Although the semiconductor industry is expected to achieve nearly 20% growth in 2024, there is hardly anything worth celebrating. The initial forecast of a 17.6% increase was mainly driven by an increase in average selling price (ASP), rather than a real increase in unit demand. However, Payne believes that a true recovery cannot occur unless there is an increase in unit sales.

20% growth: We dream of such a number, but we think it's a bad number because it doesn't reflect the reality we see, "Payne said. The foundation of last year's growth was very fragile and unsustainable, to the point where we really don't believe it's true, "he added. Key indicators such as wafer fab utilization remained weak throughout the year," except in the most cutting-edge areas

2025 forecast: bear market+6%, bull market+16%

As we enter 2025, Payne said he expects another double-digit growth this year, but 'we believe this is an artificial number'.

Excess inventory and market value growth are still driven by average selling prices rather than sales volume. Although the average selling price has been decreasing, this time it seems more like a downward adjustment rather than a sharp drop.

Payne said, "When we observe the quarterly growth rate pattern, the number we get looks like 12%, but it may eventually reach a range between 6% and 16%, depending on the specific situation." This growth will translate into a value of over $706 billion for the chip market by 2025.

Despite the positive data, the downward cycle has not yet ended, and there is still a long way to go for true recovery, "he said." The foundation of recovery is fragile

Payne stated that there is a cyclical nature in the chip market, which is a common warning, but it is entirely caused by memory. The reason why the semiconductor industry is cyclical is that production capacity and demand can never match. This is not a cyclical reason. It has nothing to do with end markets, geographical regions, or products. All of this is related to simple supply-demand balance

Payne continued, 'Memory is always blamed for everything.'. To clarify the facts, he said, "We plotted curves with and without memory, and these two curves are very significantly attracted to each other. So this is not a memory issue

market uncertainty

There may be some excessive phenomena in 2025. Payne stated that China not only has enormous potential to provide mature node technologies to the world, but the Chinese market also faces numerous challenges. He also mentioned the atmosphere of uncertainty related to the Trump administration's' America First 'investment policy, which has proven to be' very dangerous for other countries in the world '.

Looking ahead, Payne has identified two warning signs: the potential collapse of the artificial intelligence server market and geopolitical uncertainty.

Firstly, the slowdown in demand for artificial intelligence data centers is inevitable, and the true prosperity driven by artificial intelligence products will still take time. Penn said, "The artificial intelligence server market has been at a high level, attracting a large amount of capital investment, but we have not yet seen investment returns

Secondly, geopolitical tensions have intensified volatility and uncertainty, and global markets dislike uncertainty.

The signs are not optimistic, and now there are even people talking about a recession in the US economy, "commented Payne. The word 'recession' has returned to the agenda, and once you start thinking that the world will fall into recession, it really will. It becomes a self fulfilling prophecy

Payne warns that overall, the deteriorating economic outlook will push the recovery into a bear market.

Next year, it may decrease by as much as 34%

Affected by US tariff policies, the global semiconductor market is full of uncertainty. Some analysts also believe that if the average tariff rate exceeds 40% due to the deepening of the conflict between China and the United States, the semiconductor market size may decrease by about 34% next year compared to the initial estimate.

According to a survey conducted by market research firm TechInsights on the 26th, it is expected that the growth of the global semiconductor market will experience significant fluctuations due to the impact of US tariffs.

TechInsights had previously lowered its global semiconductor market size forecast in response to the US tariff policy announced in mid month. Assuming a tariff rate of 10%, the market size is expected to be $777 billion this year and $844 billion next year.

But if the tariff rate on China rises to 30-40% and the global tariff rate rises to 20-40%, the size of the semiconductor market is expected to decline significantly. It is expected to be $736 billion this year and $699 billion next year.

TechInsights explained, "Assuming so, there will be a clear trend of inventory retention for products such as smartphones, personal computers, and semiconductors among customers in the first half of this year. In the second half of the year, data center semiconductors will remain strong, but shipments of electronic products will slow down

As tariffs between China and the United States exceed 100%, it is expected that the overall tariff rate will exceed 40%, and the decline in the semiconductor equipment market is expected to further increase.

It is expected to be 696 billion US dollars this year and 557 billion US dollars next year. Compared with the basic assumption of a 10% tariff rate, analysis suggests that the maximum tariff reduction this year may be 10%, and the maximum reduction next year may be 34%.

TechInsights stated that in this situation, profits for hyperscale data centers will face pressure, capital expenditures for data centers will decrease, and demand for GPUs and HBM will also decrease starting from the second half of this year. ”The report also states that "consumer demand for electronic products in the United States and the European Union will decrease