What awaits the global semiconductor market in 2024

Last year’s chip market correction, caused by the overproduction crisis, is close to completion. Already in the fourth quarter, technology companies began to record an increase in demand both for the chips themselves and their components for a wide range of industries, and for final products in the consumer market (PCs, smartphones, etc.). This year, experts expect the global semiconductor market to grow by 13–20%. However, in a highly competitive environment, some companies may find themselves left behind this trend.

There’s no turning back

Last week, several leading technology companies reported growth in sales of chips and processors in the last quarter of last year. American AMD had fixed an increase in quarterly revenue by 10%, to $6.17 billion, and an increase in profit by almost 32 times, to $667 million. South Korean Samsung’s microprocessor production division began to reduce losses: if in the third quarter the loss was more than $2.2 billion, then in fourth – $1.6 billion. The company also noted that the DRAM chip production division returned to profit. American Qualcomm increased quarterly profit by 24% thanks to demand for chips for smartphones.

Corporate reporting by companies for the last quarter of last year reinforces previously published assumptions by research companies about how the global semiconductor market will develop in 2024. According to forecasts IDCthe global semiconductor industry has every chance of strong growth this year.

The leveling off of the situation with demand for smartphones and PCs, the ongoing recovery of the auto industry and a surge of interest in the development of artificial intelligence (AI) should together provide very positive dynamics for the chip market.

“All of these factors will lead to an overall recovery of the semiconductor industry in 2024,” said Galen Zen, senior manager of semiconductor research for the Asia/Pacific region at IDC. “Supply chains, development, manufacturing and testing – all key components of the market will say goodbye “negative trends in 2023.” IDC notes that the most difficult situation arose in the first half of last year, when the chip market dropped by 20% due to weak demand. But already in the second half of the year the situation began to improve, which made it possible to hope for a recovery in 2024.

One of the growth drivers may be the memory chip segment, which experienced the most significant decline last year – by 40%. However, a drop in the production of these chips against the backdrop of increased demand at the end of 2023 will push prices up. At the same time, the growing distribution of high-bandwidth memory (HBM) will ensure high demand for such chips, which will give the entire semiconductor market additional incentive. For the chip market as a whole, IDC predicts growth of approximately 20% in 2024.

Among the drivers, the researchers also mention the growing penetration of advanced driver assistance systems (ADAS) and infotainment systems in cars. Another important factor, according to many researchers, should be AI technologies. “The demand for AI-enabled technologies is becoming increasingly important. Data centers need more computing power, more complex language models and analytical models for big data, notes IDC. At the same time, more and more smartphones, PCs and wearable devices using AI will appear on the market. More and more innovative applications for personal devices will use AI, which will positively impact the demand for semiconductors and related industries.”

According to researchers from Deloittein 2024, sales in the global chip market will grow by 13% compared to the previous year – to $588 billion, reaching the levels of 2022, when there was rush demand for chips after the lifting of coronavirus restrictions.

Deloitte also expects a recovery in the consumer electronics market, which is closely tied to the chip industry. The company predicts that in 2024, sales of PCs and smartphones will increase by 4%.

“The recovery of this segment is critical for the entire semiconductor industry: in 2022 alone, sales in this segment accounted for 56% of total semiconductor sales,” Deloitte emphasizes.

Not everyone benefits from trends equally.

January 24, the world’s largest manufacturer of lithographic equipment for chips, the Dutch company ASML reported, that in the fourth quarter of 2023, net sales grew by 12.5% ​​year on year to reach €7.2 billion, and net profit increased by 9% to €2 billion. The figures were higher than the forecasts of analysts and ASML management. But despite better-than-expected results, the Dutch company careful forecasts for the current year. “The semiconductor manufacturing industry is still going through the low point of the cycle,” ASML CEO Peter Wennink said in a statement.

January 26 Intel Corporation quotes collapsed by 12%, after the company published a pessimistic forecast for the first quarter of this year. This drop was a record for Intel since July 2020, when the whole world was experiencing the COVID-19 pandemic.

The day before, the company said that in the first quarter of the year it expects revenue in the range of $12-13 billion, while analysts surveyed by LSEG expected $14.2 billion. Intel CEO Patrick Gelsinger explained that the weak results of the first quarter will most likely be affected by not very successful operations Mobileye company, which develops “smart” technologies for the automotive industry – Intel is the majority shareholder of this company.

Mr. Gelsinger added that Intel’s core PC and server chip operations remain “normal,” with sales for the current quarter likely to be at the lower end of forecasts. Experts and investors regarded such statements from Intel as a sign that the company is not yet able to properly take advantage of the recovery in the chip market and the rapid development of AI. “AI seems to work well on everyone except Intel,” said Reuters Hans Mosesmann, an analyst at the investment company Rosenblatt Securities.— The lack of growth vector in relation to AI points to another year of transition (for Intel.— “Kommersant”)”.

The government won’t leave you

Another stimulus for the semiconductor market this year could come from new government support measures. January 27 The Wall Street Journal (WSJ), citing unnamed knowledgeable sources, reported that in the coming weeks, the Joseph Biden administration will announce new measures to support the development and production of chips in the United States. Government subsidies will be received not only by American companies such as AMD, Micron, Intel, but also by South Korean Samsung and Taiwanese TSMC. New support measures will be implemented as a continuation of those adopted in 2022 CHIPS and Science Act on stimulating scientific research, technological development and production of advanced semiconductors in the United States.

According to WSJ sources, the Biden administration will announce new multi-billion dollar subsidies to expand chip production in February – early March.

These measures will affect TSMC factories in Phoenix (Arizona), Samsung in Dallas (Texas), Intel in Arizona, Ohio, New Mexico and Oregon, Micron in New York state. “At the beginning of the year, we will announce certain measures to move forward,” Michael Schmidt, director of the US Commerce Department’s Office of Semiconductor Industry Development, told the publication, without going into details.

January 30 in Washington took place new meeting of EU and US representatives to promote trade and cooperation in technology. It was attended by Executive Vice President of the European Commission Margrethe Vestager, Executive Vice President of the European Commission Valdis Dombrovskis, US Secretary of State Antony Blinken, US Secretary of Commerce Gina Raimondo and others. During the meeting, representatives of the EU and the US agreed to continue cooperation in the development and production of semiconductors, joint investments in this industry, coordination of supply chains between European and American manufacturers, etc. One of the results of such cooperation between the EU and the USA has previously become joint agreements between Intel and the German government to expand existing and build new Intel facilities in Magdeburg. The American company will invest €30 billion in these projects, and the German authorities will invest another €10 billion.

Evgeny Khvostik