The International Data Corporation (IDC) has increased its semiconductor market revenue outlook amid an expected return to growth, as the US market is set to remain resilient from a demand standpoint and China starts recovering by the second half of 2024.
The IDC’s new forecast shows that the worldwide semiconductor revenue is expected to decrease 12% from $598-billion in 2022 to $526.5-billion in 2023, an improvement from the $518.8-billion forecast initially tabled in September 2023.
For 2024, the IDC sees year-on-year revenue growth of 20.2% to $632.8-billion, up from the $625.9- billion outlined in the prior forecast, upgrading its market outlook to growth as the semiconductor market returns to sustained growth.
“Owing to increased inventory rationalisation, visibility in the channel and increasing demand pull from artificial intelligence (AI) server and end-point device manufacturers, the IDC has upgraded its semiconductor market outlook to sustainable growth from ‘trough’ and called the bottom of the correction,” said IDC worldwide semiconductor supply chain technology intelligence research manager Rudy Torrijos.
“Revenues will continue to recover gradually and accelerate in 2024. “The semiconductor market reached the bottom and has started to grow on a quarter-on-quarter basis,” added IDC semiconductors and enabling technologies group VP Mario Morales.
According to the new forecast, the IDC expects better semiconductor growth visibility as the long inventory correction subsides in two of the largest market segments: personal computers (PCs) and smartphones.
Automotive and industrials’ elevated inventory levels are expected to return to normal levels in the second half of 2024, as electrification continues to drive semiconductor content over the next decade.
Further, technology and large flagship product introductions will drive more semiconductor content and value across market segments from 2024 until 2026, including the introduction of AI PCs and AI smartphones next year and an improvement in memory average selling prices (ASPs) and dynamic random access memory (DRAM) bit volume, the IDC outlined in its updated forecast.
“ASPs are improving in DRAM, which is a good early indicator, and the IDC expects suppliers will continue to control capacity additions and use rates to drive a sustainable recovery,” said Morales, also noting that accelerating demand for AI servers and AI-enabled end-point devices will drive more semiconductor content in 2024 to 2026, fuelling a new upgrade cycle across enterprises.
“We expect that, by the end of our forecast period, AI silicon will account for almost $200-billion in semiconductor revenues.”
Wafer capacity pricing will remain flat next year as foundry suppliers gradually improve use rates and demand returns from their core fabless customers.
While inventory levels remain elevated with suppliers, visibility has clearly improved in the channel and with original-equipment manufacturers in key market segments, the IDC commented.
“We see revenue growth matching end-user demand beginning in the first half of 2024. As a result, we expect capital expenditure to improve subsequently, initiating a new investment cycle within the supply chain,” Morales concluded.