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After a year of weakness where sales dropped 9.4% to 520 billion dollars in 2023, the industry could see a strong return with 13% growth in 2024 to $588 billion. Deloitte predicted.
It is difficult to predict the future of the semiconductor industry because it is cyclical. Deloitte’s new global semiconductor industry forecast said that the industry was poised to make a comeback by 2024.
The consulting firm highlights a number of factors that contribute to this optimistic outlook. The memory chip market is expected to recover despite challenging conditions in 2023. Sales are expected to reach 2022 levels. The stock market’s positive response is seen as a leading indicator, with the combined market capitalization of the top 10 global chip companies rising to $3.4 trillion by mid-December 2023.
End markets like PCs and smartphones are expected grow by 4% in 2024. This resurgence will be crucial for the semiconductor sector, as communication and computer chips accounted for 56% of total semiconductor sales in 2022.
Deloitte’s report delves into key measures of industry health, including inventories and fab utilization. There were high inventories this fall in excess of $60 billion, and that’s a significant headwind for sales in the first half of 2024. But the report indicates an overall positive pattern.
However, the industry’s need for higher utilization, expected to fall below 70% in Q4 2023, may mean it will take time to achieve profitability.
Five pivotal points
The executive summary outlines the five most important topics for 2024 in the semiconductor industry:
Generative AI accelerator chipThe report estimates that the sales of AI-driven chips with a generative component will surpass $50 billion by 2024. They are expected to contribute approximately 8.5% to total sales. The relatively low unit volumes of these high value chips may have an impact on overall manufacturing capacity and industry usage.
Smart manufacturing trends: Deloitte explores trends in smart manufacturing and the industry’s adoption of generative AI, shedding light on the evolving landscape of semiconductor production.
Global Assembly and Testing Capacity: The report emphasizes the industry’s need for more assembly and test capacity worldwide, considering it a critical aspect of future growth.
Cyber attacks and IP securityThe intellectual property (IP), which is the trademark of the semiconductor industry, has been identified as a target for cyberattacks. This poses a potential risk to this sector.
Geopolitical implicationsThe report examines the export controls on advanced node production equipment, technologies and advanced generative AI semi-conductors, taking into consideration the geopolitical environment.
Deloitte acknowledges 2024 as a year of growth for the semiconductor sector, but also stresses the need for strategic decisions in the face of geopolitical challenges.
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