The global semiconductor industry is accelerating out of a two-year downturn, propelled by relentless demand for AI and high-bandwidth memory. The Semiconductor Manufacturing Monitor (SMM) report by SEMI and TechInsights reveals that Q3 2024 experienced a notable upswing in key industry metrics, marking a pivotal shift following a decline. “All key industry indicators [are] performing positive quarter-on-quarter (QoQ) increases for the first time in two years, ” the SEMI report emphasizes, underscoring the revival of this vital sector. Although the consumer, automotive, and industrial segments are still recovering, growth is largely driven by substantial investments in AI data centers and cutting-edge technologies. This is evident in a 12% QoQ increase in IC sales in Q3 2024, with a projected 10% rise in Q4. Overall, IC sales are expected to surge by more than 20% in 2024, mainly fueled by memory products and the unyielding demand for data center memory chips. Capital expenditures (CapEx) are also rising sharply. Memory-related CapEx surged by 34% QoQ and 67% year-on-year (YoY) in Q3 2024, signaling a robust recovery in the memory IC market. This upward trend is predicted to persist, with total CapEx projected to jump 27% QoQ and 31% YoY in Q4 2024. The semiconductor capital equipment sector is outperforming expectations, backed by significant investments from China along with increased spending on high-bandwidth memory and advanced packaging. Wafer Fab Equipment (WFE) spending climbed 15% YoY and 11% QoQ in Q3 2024, with China playing a key role in driving this expansion. “The semiconductor capital equipment segment continues to exhibit growth momentum, bolstered this year by strong investments from China and increased spending on advanced technologies, ” said Clark Tseng, Senior Director of Market Intelligence at SEMI. Installed wafer fab capacity hit 41. 4 million wafers per quarter in Q3 2024 and is expected to further increase.

Foundry and logic-related capacity led the rise, showing a 2% increase in Q3 and an anticipated 2. 2% growth in Q4, driven by expansions in both advanced and mature nodes. Nevertheless, the industry faces challenges. Boris Metodiev, Director of Market Analysis at TechInsights, notes, “2024 has shown two sides within the semiconductor industry. While consumer, automotive, and industrial markets have struggled, AI has thrived, boosting average selling prices in memory and logic products. ” This contrast highlights AI’s pivotal role in fueling the current growth cycle. The industry’s dedication to meeting soaring demand for advanced semiconductor technologies, especially in AI, is evident in the ongoing expansion of fab capacity and investments in state-of-the-art technologies. Looking forward, the semiconductor industry’s outlook is promising. As interest rates decline and consumer confidence bounces back, the consumer and automotive sectors are expected to recover, further driving growth in 2025 and beyond. The semiconductor industry is not merely bouncing back; it is evolving—guided by AI—toward a future of unprecedented innovation and expansion. Thousands of senior engineers and procurement professionals follow our LinkedIn Market Intel newsletter – subscribe here.