Global Semiconductor Industry Outlook for 2025

��㣨Leyu�� and the Global Semiconductor Alliance conducted the milestone 20th annual global semiconductor industry survey in the fourth quarter of 2024. The survey captured insights from 156 semiconductor executives about their outlook for the industry in 2025 and beyond. More than half of the respondents were from companies with $1 billion or more in annual revenue.

�ճ����㣨Leyu�� Semiconductor Industry Confidence Index score is 59 for the upcoming year (a value above 50 indicates a more positive outlook than negative). This is higher than last year (54) due to increased confidence across all factors: company revenue growth, profitability growth, workforce growth, research and development (R&D) spending, and capital expenditures. Confidence Index scores vary by company size, but all scores are still positive, especially at smaller companies:

Large companies ($1 billion or more in annual revenue): 58
Mid-size companies ($100 million to $999 million in annual revenue): 54
Small companies (less than $100 million in annual revenue): 68

Leaders very optimistic about revenue growth

The vast majority (86 percent) project their company’s revenue will grow over the coming year, which is on par with last year’s 83 percent. Even more encouraging is that almost half (46 percent) expect their company’s revenue to grow more than 10 percent.
Executives are also very enthusiastic about industry revenue growth in 2025 as 92 percent forecast the industry’s revenue will grow in the coming year. One-third (36 percent) predict industry revenue growth of more than 10 percent.

Artificial intelligence (AI) is now the most important revenue driver and a top strategic priority

Last year, AI surged to rank as the second most important application driving semiconductor company revenue. This year, AI ascended to the top position for the first time, displacing automotive.
Correspondingly, microprocessors (including graphics processing units used for AI) again ranked as the top product opportunity for industry growth over the next year, ahead of memory and sensors/MEMS.
Semiconductor leaders believe that AI enablers (including high bandwidth memory) are the production technology that will have the greatest impact on the industry over the next three years.
Internally, implementing generative AI (GenAI) again ranked among the top three strategic priorities for semiconductor companies over the next three years, ahead of other priorities such as mergers and acquisitions, sustainability initiatives, participating in government subsidies, and cybersecurity.
The top functions where semiconductor companies have already implemented GenAI are Information Technology and R&D/Engineering. Looking ahead, supply chain management and marketing/sales are the top functions where GenAI is expected to be implemented within the next year.

Cloud/data centers, wireless, and automotive are also key to revenue

Cloud/data centers tied for third last year, but rose to the second most important application driving semiconductor company revenue.
Wireless communications again ranked third.
Automotive, which topped the survey for the last two years as the most important revenue driver, fell to fourth place in this year’s survey.

Geopolitics is increasingly altering supply chains

After placing second in last year’s survey, territorialism (including �ٲ��ڴڲ��and trade restrictions) tied with talent risk as the biggest issue facing the industry over the next three years. However, territorialism was the clear-cut biggest issue among large companies with $1 billion or more in annual revenue.
Armed conflicts and tariffs were named the two most concerning geopolitical matters that could affect the semiconductor ecosystem over the next two years. Other matters such as government subsidies and the nationalization of semiconductor technology also ranked near the top.
In response to these concerns, increasing geographic diversity was cited as the top improvement semiconductor leaders expect to make to improve supply chain resiliency.
Making the supply chain more flexible and adaptable to geopolitical changes also tied (with talent development/retention) as the top strategic priority, after being named second in last year’s survey.

Executives on high alert for disruption

As non-traditional semiconductor companies (tech giants, platform companies, and automotive companies) expand their chip capabilities, many executives (35 percent) are concerned that new competitors will emerge, signaling a shift in the industry’s outlook.
To compare, last year only 19 percent of semiconductor leaders cited new competition as a concern.

Talent concerns won’t go away

With demand for semiconductor products expected to increase and government subsidies fueling a boom in manufacturing, 84 percent of executives expect their workforce to either expand or remain the same in the next year. Smaller companies (97 percent) are somewhat more bullish on this topic than large and mid-size companies (80 percent and 77 percent, respectively).
As the semiconductor industry grows and the global demand for technical talent becomes greater, talent risk was again identified as the biggest issue facing the semiconductor industry over the next three years (although tied this year with tariffs/trade restrictions). It ranked as the top issue in the previous three surveys.
Talent development and retention remained the top strategic priority over the next three years, (tied with supply chain resiliency) in this year’s survey.
Since nontraditional semiconductor companies (e.g., tech giants, platform companies, automotive companies, etc.) continue to expand their own silicon capabilities, industry executives view competition for talent as the main impact. They are also increasingly wary of new competitors emerging from this trend.

Inventory surplus concerns appear to be subsiding

In last year’s survey, 30 percent of respondents believed there was already an excess of semiconductor inventory. That sentiment remained stable and did not increase (29 percent in this year’s survey).
Also in last year’s survey, 45 percent believed an inventory excess would become a reality in the next four years. In this year’s survey, that belief dropped to 37 percent.
One-quarter (25 percent) of executives believe emerging technologies like AI and electric vehicles represent a continual growth engine, and demand will be balanced with supply for the next four years. This is an increase from last year’s survey (19 percent).
Further mitigating surplus concerns, reducing on-hand inventory levels was the most frequent action semiconductor companies have taken, or expect to take in the next year, in response to the economic environment.
Excess production capacity ranked as the sixth biggest industry issue over the next three years, down from fourth place in last year’s survey.

Key insights from global semiconductor leaders

92%

forecast industry revenue will grow in 2025

AI is the most important revenue driver

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Semiconductor leaders anticipate a string 2025 powered by AI

Growth expected to be fueled by AI, but talent and geopolitics are still concerns.

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Semiconductor leaders looking forward to a strong 2025, powered by AI

Optimism tempered by geopolitical apprehension and talent issues

Leaders very optimistic about revenue growth

Artificial intelligence (AI) is now the most important revenue driver and a top strategic priority

Cloud/data centers, wireless, and automotive are also key to revenue

Geopolitics is increasingly altering supply chains

Executives on high alert for disruption

Talent concerns won’t go away

Inventory surplus concerns appear to be subsiding

Key insights from global semiconductor leaders

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