January 14, 2025 /SemiMedia/ — Analysts predict that the global semiconductor market will reach $697.1 billion in 2025, an 11% year-over-year growth, driven primarily by robust demand for AI-powered data centers, while demand in electric vehicles and smartphones remains relatively sluggish.

Strong demand for AI chips

The surge in investments by U.S. tech giants in AI data centers, such as Microsoft's plan to invest $80 billion in fiscal 2025, is a major growth driver. Demand for GPUs and high-bandwidth memory (HBM) is particularly notable. According to Statista, the global GPU market is projected to grow to $270 billion by 2029, while the HBM market is expected to triple to $100 billion by 2030. Micron Technology has already sold out its entire HBM capacity for 2025 and received orders for 2026.

Slow growth in non-AI markets

Compared to the rapid growth in AI-driven segments, the recovery in non-AI semiconductor markets, such as automotive and industrial equipment, is expected to be slow. Weak electric vehicle sales in Europe and the U.S. are expected to keep automotive semiconductor demand subdued in the first half of 2025, with power semiconductor demand unlikely to fully recover until 2026 or later. Companies like Renesas Electronics and STMicroelectronics have delayed their capacity expansion plans in response.

Outlook for PC and smartphone markets

Oversupply in the PC and smartphone sectors may ease by the second quarter of 2025. As inventory adjustments for smartphone chips conclude and demand for devices featuring generative AI functionality grows, the smartphone chip market is expected to improve in the latter half of the year.

Overall, the continuous development of AI technologies in data centers and end applications remains the key driver for semiconductor market growth, while the recovery of traditional markets is likely to take more time.