We anticipate that global semiconductor revenues will grow more than twice as fast as global GDP, reaching over $1 trillion by 2030. This report highlights three key drivers of this growth and two significant trends.
Global semiconductor market forecast by component type, 2023-2030 ($bn)
Source: Omdia
Memory enters a new frontier
Memory ICs have been the fastest-growing semiconductor category over the past two decades, with DRAM and HBM standing out. DRAM will account for 14% of total semiconductor revenue in 2024, while HBM, optimized for high-performance parallel computing and AI workloads, is expected to grow rapidly with a 64% CAGR in bit growth and a 58% CAGR in revenue through 2028.
HBM enhances AI application performance by leveraging high throughput and low latency, as seen in NVIDIA and AMD GPUs. The broader DRAM market is driven by cost and scale, while HBM, due to its advanced technological requirements, represents a high-barrier, closed-loop ecosystem. Starting with HBM4, collaboration between foundries and memory companies will become essential as logic and memory chips start to merge and the market requires the semiconductor players to better incorporate various customer.
HBM & DRAM market forecast, 2023-2028 ($bn)
Source: Omdia
Automotive semis shift into high gear
The automotive semiconductor market is undergoing a substantial transformation driven by the adoption of EVs and the emergence of software-defined vehicles (SDVs). The automotive semiconductor market size reached a high of $76bn in 2023 and is expected to grow, over the next five years, to $117bn with CAGR of 8.9%.
Electrification
The shift to vehicle electrification has boosted demand for power semiconductors, particularly in EV systems like inverters and battery management. Wide bandgap (WBG) devices, such as silicon carbide (SiC) and gallium nitride (GaN), are gaining traction for their superior efficiency and are projected to reach $6 billion, comprising 18% of the market by 2028.
SDV
Automotive SoC revenue reached $7 billion in 2023 and is projected to grow at a CAGR of 17% through 2028, driven by the central role of high-performance systems-on-chip (SoCs) in SDVs for real-time data processing, ADAS control, security modules, and infotainment systems.
Automotive semiconductor market forecast, 2019-2028 ($bn)
Source: Omdia
Regional self-sufficiency creates a more resilient supply chain
The COVID-19 pandemic exposed significant supply chain vulnerabilities in the semiconductor industry. In response, the U.S., EU, Korea, China, and other countries launched initiatives to enhance regional self-sufficiency through on-shoring semiconductor manufacturing.
Achieving self-sufficiency poses challenges, as semiconductor manufacturing requires significant scale, including large customer orders, robust infrastructure, and high efficiency. Facilities must maintain high production yields and a utilization rate above 85% to remain competitive, requiring skilled engineering talent.
The industry's competitive nature demands high quality and low costs, and overcapacity risks may arise if multiple regions expand their manufacturing capabilities, leading to intense competition and unsustainable pricing. Balancing these factors is essential for regional self-sufficiency initiatives to succeed.
Approximately 400 billion USD to be granted between 2023 and 2027
US |
To date, $29.5bn in grants have been awarded, and $25.1bn in loans have been approved to 9 companies across 18 projects in 12 states. These projects carry a total investment of over $348bn over two decades, with the vast majority expected to be invested by 2030 |
EU |
Provides for incentives of $46bn. No grants have yet been made |
India |
Plans to spend $10bn on semiconductor incentives, with up to half of the project value |
Japan |
Plans to invest $7bn between newly formed Rapidus and TSMC |
South Korea |
Draws $50bn in investment via the 20% tax credit, providing support equivalent to $90bn |
Taiwan |
Under this act, eligible companies can benefit from a 25% tax deduction on R&D expenses and a 5% deduction on expenditures for new machinery used in advanced processes |
Singapore |
Considered to be the best country outside of the U.S. for government incentives that carry the potential to lower the cost of fab ownership by as much as 25% to 30% |
China |
China has promoted its domestic semiconductor industry for a decade through investment funds, including the National Integrated Circuit Investment Fund ($21 billion in 2014, $35 billion in 2019, and $41 billion in 2023) and local funds, along with incentives like tax breaks and loans. Total government investments are estimated to exceed $190 billion |
Purpose-built silicon
The market for purpose-built, custom ICs is set to grow significantly over the next decade, mainly driven by data center applications like video processing, network security, and AI. Custom ICs, such as Google’s TPU for AI and VCUs for video encoding, have dramatically improved performance and cost efficiency.
The decreasing cost and increased accessibility of design tools and services have democratized custom IC development, enabling even smaller enterprises to participate. By 2028, the data center custom IC market is expected to reach $24 billion annually, with major cloud service providers like Amazon, Google, Microsoft, and Meta leading the way.
Artificial intelligence
AI relies heavily on semiconductors, including GPUs, accelerators, and high-speed HBM chips. The market for AI-specific silicon is projected to reach $150 billion by 2028, underscoring its importance.
However, key challenges remain, including the development of comprehensive custom silicon ecosystems, advanced software tools, and strategies to address post-Transformer AI advancements. Addressing these challenges will be crucial for sustaining growth and maintaining competitiveness in the rapidly evolving AI landscape.
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