According to forecasts from the U.S. Semiconductor Industry Association, as demand for chips increases in many fields, the global chip industry is expected to rebound significantly this year, and sales are expected to reach record highs.
The Semiconductor Industry Association issued a statement on Monday saying that global chip sales fell 8.2% to US$526.8 billion in 2023, but improvements in the second half of the year partially moderated the overall decline. The association said momentum points to sales rising 13% this year to nearly $600 billion.
John Neuffer, president and CEO of the Semiconductor Industry Association, said, "Global semiconductor sales were sluggish in early 2023 but rebounded strongly in the second half, and we expect this trend to continue in 2024. As chips play an increasingly important role in countless products on which the world depends, the long-term outlook for the semiconductor market is very strong."
Nvidia is at the heart of the industry's growth. As the chip manufacturer with the highest market value, Nvidia, which owns the market-leading artificial intelligence accelerator, has not been affected by the industry downturn. Such chips are in high demand because they can handle the vast amounts of data companies need to develop artificial intelligence models. Nvidia's sales are expected to more than double to nearly $60 billion in the fiscal year ending last month. Analysts expect the company's annual revenue to exceed $90 billion by January 2025.
Investors are eyeing the prospects for future growth, especially from chipmakers like Nvidia. They believe such companies will benefit from increased spending on AI-related hardware. The Philadelphia Stock Exchange Semiconductor Index has risen 65% in 2023 and has gained 3.9% this year as of last Friday's close.
However, some of the chip industry's largest companies are having a tough time in 2023, with sales falling sharply as customers cut orders and digest bloated inventories. Intel, Qualcomm and other companies said that the market is returning to normal buying patterns and that the worst period of contraction has passed.
Neuffer believes that the industry's weakness in the first half of 2023 is a "sequela" of the epidemic. During the epidemic, electronic product manufacturers struggled to obtain sufficient chip supplies, and demand reached unprecedented levels. This led to many customers ordering too much. When the economy returned to normal and the purchase of personal computers and other equipment slowed down, they found themselves in an oversupply situation.