SAN MATEO, Calif., November 14, 2023 – International Data Corporation (IDC) has revised its Semiconductor Market Outlook, anticipating a bottom and a return to growth that accelerates next year. In the new forecast, IDC raised its revenue outlook for September 2023 from $518.8 billion to $526.5 billion. Additionally, revenue expectations for 2024 were increased from $625.9 billion to $632.8 billion, with IDC expressing confidence in the resilience of the U.S. market and anticipating a recovery in China by the second half of 2024.
IDC attributes this improved visibility in semiconductor growth to the gradual subsiding of long inventory corrections in two major market segments: PCs and smartphones. The elevated inventory levels in automotive and industrials are also anticipated to normalize by the second half of 2024, driven by continued electrification efforts driving semiconductor content over the next decade. Furthermore, IDC predicts that technology advancements and flagship product introductions will enhance semiconductor content and value across various market segments from 2024 through 2026, including the introduction of AI PCs and AI smartphones next year, along with anticipated improvements in memory ASPs and DRAM bit volume.
Wafer capacity pricing is projected to remain stable next year, with foundry suppliers expected to enhance utilization rates gradually as demand returns from their primary fabless customers. Additionally, IDC anticipates an improvement in CapEx by the second half of 2024, as revenue shipments align with end demand and regional incentives, such as ChipAct, stimulate investment across the supply chain.
Worldwide semiconductor revenue is forecasted to grow to $526.5 billion in 2023, marking a 12.0% decline from $598 billion in 2022, but up from the $519 billion forecasted in September. For 2024, IDC expects a year-over-year growth of 20.2% to $633 billion, up from $626 billion in the prior forecast.
Due to increased inventory rationalization and visibility in the channel, along with rising demand from AI server and endpoint device manufacturers, IDC has upgraded its Semiconductor Market Outlook to sustainable growth from trough, signaling 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, 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 endpoint devices will drive more semiconductor content in 2024-2026, 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.”
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.
