International Data Corp. (IDC) has upgraded its semiconductor market outlook by calling a bottom and return to growth that accelerates next year. IDC raised its September 2023 revenue outlook from $518.8 billion to $526.5 billion in a new forecast. Revenue expectations for 2024 were also raised from $625.9 billion to $632.8 billion as IDC believes the U.S. market will remain resilient from a demand standpoint and China will begin recovering by the second half of 2024 (2H 2024).

IDC sees better semiconductor growth visibility as the long inventory correction subsides in two of the largest market segments: PCs and smartphones. Automotive and Industrials elevated inventory levels are expected to return to normal levels in 2H24 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, including the introduction of AI PCs and AI Smartphones next year and a much-needed improvement in memory ASPs and DRAM bit volume.

Wafer capacity pricing will remain flat next year as foundry suppliers gradually improve utilization rates and demand returns from their core fabless customers. CapEx is expected to improve by 2H 2024 as revenue shipments match end demand and regional ChipAct incentives stimulate investment across the supply chain.

Worldwide semiconductor revenue will grow to $526.5 billion in 2023, down 12% from $598 billion in 2022. This is up from the $519 billion IDC forecast in September. For 2024, IDC sees year-over-year growth of 20.2% to $633 billion, up from $626 billion in the prior forecast.

Due to increased inventory rationalization, 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, 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 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.”

By: DocMemory
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