Semiconductor manufacturing sector poised for robust growth driven by AI investments

The semiconductor manufacturing sector is poised for a robust growth trajectory in the coming years, driven largely by significant investments in technology and innovation, particularly in artificial intelligence (AI) applications. SEMI CEO Ajit Manocha highlighted the sector’s critical role in supporting the global economy and promoting technological advancements, stating, “Three consecutive years of projected growth in investments in semiconductor manufacturing reflect the vital role our industry plays in underpinning the global economy and advancing technology innovation.”

For 2024, the wafer fab equipment (WFE) segment, encompassing wafer processing, mask/reticle, and fab facilities equipment, anticipates a solid increase in sales, projected to rise by 5.4% from the previous year’s $96 billion to an estimated $101 billion. This growth is attributed primarily to the demand for Dynamic Random Access Memory (DRAM), High Bandwidth Memory (HBM), and notable investments emerging from China. The WFE sales are expected to continue this upward trend, with increases of 6.8% in 2025 and 14% in 2026, ultimately reaching $123 billion.

In addition, after experiencing two years of contraction, the back-end equipment segment is set to witness a strong recovery, particularly in the latter half of 2024. Sales of semiconductor test equipment are projected to grow by 13.8%, amounting to approximately $7.1 billion, while assembly and packaging (A&P) equipment sales are forecast to jump 22.6% to reach $4.9 billion.

The momentum within the back-end segment is tethered closely to the growing complexity of semiconductor devices used in high-performance computing, as well as the escalating demand across mobile, automotive, and industrial markets. In regard to WFE dedicated to foundry and logic applications, a stable outlook is anticipated, maintaining a year-on-year target of $58.6 billion in 2024, with an expected modest growth of 2.8% in 2025 and a more robust 15% increase to $69.3 billion in 2026.

The semiconductor sector is particularly focused on memory-related capital expenditures, slated for significant increases through 2026, especially driven by escalating demand for HBM applications in AI deployments and ongoing technology migrations. In terms of NAND equipment sales, a marginal growth of 0.7% is anticipated for 2024, reaching $9.3 billion, before marking a notable 47.8% expansion to $13.7 billion in 2025 and a further 9.7% increase in 2026.

Conversely, DRAM equipment sales are predicted to experience considerable growth, with projections indicating a 35.3% rise to $18.8 billion in 2024, followed by increases of 10.4% and 6.2% in the subsequent years. Notably, China, Taiwan, and Korea are expected to retain their positions as the leading regions for equipment investments through 2026. China is anticipated to sustain its status as the top destination for semiconductor equipment spending, with projected purchases soaring to a record $49 billion in 2024.

Despite a general decrease in equipment spending across various regions in 2024, with recovery expected in 2025, China’s investment landscape is predicted to undergo a contraction in 2025, attributed to overwhelming investments made over the previous three years. As the global semiconductor industry continues to evolve, all regions tracked are poised for recovery and spending increases in 2026, establishing a significant outlook for stakeholders in the semiconductor ecosystem.

Source: Noah Wire Services