Advancements in semiconductor technology have been the foremost driver of vast improvements in device size and power draw over the past decades: when chip fabs improve semiconductor density (by shrinking individual transistors), semiconductor chips can get better functionality and features with reduced board real estate. The consistency of these improvements in semiconductor manufacturing tracks with the informal Moore’s Law – a rough doubling of performance every two years. However, the physical limits of transistor size reduction have gradually slowed with recent breakthroughs. New semiconductor manufacturing gains are far more modest than those that Moore’s Law predicted (and initially realized). Overall, the semiconductor industry forecast for 2024 is healthy despite this, as continued technological innovation drives the marketplace.
Overall Semiconductor Industry Forecast for 2024
The semiconductor industry never quite subsided, but a big comeback is on the horizon: early infrastructure investments in response to the COVID-19 shutdowns are beginning to pay dividends globally, with greater returns in the coming years as new projects and developments come to fruition. Continued proficiency of 3 nm production requirements should result in a full maturation of the technology, exerting downward pressure on chip prices as manufacturers’ research and development focuses on 2024 2 nm rollouts. Although high-tech consumer devices like smartphones and personal computers show stubborn growth predictions, AI components remain highly in demand across a large swath of business and industry.
In many ways, 2024 will likely be a correction for the notable decrease in the global semiconductor industry across 2023. Inflation concerns have pushed some adoption of devices, but a slowly recovering global economy should counteract this trend. Even memory semiconductor devices that took significant hits to their 2023 market capitalization look to rebound strongly in 2024. Semiconductor devices require semiconductor equipment to implement cutting-edge manufacturing techniques and should similarly see a boost in demand due to greater volume and precision requirements.
Global Semiconductor Industry Sales and Growth (Adapted from WSTS Fall 2023 Summary)
| 2023* ($M) | 2024† ($M) | 2024 YoY% | |
| Semiconductors | 35,591 | 37,459 | 5.2 |
| Optoelectronics | 42,583 | 43,324 | 1.7 |
| Sensors | 19,417 | 20,12 | 3.7 |
| ICs | 422,174 | 487,454 | 15.5 |
*: Based on Q3 2023 data.
†: Projected.
Innovation Pushing Semiconductor Industry
One of the burgeoning areas of R&D in semiconductors is co-packaged optics, which unite optical and electrical functionality on a single substrate. Combining the electrical and optical systems in this way greatly reduces power consumption by eliminating a digital-signal processor circuit interface to the optical component and carefully controlling the characteristics of dielectric material. The high bandwidth of the optical system is likely to serve as a bridge to future network transmission protocol (i.e., 6G and beyond). With mobile data networks experiencing exponential growth in areas of high population density and the high bandwidth demands of artificial intelligence/machine learning applications, addressing these needs will be critical.
Chiplet design contradicts the established protocol of continuous die shrinking, already experiencing diminished returns. The idea here is the wafer manufacturer equivalent to SoC – by integrating the sub-circuit assembly of the chip on a single die, it’s possible to increase yield and dramatically improve performance within the heterogeneous system. Granted, the inter-circuit becomes even more complex, and coupling factors affecting signal/power integrity heighten dramatically due to the connection density. However, challenges like these are much more surmountable than the cost and difficulty of continuous die shrinkage.
Traditionally, GPUs have dominated high-end processing tasks at the consumer level due to their sheer computational ability. However, as AI has emerged as a bonafide market force, chip makers are now producing AI application-specific integrated circuits (ASICs) to optimize chip design for its intended end-use better. AI ASICs contain multiple circuits, including a GPU, FPGA, and additional ICs focused on parallel processing to boost speeds and power efficiency further. These characteristics can make AI ASICs’ performance several magnitudes greater than a CPU alone.
Commercial quantum computing – for years seen as something of a Holy Grail – is also nearing a breakthrough. While viable, low-scale models are currently under continued research in development, new material breakthroughs and manufacturing sophistication are close to realizing the tipping point where commercial viability becomes inevitable. At the moment, the routing complexity of qubit computing has greatly limited the ability of quantum computers to compete with classic binary logic.
Your Contract Manufacturer for 2024 and Beyond
The semiconductor industry forecast 2024 shows healthy resilience and overall improvement compared to 2023 globally, which should ease concerns about market potential. Even more reassuring is that continued growth in the industry over the next few years appears strong, consistent with worldwide investments in infrastructure and general demand for faster, more powerful electronic devices. To unlock the full benefits of semiconductor manufacturing, consider partnering with a manufacturer with extensive experience in the field. At VSE, we’re a team of engineers committed to building electronics for our customers, focusing on quality and reliability.
