Global Semiconductor Sector on Track for Strong Growth Due to AI Demand, New Report Reveals

The global semiconductor industry is primed for substantial recovery and expansion in the coming years, driven by the surging demand for AI technologies, advanced data processing, and renewed electronics manufacturing.

According to the latest report from Gartner, semiconductor industry revenue is set to reach a remarkable $630 billion by 2024, marking a 19% increase from the previous year. Furthermore, this growth is expected to continue, with projections indicating an industry-wide revenue of $717 billion by 2025.

AI Demand Catalyzes Growth in Global Semiconductor Market

The accelerated adoption of AI has spurred a sharp rise in demand for specialized chips, which are now essential across sectors, from high-performance computing to mainstream consumer electronics.

Surge in Demand for AI Chips and Specialized Memory Technologies

Memory components like NAND flash and DRAM are at the forefront of this demand, optimized for AI-intensive computing needs that support complex workloads. Gartner’s findings indicate that NAND flash, integral to AI systems, will see a 12% revenue increase by 2025. This surge is largely attributed to an undersupplied market and rising AI application demands.

GPUs Experience Renewed Demand in AI Training and Deployment

As AI-driven innovations continue to expand, GPUs are witnessing a resurgence. After a decline in 2023, the GPU market is set for a robust comeback, potentially growing by 27% by 2025, with anticipated revenue reaching $51 billion. GPUs play a critical role in the AI ecosystem, particularly in training and deploying complex AI models.

High-Bandwidth Memory Investments to Support AI Hardware Needs

High-bandwidth memory (HBM) is another segment seeing significant investment. Manufacturers are ramping up production and refining memory packaging techniques to meet the high-capacity demands of modern AI hardware.

Advancements in DRAM and DDR5 Technology Fuel Semiconductor Demand

DRAM technology, essential for high-speed data transfer, is also experiencing renewed growth. The production of high-bandwidth memory and the increasing adoption of DDR5 technology—which offers faster and more efficient data processing capabilities—are driving demand for DRAM. Revenue for this segment is expected to grow from $90.1 billion in 2024 to $115.6 billion by 2025, as advancements in supply chain management ease previous constraints.

What is DRAM technology

DRAM: The Backbone of Modern Computing

DRAM (Dynamic Random-Access Memory) is a type of semiconductor memory that stores each bit of data in a memory cell, typically consisting of a tiny capacitor and a transistor. It's the primary type of memory used in most computers and electronic devices.  

How DRAM Works:

1. Storage: Each memory cell stores a bit of data, either a 0 or a 1. This is achieved by charging or discharging the capacitor.  
2. Refresh: DRAM is a "dynamic" memory, meaning the stored data needs to be refreshed periodically. This is because the capacitors gradually lose their charge over time. The memory controller constantly refreshes the DRAM to maintain data integrity.  
3. Access: DRAM is a random-access memory, which means that any memory cell can be accessed directly, without having to read through the preceding cells. This makes it highly efficient for various computing tasks.  

Types of DRAM:

• DDR (Double Data Rate) DRAM: This is the most common type of DRAM used in personal computers. It allows data to be transferred on both the rising and falling edges of the clock signal, doubling the data transfer rate.  
• LPDDR (Low-Power Double Data Rate) DRAM: This type of DRAM is optimized for mobile devices, such as smartphones and tablets, as it consumes less power while maintaining high performance.  
• GDDR (Graphics Double Data Rate) DRAM: This is a high-performance type of DRAM used in graphics cards to handle the demanding requirements of modern video games and other graphics-intensive applications.  
• HBM (High Bandwidth Memory): This is a high-bandwidth, high-density memory technology used in high-performance computing and graphics applications.  

Why DRAM is Essential:

• Fast Access: DRAM provides fast access to data, which is crucial for the smooth operation of computer systems.  
• High Capacity: DRAM modules come in various capacities, allowing users to customize their systems based on their needs.  
• Cost-Effective: DRAM is relatively inexpensive, making it a popular choice for a wide range of applications.

Resilience of Semiconductor Industry Amid AI Advancements

The semiconductor sector’s swift adaptation to the expanding AI and data-processing landscape reflects its resilience and readiness for continued growth. Although the automotive and industrial applications markets have seen moderate growth, consumer electronics and AI-powered solutions are propelling the semiconductor industry toward a technology-driven future.

Conclusion: Sustained Growth on the Horizon

The global semiconductor industry is on the cusp of a transformative era, poised for substantial growth and innovation as it adapts to the demands of a rapidly evolving technological landscape. The projections for 2024 and 2025 underscore a strong recovery, with revenue expected to reach unprecedented heights, primarily fueled by the demand for AI-driven solutions and sophisticated data processing capabilities.

This anticipated growth reflects both the industry’s resilience and its strategic response to capitalize on emerging trends.

One of the key drivers behind this growth is the escalating demand for AI-specific hardware. From specialized memory technologies like NAND flash and DRAM to high-bandwidth memory and GPUs, the industry is seeing unprecedented investments to accommodate the rigorous computational needs of AI applications.

GPUs, in particular, have found a renewed purpose in AI model training and deployment, highlighting their indispensable role in the artificial intelligence ecosystem. This shift is expected to continue, with GPUs projected to experience a remarkable rebound following previous declines, which emphasizes the ongoing importance of this technology in a data-centric world.