We’re pleased to share this month’s executive summary from Future Horizons’ March report, featuring the latest insights and forecasts for the semiconductor market.
Executive Summary
Annualised growth rates continued their declining trend in January, with Total Semiconductors growing 14.8 percent, down from 15.9 percent in December and 22.8 percent in November, led by Total Memory, at 29.3 percent, a further sharp reduction from December’s 38.8 and November’s 87.2 percent numbers.
Logic growth was the star performer, at a healthy 29.7 percent growth, up from 23.1 percent in December, with Analog ICs losing ground at minus 1.0 percent, compared with December’s 3.3 growth.
Total Micro was also stuck in the doldrums, chalking up a 0.5 percent decline, albeit an improvement on December’s minus 2.5 percent growth.
The overall IC market ended up growing 19.3 percent year-on-year, down slightly from last month’s 20.3 percent number but significantly lower than November’s 29.5 percent growth. The overall trends are more favouring retrenchment vs. growth.
Annualised growth rates are, however, just one side of the coin. Our preferred measure is the month-on-month growth trends which we believe are a more accurate reflection of the overall industry health.
The picture here paints a much darker outlook, compared with the dizzy double-digit annualised monthly rates, with January’s sales down 5.6 percent from December, on top of November’s 8.7 percent decline. This decline was broadly spread across all industry segments, with Logic ICs the only sector seemingly bucking this trend.
Quite where the overall 2025 growth rate ends up will be determined by how much longer the current Hyperscale AI server market boom lasts. Were that to stumble, watch out for the annualised growth rate to implode.
AI aside, the overall chip market is now entering its eleventh quarter of recession since the Covid boom collapse in July 2022, with the high growth rate numbers propped up solely by the current AI-fueled market frenzy. All other mainstream product sectors are still wallowing in excess inventory and weak end-user demand.
History shows how difficult it is to spot the exact moment markets turn but the parallels between the current AI exuberance and the late 1990s telecoms network infrastructure bonanza remain uncannily profound, with the only obvious difference being most of the dotcom companies were ephemeral newcomers whereas today’s AI champions include some of the world’s most profitable and impressive groups including Apple, Amazon and Microsoft, as well as vNIDIA, the main supplier to the AI economy.
The sword of dotcom bust 2.0 hangs unnervingly from a thread. If the AI market were to even slow, let alone implode, it would take the chip market with it and our 15 percent growth forecast would overnight become a 15 percent decline.
Boom and bust cycles are often forewarned but past experiences are more often forgotten than learned and bad practices mostly unaltered.
You can read the full March report here: https://www.futurehorizons.com/page/137/
