IDC Predicts 12% Drop in Semis for 2021, Followed by 20% Surge in 2022

2023 Semiconductor Market Predictions

The semiconductor market is set to undergo significant changes in the coming years, according to a report by IDC. The market, which was valued at $598 billion in 2022, is expected to decline by 12% in 2023, reaching $526 billion. However, the report also predicts a strong rebound in 2024, with the market growing by 20% to reach $633 billion.

Several factors are expected to drive this growth. One key factor is the depletion of inventory in various sectors such as PCs, smartphones, automotive, and industrial. As these industries recover from the disruptions caused by the pandemic, demand for semiconductors is expected to increase. Additionally, the electrification of the automotive and industrial sectors is expected to contribute to the growth of the semiconductor market.

Another significant driver of growth is the increasing adoption of artificial intelligence (AI) in PCs and smartphones. AI-powered devices are becoming more prevalent, and this trend is expected to continue in the coming years. The rising demand for AI-enabled devices will lead to an increase in semiconductor sales. Furthermore, the report highlights the rising average selling prices (ASPs) of memory chips, which will also contribute to the overall growth of the market.

While the overall market is expected to decline in 2023, the report suggests that wafer capacity pricing will remain flat. This is due to the gradual improvement in utilization rates by foundry suppliers and the return of demand from their core fabless customers. These factors will help stabilize pricing in the market.

Looking ahead to 2024, the report predicts that capital expenditure (CapEx) will improve in the second half of the year. This improvement is expected to be driven by revenue shipments matching end demand and regional ChipAct incentives stimulating investment across the semiconductor supply chain. These investments will help boost production capacity and support the growing demand for semiconductors.

Finally, the report highlights the increasing importance of AI silicon in the semiconductor industry. By 2026, IDC expects AI silicon to account for almost $200 billion in semiconductor revenues. This underscores the growing significance of AI technology and its impact on the semiconductor market.