Chip market to weaken in 2025 says Semiconductor Intelligence

Analyst Semiconductor Intelligence (SC-IQ) sees the global chip market growing by 19 percent annually in 2024 followed by 6 percent growth in 2025, as it expects a deceleration in AI demand and general weakness elsewhere.

The forecast figueres makes the firm amongst the most bullish in the short term and yet the most bearish for 2025.

The global chip market was worth US$166 billion in 3Q24 up 23.2 percent compared with 3Q23. However, a weighted average of guidance for 4Q24 – where available – is calculated at just 3 percent with a big divide between those companies exposed to AI and data center applications and those exposed to the automotive and industrial sectors.

The balance between the market driving impact of Nvidia and AI versus the geopolitical tension and sluggishness in industrial and automotive market is tipping away from AI’s ability to drag the market up, according to SC-IQ and this suggest weakness to come in 2025, the firm said

Nvidia was the world’s largest chip company in 3Q24 with US$35.1 billion in revenue due to its strength in AI GPUs. That total includes memory that Nvidia buys in from SK Hynix, Micron Technology and Samsung revealing the perils of double-counting. Nonetheless Nvidia would still be number one chip company with its memory purchases substracted, SC-IQ said.

However, Intel’s fortunes continue to plummet. The company was the leading chip vendor for decades but ranked fourth in 3Q24. Korean emory company SK Hynix is almost certain to overtake Intel in 4Q24.

Servers, smartphones and PCs will all help drive chip sales in 2025. But the first two categories will show significantly less growth in 2025 than in 2024, said SC-IQ referencing market forecasts from IDC. PCs will show 4.3 percent growth in 2025 compared with 0.3 percent in 2024.

SC-IQ’s assumptions for 2025 are:

• Continued growth in AI, though decelerating
• Healthy memory demand due to AI, but prices moderating
• Mediocre growth for PCs and smartphones
• Relatively weak automotive market
• Potential higher tariffs (particularly in the U.S.) affecting consumer demand