The global semiconductor market in 2025 will still depend on artificial intelligence (AI). The demand from AI data centers for generative AI continues to grow, while the demand from pure electric vehicles (EVs) and smartphones remains stagnant. Some experts believe that the semiconductor market outside of AI will truly enter a recovery phase after October. The global economy is increasingly reliant on AI and is more susceptible to shifts in AI investment trends.
The Nikkei Asian Review on the semiconductor supply and demand situation for 2025 invited experts to assess the market in five levels, from oversupply to undersupply, broken down by type and use. The responses came from 11 organizations, including research companies, analysts, and professional trading companies.
Experts are generally optimistic about AI semiconductors, with supply and demand expected to remain tight in 2025. Yasuhiko Takeo, CEO of GlobalNet (Tokyo’s Chuo ward), pointed out, “The high-level investment from major U.S. IT companies in AI data centers will drive the market.” Microsoft plans to invest a total of $80 billion in AI data centers by June 2025.
Demand is especially strong for image processing semiconductors (GPUs) used in AI computing and high-bandwidth memory (HBM) for temporarily storing computing results. According to forecasts from Germany’s Statista and others, the GPU market is expected to grow fourfold by 2029, reaching $270 billion. The HBM market is expected to expand to $100 billion by 2030, more than three times its current size, according to manufacturer estimates.
U.S. semiconductor giant Micron Technology stated that all HBM shipments for 2025 are already sold out, and it has even received orders for 2026. CEO Sanjay Mehrotra said, “Demand for AI semiconductors is extremely strong, and supply will still be insufficient in 2025.” U.S. company NVIDIA will also expand supply, officially introducing new GPUs in 2025.
The World Semiconductor Trade Statistics (WSTS), composed of major semiconductor manufacturers, expects the global semiconductor market to grow by 11% in 2025, reaching $697.1 billion, driven by AI semiconductors.
On the other hand, the semiconductor market for uses outside AI, such as automotive and industrial equipment, is recovering slowly. Regarding the supply and demand of non-cutting-edge computing semiconductors and general-purpose memory, experts predict that the situation will worsen from January to March, but stabilize after April to June. While three companies predict an improvement in supply and demand from October to December, overall forecasts remain cautious.
A major drag on the overall market is the sluggish demand for semiconductors for EVs. Experts say that due to challenges in EV sales in Europe and the U.S., the demand for automotive semiconductors will continue to worsen until around April to June. A semiconductor trading company stated, “There is no significant shortage of automotive semiconductors” (Ryoyo Ryosan Holdings) and mentioned that inventory adjustments will continue.
Supply and demand are expected to begin balancing from July to September, but Jun Okamoto, a consultant at KPMG FAS, believes, “The demand for power semiconductors in EVs will not truly recover until after 2026.”
The slowdown in EV demand is also affecting corporate strategies. Renesas Electronics has postponed its power semiconductor mass production plan, originally scheduled for early 2025. Switzerland’s STMicroelectronics (ST) has pushed back its goal of achieving a 20% year-on-year sales growth to $20 billion by November 2024, with the completion timeline now extended from 2027 to 2030.
Meanwhile, the oversupply of semiconductors for personal computers and smartphones, which account for 40-50% of semiconductor uses, will be alleviated between April and June. After a peak in home demand during the COVID-19 pandemic, sales of digital products have declined since 2022. In January to March, inventory adjustments for smartphone semiconductors made progress, and with the growing demand for AI-powered products from companies like Apple, there is a general expectation for market improvement.
The semiconductor market overall still lacks strong recovery momentum after July. As Kunihiro Konno, chairman and CEO of semiconductor trading company Restar, put it, “The production capacity resulting from various countries’ semiconductor support policies will seem excessive.” According to industry data from SEMI, 108 new semiconductor factories will be built globally from 2025 to 2027.
The Chinese government expects the U.S. to strengthen export controls and is accelerating semiconductor domestic production. Some experts also point out that “Chinese companies are catching up in fields such as memory” (SMBC Nikko Securities’ Takehiko Hanaoka). Concerns are rising about potential oversupply caused by the increased production of Chinese companies.
Semiconductors, known as the “industrial rice” of the economy, are a leading indicator for the global economy, and supply and demand improvements will impact a wide range of industries. In the stock market, the movements of semiconductor-related companies continue to attract attention.
The U.S. Trump administration’s domestic-centric industrial policy and the escalating geopolitical risks of U.S.-China tensions are also growing. If the global economic trajectory changes, the growth scenario of the AI-centered semiconductor market may collapse.
The resources comes from the internet.
Related:
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- Rigid and Flexible Semiconductors: The Future of Electronics
- Micron to Increase DRAM and NAND Prices in March 2025
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