Global semiconductor sales are on track to hit $1 trillion dollars as early as 2030, analysts reported at the annual Semicon West trade show in San Francisco earlier this month. In agreement were Needham & Co’s Charles Shi and Gartner’s Gaurav Gupta, with Gupta pegging the milestone closer to 2031 to 2032.
Gupta also projects double digit growth for 2024 and 2025, with semiconductor capacity up more than 50% by the end of the decade.
From AI and automotive to the rise of smart spaces and commercial drones, chips are expected to remain in high demand as the forces of autonomy, labor, power and geopolitics shape what’s to come.
With a gap of one million skilled workers needed to staff the more than 70 foundries expected to go live over the next few years, SEMI’s Christian Gregor Dieseldorf sees the coming labor shortage as a ticking time bomb.
Accenture’s Elias Eliadis feels AI can play a key role. He reported that fully autonomous smart fabs powered by generative AI that can operate with minimal human intervention are in the works. And Gupta expects human engagement with robots to jump to 80% over the next five years, which could drive foundry productivity.
As countries around the world race to bolster national security and build for economic prosperity, Dieseldorf said billions have already flowed into homeshoring chip manufacturing across China, Japan, India, Spain, Germany, UK, Singapore, Taiwan, Italy, Korea and Malaysia. And despite the US deploying $52 billion from the US CHIPS Act to bring chip production on shore, it might be too little too late for America to gain more than its current 10% market share.
Recipients of funding to date include Intel, TSMC, Samsung, Micron, GlobalFoundries, Microchip Technology, Polar Semiconductor, BAE Systems, GlobalWafers, Rogue Valley Microdevices, Entegris, and Absolics with plans to construct plants across Arizona, Colorado, Minnesota, New Hampshire, New Mexico, New York, Oregon, Ohio and Texas.
In addition, five hundred million dollars has been set aside for the International Technology Security and Innovation Fund, also known as ITSI, to back nearshoring and friendshoring projects with partner countries like Mexico, Costa Rica, Panama and India.
Nvidia by the numbers
Having crossed the $3 trillion valuation mark in June, all eyes are now on Nvidia. Leading with more than 10% of global semiconductor revenue, the AI chip giant tops a cohort of Intel, Samsung, Apple, Qualcomm, SK Hynix, Broadcom, AMD, Micron, STMicroelectronics, Infineon, Texas Instruments, Sony and NXP that made up 72% of global semiconductor revenue as of the end of last year, according to IDC’s Mario Morales.
Charts showing Nvidia’s revenue jumping to $22.1 billion on a gross margin of 76% compared to Intel’s $15.4 billion in revenue at a 46% gross margin for the same period served as a stark reminder that much is being staked on AI.
Shi quoted TSMC’s chief executive officer, CC Wei, in explaining how Nvidia has been able to generate such fat margins thanks to favorable pricing that enables it to procure AI chips at $600 to $700, for a product the AI chip giant sells for $200,000.
If the boom continues, Wei has said price hikes that could give suppliers a bigger piece of the pie should be expected.
