International Data Corp. (San Mateo, Calif.) has raised its forecasts for the global chip market in 2023 and 2024 but kept growth predictions largely unchanged maintaining the view that 2024 will be a strong growth year.
IDC raised its 2023 revenue outlook from US$518.8 billion to US$526.5 billion, still a considerable fell from a market value of US$598 billion in 2022. The result of the raised forecast is that IDC now sees a market contraction of 12.0 percent compared with the 13.2 percent fall it was predicting.
The revenue forecast for 2024 was also raised from $625.9 billion to $632.8 billion. IDC said it believes the US market for chips will maintain demand through the year and China will begin recovering the 2H24. IDC now sees an annual growth of 20.2 percent compared with the 20.6 percent it was predicting.
That still places IDC as a bullish outlier of a spectrum of analysts’ opinions. Most analysts are predicting double-digit percentage growth between 10 and 18.5 percent for 2024.
Growth drivers lining up
IDC said that number of negative trends are giving way to chip market growth drivers. The analyst argued that a long-running inventory correction is subsiding in two of the largest market segments: personal computers and smartphones. At the same time elevated inventory levels in automotive and industrials are expected to return to normal levels in 2H24. In addition, the introduction of AI will drive semiconductor content and value up across multiple sectors over the period 2024 to 2026.
The introduction of AI PCs and AI Smartphones in 2024 will drive a rises in memory prices and DRAM bit volume, IDC said.
For fabless chip companies wafer pricing will remain flat in 2024 as foundry suppliers only improve utilization rates gradually from current lows (see Global fab utilization to drop below 70% in 4Q23, says SEMI).
Excess chip manufacturing capacity means that capital expenditures have been low in 2023 but IDC said it expects this to improve by 2H24 as various regional ChipAct incentives stimulate investment across the supply chain.
“The semiconductor market reached a bottom and has begun to grow on a quarter-over-quarter basis. ASPs are improving in DRAM, which is a good early indicator and IDC expects suppliers will continue to control capacity additions and utilization rates to drive a sustainable recovery,” said Mario Morales, the group vice president responsible for semiconductor forecasting at IDC, in a statement.
“Accelerating demand for AI servers and AI-enabled end point devices will drive more semiconductor content in 2024 to 2026 fueling a new upgrade cycle across enterprises. We expect that by the end of our forecast period, AI silicon will account for almost $200 billion in semiconductor revenues,” he added.