Future Horizons lifts 2025 forecast for a ‘fragile’ chip market
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Malcolm Penn, founder and chief analyst with Future Horizons, has raised his forecast for global chip market growth in 2025 to 15 percent, plus or minus 4 percent.
This is a jump from Penn’s prediction made in September 2024 of a 2025 chip market that will grow by 8 percent plus or minus 3 percent. It comes despite Penn’s assessment that 2025 will be a “challenging year” and that the recovery base is “fragile.”
Back in September Penn’s reasoning was that there would be continuing weakness in markets such as the automotive and industrial sectors together with a softening of prices in memory and a potential oversupply of mature process manufacturing.
Penn has been sceptical about the 2024 recovery arguing that it is based on average selling prices (ASPs) amidst flat unit sales. He argued that you couldn’t call something a proper recovery until unit sales are climbing. He has also been a sceptic of how long an AI boom can be sustained when it is not obviously generating funds through product sales.
The chip market in 2024 is coming in hotter than Penn predicted at between US$625 billion and US$630 billion. This is looking like 20 percent year-on-year growth rather than the 15 percent Penn had predicted, which itself was an uplift from 4.9 percent made in May 2024.
As a result he said he now sees the present situation continuing well into 2025 and has raised his forecast for the 2025 global chip market accordingly.
Analyst Penn flips chip market forecast back up, remains cautious
Speaking of 2024 in a webinar presentation Penn said: “We didn’t call the ASP strength lasting the whole year. The AI growth we under-called.”
For 2025 Penn said that the IMF’s GDP is holding steady but remains uninspiring at 3.2 percent and this, together with ASPs starting to dip and no signs of unit growth, are a trio of band indicators. On top there is turbulent geopolitical situation and an incoming US president.
Penn said that three of his notorious four horsemen of the semiconductor apocalypse are stuck on red and the last – fab capacity utilisation – is blinking amber.
Nonetheless Penn has broken away from the bearish Bill Jewell at Semiconductor Intelligence (SC-IQ) who recently forecast just 6 percent chip market growth in 2025.
Penn, by raising his forecast to 15 percent, has joined such bears as Gartner and leaped higher than WSTS which forecast 2025 chip market growth of 11.2 percent in December 2024.
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AI demand is driving two years of chip market growth, says Gartner
Analyst Penn flips chip market forecast back up, remains cautious
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