Semiconductor market will bounce back in 2024, says IDC

Market drivers include AI, high-performance computing and stable smartphone and PC sales

The semiconductor industry is expected to usher in a new wave of growth next year owing to the global demand for AI and explosion in high-performance computing (HPC), coupled with the stabilising demand for smartphones, personal computers and infrastructure.

According to IDC's latest research, the semiconductor sales market will recover in 2024 with an annual growth rate of 20 per cent.

The analyst firm said the supply chain inventory depletion process continues due to weak market demand.

It adds that although there are some sporadic short orders and rush orders in the second half of 2023, it is still difficult to reverse the first half annual decline of 20 per cent.

Therefore the market is expected to still decline by 12 per cent in 2023.

However, with the gradual recovery of smartphone demand and the strong demand for AI chips, IDC expects the semiconductor market to return to a growth trend in 2024, with an annual growth rate above 20 per cent.

"Memory manufacturers' strict control of supply and output has led to increasing prices from the start of November, and the demand for AI across all major applications will drive the overall semiconductor sales market to recover in 2024," said Galen Zeng, senior research manager of semiconductor research for IDC Asia/Pacific.

"The semiconductor supply chain, including design, manufacturing, packaging, and testing, will bid farewell to the downturn in 2023."

AI is making a big splash as datacentres require higher computing power, data processing, complex large language models, and big data analytics.

With the advancement of semiconductor technology, it is expected that more AI functions will be integrated into personal devices starting in 2024.

AI smartphones, AI PCs, and AI wearable devices will be gradually launched into the market.

IDC expects there will be more innovative applications for personal devices after the introduction of AI, which will positively stimulate the increase in demand for semiconductors and advanced packaging.