract 5% in 2024, projected to increase 16% in 2025.
Japan: Shipment will drop 7% in 2024 but is expected to grow 16% in 2025.
Americas and Europe: 2% and 5% declines respectively in 2024, with high-teen percentage increases expected in 2025.

AI as a Catalyst for Growth

Despite the trials of 2023, the chip industry is poised for a triumphant resurgence in 2024, buoyed by the exponential growth of AI chips. Forecasts paint a picture of record-breaking revenues and market capitalization for leading chip companies. However, amidst this prosperity, challenges loom, with subdued demand outside the realm of AI, coupled with inventory surpluses and underutilization. Geopolitical tensions further threaten to complicate the supply chain and exacerbate raw material shortages. Yet, despite these obstacles, the industry’s long-term trajectory remains robust, with projections pointing towards a monumental milestone of $1 trillion by 2030. As the industry navigates through uncertainty, the evolution of AI chips stands as a beacon of innovation, driving the chip industry towards unprecedented heights of success.

AI Chips: The New Gold Rush

AI chips are poised to redefine the semiconductor industry’s landscape, with projections indicating a staggering $1 trillion market by 2028. Deep learning technologies stand at the forefront, driving exponential growth, particularly in the Asia Pacific region, expected to surge by 45.4% from 2021 to 2028. Vital to this advancement is the development of advanced packaging solutions, crucial for overcoming the “memory wall” challenge and enhancing data transfer rates between processors and memory chips. As the demand for AI capabilities continues to soar, the evolution of AI chips remains pivotal, shaping the trajectory of technological innovation and economic growth worldwide.

Cybersecurity Concerns

Digitalization has made cybersecurity a top priority for semiconductor companies. By 2025, the industry is expected to spend around $36.6 billion on cybersecurity. With 57% of executives seeing it as the main operational challenge and 78% believing their security functions are insufficient, the need is clear. Cyber threats have surged by 41% over three years, with 43% of companies facing incidents and 25% experiencing IP theft in the last year.

As digitalization accelerates, semiconductor companies must prioritize robust cybersecurity measures to safeguard their innovations and maintain competitive advantage in an increasingly threat-laden landscape.

China’s Semiconductor Strategy

Despite escalating Western restrictions, China is rapidly advancing its semiconductor industry. Efforts towards self-sufficiency have led to significant progress in domestic production since 2016, though challenges persist in advanced technologies. Tightened export restrictions could hasten China’s development of indigenous solutions while impeding foreign chipmakers.

Off-Site Manufacturing (OSM) in Semiconductor Industry

OSM is becoming increasingly important for managing supply chain constraints and reducing construction schedules. Off-Site Manufacturing (OSM) is revolutionizing the semiconductor industry by addressing supply chain constraints and accelerating construction schedules. Key benefits include improved safety, material efficiency, consistent quality, and reduced timelines. Crucial for fab expansion, OSM optimizes CAPEX management, enhances resource availability, boosts efficiency, cuts costs, and promotes sustainability, safety, and reliability in construction projects.

This session at SEMICON SEA 2024 Market Insights and Trends Forum provided a comprehensive overview of the semiconductor industry’s current state and future direction. With strong growth projections, advancements in AI, and increasing importance of cybersecurity and OSM, the industry is poised for a resilient and innovative future. The insights gained from these sessions highlight the dynamic nature of the semiconductor market and its critical role not just in Asia but in global technology development.

Senior Commercial Analyst

JENNY ORTILLA