Semiconductor Market Forecast for First Half of 2025

The semiconductor industry is experiencing a remarkable growth trajectory, with estimates suggesting that global revenues will surpass $1 trillion annually by 2030 as per Gartner’s forecast for Q1 of 2025. However, this expansion is not solely about size; it is fueled by the increasing complexity of technological advancements. With the swift adoption of artificial intelligence, the mainstream integration of electric vehicles, and the further development of industrial systems toward the edge, there is a surging demand for cutting-edge silicon that will reshape sourcing strategies across the entire supply chain. Following a gentle landing in 2023, the chip market has rebounded in a remarkable fashion. Gartner’s projections indicate double-digit revenue growth for 2025 and 2026, at 11.8% and 11.2%, respectively. Despite the numerous challenges facing the sector, including volatile memory pricing, escalating geopolitical tensions, and extensive U.S. tariffs, there is overall optimism for a substantial recovery. Given the fluid nature of the current environment, adaptability in sourcing approaches is indispensable. Sourceability offers a solution for OEMs, CMs, and procurement leaders by providing data-driven insights and diversified supplier networks to navigate uncertainties successfully. Leveraging insights from Q1 will enable supply leaders to stay competitive and agile in the market as we progress into the latter half of the year.

The semiconductor industry’s growth outlook appears robust in the coming months, with Gartner’s forecast indicating a climb in global semiconductor revenue from $598 billion in 2024 to $733 billion in 2026. With a more extended timeline, industry revenue is predicted to exceed $924 billion by 2029, boasting a healthy compound annual growth rate (CAGR) of 7.1%. This growth is a promising sign of sustained demand across various sectors. One of the primary drivers of this growth is the surge in the demand for AI infrastructure, specifically in high-performance data centers utilized for LLM training. The need for GPUs, custom ASICs, and AI-optimized processors continues to outpace supply, catalyzing growth in high-performance computing silicon. Considering the prevalent integration of artificial intelligence across diverse industries, this demand is anticipated to remain robust, making it a substantial revenue driver in the chip industry in the near term. Looking further ahead, there is an expectation that the focus will transition towards the edge, with significant growth projected in industrial automation, robotics, and distributed AI workloads necessitating intelligent edge devices, thereby exerting new pressures on sourcing strategies.

The automotive electronics segment has been witnessing a steady increase in the number of semiconductors per vehicle in recent years, a trend accentuated by the chip shortages experienced in 2020 and 2021 due to the pandemic. The automotive semiconductor market, predicted to reach nearly $116 billion by 2029 from $80.8 billion in 2024, is primarily driven by electrification and autonomous driving platforms. Furthermore, the consumer device segment, comprising smartphones and PCs, has shown signs of stabilization following multiple lackluster years. Gartner foresees a return to moderate growth in both smartphones and PCs buoyed by balanced memory inventory levels and an uptick in refresh cycles.

Although the overall semiconductor demand is on the rise, the memory market remains tumultuous with fluctuating pricing trends, persistent volatility, and mounting pressure from AI applications. After hitting a low point in 2024, Gartner anticipates a stabilization in DRAM prices, with a projected 2.5% increase in 2025 followed by a 5.5% rise in 2026. The explosive demand for high bandwidth memory (HBM) in AI accelerators is driving this growth with a 21.7% CAGR from 2024 to 2028. However, as AI servers consume a considerable portion of the DRAM supply, conventional server DRAM is being sidelined in favor of higher margins, tightens the availability for buyers. Procurement leaders sourcing DRAM for non-AI applications should expect shorter pricing cycles and less pronounced corrections compared to previous downturns. Nonetheless, Samsung’s announcement to phase out DDR4 products by 2025 could lead to significant disruptions, leaving gaps in the market that even market leader Micron will struggle to fill adequately. In contrast, the NAND market is under pressure, and NAND prices are expected to decrease by 6.4% in 2025 due to insufficient demand from consumer devices and high fab costs, with a potential recovery projected for mid-2026 as supply and demand equilibrate.

HBM has emerged as a key growth driver and bottleneck in the semiconductor market, evolving from a specialized technology to a critical component of the AI hardware ecosystem. Its ability to provide substantial memory bandwidth in a compact form has positioned it at the core of AI hardware configurations, underpinning its significance in driving AI applications and semiconductor advancements.