KUALA LUMPUR (July 15): The semiconductor sector’s revenue growth is expected to experience a decline to 24% in the first quarter of 2025 (1Q2025), from 44% in the same period the prior year, according to S&P Global Market Intelligence.
“The semiconductor sector is currently experiencing varied recovery rates across a myriad of different segments.
“With AI (artificial intelligence) applications and Nvidia Corp experiencing an all-time high in its successes, the challenges inevitably follow suit,” said S&P in a statement on Monday.
The research firm said while the smartphone market has been experiencing a positive increase in growth due to pent-up demand, it should be noted that the long-term trends suggest a decline due to market saturation.
Meanwhile, personal computer shipments are experiencing an upgrade cycle which is further driven by AI-enabled machines.
In contrast, connected devices like streaming media and video game consoles are enduring a decline in growth predominantly because of market maturity and lack of products being launched.
Meanwhile, international volumes of chips are increasing, with growth of 11% in the three months to May 31, 2024, with memory chipmakers experiencing an obvious growth due to the requirements of AI applications.
“Despite weak export data for Taiwan, TSMC and other firms like Samsung and Micron are expanding. The sector will also be aided by the funds recently provided from the US CHIPS and Science Act,” added S&P.
The hurdle to recovery relies on export controls related to national security, particularly by both the US and the EU.
S&P said this heavily impacts the semiconductor supply chains that are connected to mainland China, which is advancing its domestic chip production capabilities.
It should be noted that the widening trade restrictions on computer chips and manufacturing technology have a substantial effect on chipmakers’ revenues, as 30% of their sales originate from mainland China.