DEAN FREEMAN, Market Analyst and SME, Kiterocket
The 2024 electronics industry forecast did not meet expectations. The predicted growth in artificial intelligence (AI) PC and mobile phones never materialized; electric vehicle (EV) growth took a hiatus; and home sales worldwide were in the doldrums. The bright spot was AI, which drove DRAM and advanced logic and 3D packaging to strong growth. The outlook for 2025 is built on many of the same assumptions that were expected to drive the second half of 2024.
Looking for clues to forecast what the 2025 semiconductor and equipment industry will look like, let’s first consider China. The economic situation in China is dragging down the consumption of electronic goods, and the Chinese economy is expected to continue to slow in 2025, thus impacting demand for electronics. The United States has achieved its soft landing, but—depending upon the outcome of the upcoming election—any tariffs placed on electronic goods made in China, and potentially Taiwan upcoming election—any tariffs placed on electronic goods made in China, which include a significant number of PCs and mobile phones, would increase prices, decrease consumption, and slow the U.S. economy. Europe is expected to see gradual growth in 2025. So overall, the worldwide economic outlook.is positive but not stellar.
Looking at the key drivers for the electronics industry in 2025, AI is still king. Bloomberg is predicting capital expenditure (capex) spending for AI to approach $200 billion. PCs and mobile phones seem to have found their footing and will grow in the low single digits for 2025. The EV market is projected to grow by 20 million vehicles, and the semiconductor industrial sector seems to have bottomed and is starting to post positive growth. The drivers suggest that we will see good semiconductor growth in the low double digits for 2025, growth that is not as AI-centric as it was in 2024.
For the equipment forecast, AI will continue to drive market demand. Capex spending will increase in logic, memory, and advanced packaging. Memory will see slightly stronger equipment growth in 2025 as utilization increases through AI and electronic device growth. One of the wild cards: When will Intel and Samsung have enough business to justify ramping up any of their additional fabs? Declining equipment sales to China, which currently represent about 40-50% of wafer fab equipment revenue, are expected to drop to around 20% due to DOC sanctions and slowing demand. As a result, wafer fab equipment sales for 2025 are likely to fall below the 11% growth initially projected by SEMI at SEMICON West. number of Chips, PC and mobile Phones. With the information available, I would expect numbers for wafer fab equipment (WFE) to be between 5% and 10% growth, reaching the low $100 billions for 2025.
Click here to read the 2025 Executive Viewpoints in Semiconductor Digest
