The global semiconductor manufacturing industry continued to show signs of improvement, with significant growth of IC sales in the second quarter of 2024, stabilizing capital expenditure, and an increase in installed wafer fab capacity, according to SEMI’s 2Q 2024 publication of the Semiconductor Manufacturing Monitor (SMM) Report, prepared in partnership with TechInsights.

While slower recovery in some end markets impacted the pace of growth in the first half of the year, the surge in demand for AI chips and high bandwidth memory (HBM) created strong tailwinds driving industry expansion.

Seasonality and weaker than expected consumer demand impacted electronics sales in the first half of 2024, resulting in a 0.8% decrease year-over-year (YoY). Starting 3Q 2024, electronics sales are forecast to see a rebound, growing by 4% YoY and by 9% relative to 2Q 2024. IC sales showed robust 27% YoY growth in 2Q 2024 and are further expected to surge by 29% in 3Q 2024, surpassing record levels seen in 2021 as the AI-fueled demand continues to boost IC sales growth. Improved demand also led to a 2.6% decline YoY in IC inventory levels in the first half of 2024.

Installed wafer fab capacity reached 40.5 million wafers per quarter (in 300mm wafer equivalent) in 2Q 2024 and is projected to rise by 1.6% in 3Q 2024. Foundry and logic-related capacity showed stronger growth in 2Q 2024 at 2% and is projected to increase 1.9% in 3Q 2024 driven by capacity build-up for advanced nodes. Memory capacity increased by 0.7% in 2Q 2024 and is forecast to see 1.1% growth in 3Q 2024 supported by strong demand for HBM and improving memory pricing conditions. All regions tracked saw installed capacity increases in 2Q 2024 with China remaining the fastest growing region despite mediocre fab utilization rates.

Semiconductor capital expenditures remained conservative in the first half of 2024 resulting in a 9.8% decrease YoY. The trend is expected to turn positive starting in 3Q 2024 in response to the growing demand for AI chips and rapid adoption of HBM with memory CapEx leading the growth at 16% quarter-on-quarter (QoQ) while non-memory related capital expenditures increase by 6% QoQ.

“Despite moderate semiconductor capital expenditures in the first half of the year, we expect a positive trend to begin in Q3 2024 led by memory CapEx. Strong demand for AI chips and high bandwidth memory is boosting results in various segments of the semiconductor manufacturing ecosystem,” said Clark Tseng, Senior Director of Market Intelligence at SEMI.

“The entire semiconductor supply chain is recovering this year as the market prepares for a surge in 2025. AI is certainly continuing to drive high value ICs to the market, while also supporting CapEx for capacity expansion of AI chips and especially HBM. As consumer demand recovers, and new technologies like AI are pushed to the edge, unit volumes and especially revenues will recover and support the broader semiconductor manufacturing sector,” said Boris Metodiev, Director of Market Analysis at TechInsights.

By: DocMemory
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