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AI demand is driving two years of chip market growth, says Gartner

AI demand is driving two years of chip market growth, says Gartner

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By Peter Clarke

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The global chip market will grow by 18.8 percent in 2024 to reach US$629.8 billion driven by AI demand, according to market research firm Gartner.

This is a higher rate than the 16.8 percent growth Gartner forecast a year ago which itself had been a dip from a previous 18.5 percent forecast. Gartner has reduced its latest growth prediction for 2025 to 13.8 percent growth – from 15.5 percent – so that the market is set to total US$716.7 billion next year.

“The growth is driven by a continued surge in AI-related semiconductor demand and recovery in electronic production, while demand from the automotive and industrial sectors continues to be weak,” said Rajeev Rajput, senior principal analyst at Gartner, in a statement.

In the near term, the memory market and graphics processing units (GPUs) will bolster semiconductor revenue globally.

The worldwide memory revenue market is forecast to record 20.5 percent growth in 2025, to total US$196.3 billion. Sustained undersupply in 2024 will fuel NAND prices up 60 percent in 2024, but they are poised to decline by 3 percent in 2025. With lower supply and a softer pricing landscape in 2025, NAND flash revenue is forecast to total US$75.5 billion in 2025, up 12 percent from 2024.

GPU, HBM

DRAM supply and demand will rebound due to improved undersupply, unprecedented high-bandwidth memory (HBM) production and rising demand, and the increase in prices for DDR5 format DRAMs. Overall, DRAM revenue is expected to total US$115.6 billion in 2025, up from US$90.1 billion in 2024.

GPU revenue is projected to total US$51 billion, an increase of 27 percent in 2025. “However, the market is now shifting to a return on investment (ROI) phase where inference revenues need to grow to multiples of training investments,” said George Brocklehurst, an analyst at Gartner.

However, the hottest product is likely to be high-bandwidth memory (HBM) DRAM where revenue is expected to increase by more than 284 percent in 2024 and 70 percent in 2025, reaching US$12.3 billion and US$21 billion, respectively. 

Related links and articles:

www.gartner.com

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