IDC sees sustained chip revenue growth in 2024, joining hopeful chorus

Semiconductor analysts at IDC on Tuesday added their optimism to a growing list of experts who feel the bottom has been reached for the global chip market, which they estimate to be down 12% for all of 2023 but with sustained growth of 20% in 2024.

“We upgraded our market outlook to ‘growth’ as the semiconductor market returns to sustained growth,” said Rudy Torrijos, research manager at IDC, in a statement. The research firm issued a new forecast, raised upward slightly from a forecast in September, that said revenues in 2023 will reach $526.5 billion, while revenues in 2024 will reach $632.8 billion.

IDC said a lengthy semiconductor inventory correction that has lasted for several quarters is now subsiding for chips used in PCs and smartphones. Also, chips for automotive and industrials are expected to see a return to normal inventory levels in second half of 2024 due to the need for chips for electrification.

AI PCs and AI smartphones, as well as AI chips for servers used in data centers and cloud operations, will also boost memory prices and DRAM volume, IDC said.

And, the important China market will begin recovering in the second half of 2024, IDC said.  China represents 20% of sales for some chipmakers because of its vast market size across consumers and industrial users.

“The semiconductor market reached a bottom and has begun to grow on a quarter-over-quarter basis,” said Mario Morales, group vice president at IDC. One early indicator of the positive behavior is a rise in DRAM prices.

The analysts also see increased demand for AI servers and AI-enabled devices through 2024-2026 to fuel a new upgrade cycle across enterprises. AI silicon will account for nearly $200 billion in chip revenues in 2026, they predicted.

IDC’s optimistic outlook was published one day after experts at the SEMI trade group issued a similar sentiment, saying the global chip market is “on track for recovery in the fourth quarter…setting the stage for continued growth in 2024.”

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One of the few concerns IDC expressed was over wafers, with pricing expected to remain flat next year. IDC also predicted capex spending will improve in second half of 2024. In the US, the CHIP Act investments will help stimulate investment across the supply chain, IDC said.