Future Horizons May Report on Semiconductor Trends

We’re happy to share this month’s extract from the Future Horizons May report on the semiconductor market. Explore the latest market perspective and informed insights below.

Executive Summary

Annualised growth rates tapered off in March, with Total Semiconductors growing 20.6 percent, down from last month’s 20.7 percent number and August 2024’s 28.5 percent cyclical peak.

Total ICs continued to be the star sector performer, at a healthy 24.8 percent growth up from 24.1 percent in February, with Opto at minus 3.5 percent, vs. minus 2.3 percent in February, and Discretes dropping back into negative growth territory, at minus 0.9 percent, following last month’s short-lived excursion into positive annualised growth.

Whilst the overall IC market still showed strong double-digit growth, the overall trend is still one of decline, a downward trend that started from August 2024’s 36.2 percent peak seven months ago, Figure E1(a). We do not expect this trend to turn up anytime soon.

Annualised growth rates are, however, just one side of the coin. Our preferred measure is the month-on-month revenue growth trends, which we believe are a more accurate reflection of the overall industry health.

Worryingly, March saw monthly sales shrink 7.5 percent vs. February, reversing both last month’s growth and more severe that January’s 5.6 percent decline.

Even more worryingly, this decline was broadly spread across all IC sectors and the fact that March, being the last month of the quarter, is seasonally usually quite strong.

The key factor driving the 2025 semiconductor market continues to be an apparently insatiable AI data center server demand, the key factor that drove most of the 2024 market growth. So far, this sector shows no sign of slowing down, with the best-case scenario anticipating a strong, but significantly lower growth rate in 2025.

The outlook for the other key markets, such as smartphones, PCs, automotive and industrial, remains weak, and are unlikely to compensate for any slowdown in the AI-infrastructure deployment.

The global economic outlook for 2025 is not strong, especially with the uncertainty of the threatened U.S. increased tariffs on imports on global trade and other countries promising retaliatory actions.

The chip industry needs a strong global economy to thrive … we expect to be significantly downgrading our January 2025 forecast from 15 percent to single digits at our Spring Semiconductor Industry Outlook Webinar on May 13.

You can read the full report here: https://www.futurehorizons.com/page/137/