Analyst: Raised chip forecast

Future Horizons founder and chief analyst Malcolm Penn has raised his forecast for global chip market growth in 2025 to 15%, with a fluctuation of 4%. This forecast is an increase from the 8% growth with a 3% fluctuation that Penn predicted for the market in 2024 back in September. Despite evaluating that 2025 will be a challenging year with a fragile recovery foundation, this forecast still holds. Back in September, Penn's reason was that markets such as automotive and industrial would continue to be weak, memory prices would decrease, and mature process manufacturing might experience oversupply. Penn has always been skeptical of the recent recovery, believing it is based on average selling prices (ASP) holding steady despite unit volumes. He also questions how long the artificial intelligence boom can last, as it clearly does not generate funds through product sales. Nevertheless, he believes the current situation will continue until 2025. The chip market in 2024 is expected to be even hotter than Penn's predictions, with a market size ranging between 625 billion and 630 billion dollars. This appears to be a 20% year-on-year growth, rather than the 15% predicted by Penn, which is already an increase from the 4.9% predicted in May 2024. During a webinar, Penn mentioned in 2024: "We did not predict that the strong momentum of ASP would continue throughout the entire year. We underestimated the growth of AI." Penn stated that for 2025, the International Monetary Fund's GDP would remain stable but the growth rate was not as expected, at only 3.2%. Additionally, with the average selling price starting to decline and no signs of unit growth, this is not a good indicator. Furthermore, there are geopolitical uncertainties and an incoming U.S. president. Penn mentioned that out of the four horsemen of the semiconductor apocalypse he predicted, three are in red light status, while the last onewafer fab utilization rateis flickering amber. Nevertheless, Penn has moved away from the pessimistic views of Semiconductor Intelligence (SC-IQ), with Bill Jewell recently predicting a chip market growth rate of only 6% in 2025. Penn has raised his forecast to 15%, joining the ranks of bearish forecasters like Gartner and surpassing the WSTS, which predicted a 11.2% growth for the chip market in 2025 in December 2024. WSTS adjusts 2025 forecast The World Semiconductor Trade Statistics organization (WSTS) has indicated that while the global chip market is growing, the European chip market is expected to shrink in 2024. WSTS has raised its forecast for the global chip market in 2024, thanks to growth in the Americas and Asia-Pacific regions, but this comes at the cost of a slowdown in growth in 2025. Although it was able to raise growth expectations for the Americas and Asia-Pacific regions for 2024 by 38.9% and 17.5%, respectively, from five months ago, it predicted a decline of 6.7% in annual growth for Europe. In its autumn forecast, WSTS raised its forecast for the global chip market in 2024 to $626.87 billion, a 19.0% increase from the total in 2023. In its spring forecast, it expected a growth of 16.0%. WSTS currently predicts that the global chip market size in 2025 will reach $697.18 billion, with a growth rate of 11.2%, lower than the previous forecast of 12.3%. This still makes WSTS one of the more optimistic forecasters compared to others predicting a range of 6% to 14% for 2025. The upward adjustment in short-term global chip market data reflects improvements in performance in the second and third quarters of 2024, especially in the computing sector driven by the demand for AI-supported chips. Therefore, the growth in 2024 will be driven by memory (expected to grow by 81.0%) and logic (expected to grow by 16.9%). The growth in memory is primarily due to an increase in average selling prices. Europe has almost no computer manufacturing industry and its development is mainly driven by the industrial and automotive sectors, both of which are being hit by low demand and excess inventory. As a result, categories such as discrete devices, optoelectronics, sensors, and analog semiconductors are expected to decline in 2024. The forecast for the following year reflects a more traditional pattern, with the rapid growth of memory being restrained while the percentage growth of discrete devices, optoelectronics, sensors, and analog devices will return to single digits. Semiconductor Intelligence predicts a weak chip market in 2025 The Semiconductor Intelligence (SC-IQ) analyst forecasts that the global chip market will grow by 19% in 2024, but in 2025 it will only grow by 6%, as the company predicts a slowdown in demand for artificial intelligence and general weakness in other areas. These forecast data indicate that the company is most optimistic in the short term, but most pessimistic in 2025. According to data from the World Semiconductor Trade Statistics organization (WSTS), the global chip market was valued at $166 billion in the third quarter of 2024, a 23.2% increase from the third quarter of 2023. However, SC-IQ calculated that the fourth quarter of 2024 for leading chip companies would only be 3%, with a significant gap between companies involved in AI and data center applications and those involved in the automotive and industrial sectors. SC-IQ states that the balancing act between Nvidia's push and AI's impact on the market, the slowdown in industrial and automotive markets, and global geopolitical tensions are offsetting the market pull of AI.Strength, the company indicates, this indicates a softening by 2025.With its strength in the AI GPU field, Nvidia was the world's largest chip company in the third quarter of 2024, with revenue reaching $35.1 billion. This total includes memory purchased by Nvidia from SK Hynix, Micron Technology, and Samsung, exposing the risk of duplicate calculations. However, SC-IQ suggests that even after subtracting memory purchases, Nvidia will still be the largest chip company. On the other hand, Intel's fate continues to decline. The company has been a leading chip supplier for decades, but in the third quarter of 2024, it ranked fourth. It is almost certain that South Korean memory company SK Hynix will surpass Intel in the fourth quarter of 2024. In 2025, servers, smartphones, and personal computers will all help drive chip sales. However, SC-IQ quotes IDC's market forecast, stating that the growth of the first two categories in 2025 will be much lower than in 2024. SC-IQ states that due to the push for AI support in devices, the personal computer market will grow 4.3% in 2025, compared to 0.3% in 2024. The company indicates that this is still a relatively weak driving factor. SC-IQ's assumptions for 2025 are: - Artificial intelligence continues to grow, though at a slower pace - AI drives healthy memory demand, but prices are stabilizing - Personal computer and smartphone growth remains steady - The automotive market is relatively weak - Potential tariff increases (especially in the United States) will impact consumer demand This article is a reprint from the "Semiconductor Industry Observation" public account, GMTEight Editor: Li Fo.