The worldwide semiconductor industry is heading into one other file 12 months, with income projected to hit $800 billion in 2025, in keeping with new information from Worldwide Information Company (IDC). That determine represents a 17.6% enhance from the $680 billion forecast for 2024, itself a 12 months of robust restoration with 22.4% progress after a interval of contraction.
IDC attributes the growth primarily to information heart demand, significantly the surge in AI infrastructure, accelerated computing, and networking applied sciences.
The compute section of the semiconductor market is anticipated to develop 36% year-over-year to $349 billion in 2025, pushed by hyperscale AI workloads. IDC tasks this section to maintain a compound annual progress charge of 12% by 2030. The acceleration is so pronounced that, for the primary time, a single semiconductor vendor is anticipated to surpass $200 billion in annual income, underscoring the dominance of AI-driven information heart spending. Adjoining markets equivalent to rack-scale methods, high-speed interconnects, reminiscence, and networking semiconductors are additionally benefiting from this momentum.
Networking is rising as a crucial bottleneck in AI workloads, with information motion more and more constraining system efficiency greater than compute energy itself. To deal with this, cloud suppliers, telecommunications companies, and enterprises are ramping up funding in networking chips and optical interconnects. IDC forecasts networking and connectivity semiconductor demand to develop 13% in 2025, led by high-capacity Ethernet switches, SmartNICs, and DPUs, which assist offload community processing from CPUs and GPUs. Optical applied sciences are additionally gaining traction as data-intensive AI functions push conventional copper-based methods to their limits.
Past information facilities, different markets are starting to rebound after durations of weak spot. Automotive and industrial semiconductors, which suffered from extra stock and demand softness in 2024, are actually stabilizing. Automotive suppliers are reporting sequential progress as stock ranges normalize, although headwinds stay from expiring subsidies in China, ongoing worth stress, and commerce uncertainty. Nonetheless, rising semiconductor content material per automobile, pushed by electrification, silicon carbide (SiC) and gallium nitride (GaN) adoption, and the shift towards area and zonal controllers, will maintain progress. IDC expects the automotive semiconductor sector to extend by 3% in 2025.
Improved Visibility and Restoration
IDC’s industrial semiconductor market is on a stronger restoration path, with 11% progress anticipated in 2025 after contracting almost 14% the earlier 12 months. Demand is being bolstered by army and aerospace functions, manufacturing, edge AI adoption, and electrification traits. Whereas macroeconomic uncertainty and cautious capital spending stay challenges, industrial chip suppliers are reporting improved visibility and backlog restoration.
Smartphone semiconductors, whereas not driving progress by unit quantity, are seeing larger income per system. The wi-fi semiconductor section is forecast to develop 5% in 2025, with adoption of 5G, richer multimedia capabilities, and on-device AI driving larger content material. Common promoting costs are climbing as smartphones combine neural processing items (NPUs), GPUs, and superior connectivity options. Nonetheless, tariff insurance policies and commerce restrictions could distort cargo timing and have an effect on shopper pricing into 2026.
Business analysts emphasize that whereas markets like automotive and industrial are solely starting to get well, their long-term trajectory stays robust as a consequence of elevated chip content material and electrification. “Whereas these markets are usually not experiencing the explosive progress of the datacenter, the rise in semiconductor content material per system, elevated compute capabilities, and electrification will assist guarantee long-term income resilience,” mentioned Nina Turner, analysis director at IDC.
Mario Morales, group vp for semiconductors at IDC, famous that the trade is experiencing a structural shift: “Explosive demand for compute and networking at scale is making a step-function in income progress, whereas adjoining markets from cloud to connectivity profit from the shift to rack-scale methods. The general trade is about on a powerful trajectory that extends nicely past 2025.”
IDC now forecasts that the semiconductor market will surpass $1 trillion in income by 2028, almost two years sooner than earlier consensus estimates, cementing its place as one of many fastest-growing and most strategically crucial sectors within the international financial system.
