Semiconductor growth returns, market outlook upgraded - IDC

IDC raises 2023-2024 semiconductor revenue forecasts as inventory corrections wane and AI demand grows

IDC has upgraded its Semiconductor Market Outlook raising its September 2023 revenue outlook from $518.8bn to $526.5bn in a new forecast.

Revenue expectations for 2024 were also raised from $625.9bn to $632.8bn.

IDC believes the US market demand will remain resilient and China will begin recovering by the second half of 2024.

IDC sees improved semiconductor growth visibility as long inventory corrections subside in two major segments, PCs and smartphones.

Automotive and industrials elevated inventory levels are expected to return to normal levels in the second half of 2024 as electrification continues to drive semiconductor content over the next decade.

Technology and large flagship product introductions will drive more semiconductor content and value across market segments in 2024 through 2026.

This includes AI PCs and smartphones in 2024 and improved memory prices and volume.

Wafer pricing will remain flat next year as foundries gradually improve utilisation and demand returns from core customers.

CapEx should improve by H2 2024 as revenue shipments match end demand and regional incentives stimulate supply chain investment.

Worldwide semiconductor revenue will grow to $526.5bn in 2023, down 12.0 per cent from $598bn in 2022. This is up from the $519bn IDC forecast in September.

For 2024, IDC sees year-over-year growth of 20.2 per cent to $633bn, up from $626bn in the prior forecast.

Due to increased inventory rationalisation, visibility in the channel, and increasing demand pull from AI server and end point device manufacturers, IDC has upgraded its Semiconductor Market Outlook to sustainable "growth" from "trough" and called the bottom of the correction.

"We upgraded our Market Outlook to ‘growth' as the semiconductor market returns to sustained growth," said Rudy Torrijos, research manager of worldwide semiconductor supply chain technology intelligence at IDC.

"While inventory levels remain elevated with suppliers, visibility has clearly improved in the channel and with OEMs in key market segments. We see revenue growth matching end user demand beginning in 1H24. As a result, we expect capex to improve subsequently initiating a new investment cycle within the supply chain."

"Overall, IDC expects the total semiconductor industry to decline by 12% in 2023, which is an improvement from our September outlook. Revenues will continue to recover gradually and accelerate in 2024," said Mario Morales, group vice president, semiconductors and enabling technologies at IDC.

"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.

"Accelerating demand for AI servers and AI-enabled end point devices will drive more semiconductor content in 2024-2026 fuelling a new upgrade cycle across enterprises.

"We expect that by the end of our forecast period, AI silicon will account for almost $200bn in semiconductor revenues."

The IDC Worldwide Semiconductor Technology Supply Chain Intelligence (STSI) serves as the basis for IDC's semiconductor supply-side research, including market forecasts, vendor market shares, and custom market models.

This service contains segmented revenue data collected from over 150 of the top global private and public semiconductor companies. Revenue for over twenty semiconductor device areas, five geographic regions, seven industry segments, and more than 70 end-device applications are included in our forecast data.