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Global chip sales set for strong 2024 recovery
AI, EVs, revolution in high-performance N2 technology, Greater China driving demand
Yuki Li 9 Feb 2024

This year will see global semiconductor sales of US$588 billion, 13% higher than 2023, and 2.5% higher than 2022’s record industry revenues of US$574 billion, according to a report by Deloitte, with artificial intelligence (AI) and electronic vehicles (EV) being the main drivers of demand.

“In general, we believe AI (via servers, personal computers, smartphones, etc.) will continue to be a major organic growth driver in the semiconductor industry in 2024, followed by the memory sector’s rebound due to a normalizing of the oversupply situation and demand recovery,” adds William Li, senior analyst at global technology research firm Counterpoint. “The automotive sector could be another driver for the market due to content growth, which was already a key revenue driver for Infineon and STMicroelectronics in 2023.”

The world’s semiconductor giants are competing fiercely in the research and production of AI chips. TSMC, the dominant producer of the world’s most advanced semiconductors, is accelerating it footprint in 2-nanometer (N2) chips due to a much higher level of interest and engagement. N2 technology will be a revolution within the semiconductor industry since it can improve chip density and energy efficiency, factors that industry players are targeting.

“N2 is on track for volume production in 2025 with a ramp profile similar to N3, says C.C. Wei, CEO at TSMC, speaking at the company’s Q4 2023 earning’s call. “As part of our N2 technology platform, we also developed the N2 with a backside power rail solution, which is better suited for specific HPC [high performance computing] applications based on performance, cost and maturity considerations. N2 with a backside power rail will be available in the second half of 2025 to customers with production in 2026.”

Apart from clients’ interest in AI, the growth of the EV industry is also expected to improve semiconductor revenue, given the average modern car, according to DRex Electronics, is estimated to have between 1,400 and 1,500 semiconductor chips in it.

The global EV market, according to tech market analyst firm Canalys, is forecast to grow by 27.1% in 2024, hitting 17.5 million units. And Greater China – on the back of the mainland government prioritizing sustainable economic development and expanding vehicle consumption – is set to make up more than half of global EV sales in 2024, with Canalys projecting EV sales to reach 9.1 million units in the region, taking 40% of all light vehicle sales in the region.

As well, drops in battery costs will further drive battery electronic vehicle sales in the compact and subcompact vehicle market. And plug-in hybrid electric vehicles will continue to gain market share in the next two to three years due to their cost-effectiveness and stronger adaptability.

The growth of EV demand in the world, particularly in Greater China, will greatly drive demand for EV chips. Nevertheless, geopolitical risks are still a concern, among them, export controls on China in the areas of advanced node manufacturing equipment and technologies, and advanced generative AI semiconductors.

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