Semiconductor Market to grow by USD 157.1 Billion (2025-2029), Rising IoT Device Adoption Fuels Growth, Report Highlights How AI is Redefining the Landscape - Technavio

NEW YORK, Jan. 27, 2025 /PRNewswire/ -- Report with market evolution powered by AI - The global semiconductor market size is estimated to grow by USD 157.1 billion from 2025-2029, according to Technavio. The market is estimated to grow at a CAGR of  4.5%  during the forecast period. Growing adoption of iot devices is driving market growth, with a trend towards increasing adoption of sustainability manufacturing. However, supply-demand gap in global semiconductor market  poses a challenge. Key market players include Analog Devices Inc., Broadcom Inc., Infineon Technologies AG, Intel Corp., MediaTek Inc., Microchip Technology Inc., Micron Technology Inc., NVIDIA Corp., NXP Semiconductors NV, ON Semiconductor Corp., Qualcomm Inc., Renesas Electronics Corp., Samsung Electronics Co. Ltd., Skyworks Solutions Inc., Sony Group Corp., STMicroelectronics NV, Taiwan Semiconductor Manufacturing Co. Ltd., Texas Instruments Inc., Toshiba Corp., and Wolfspeed Inc..

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Market Driver

The semiconductor market is experiencing significant trends driven by Artificial Intelligence (AI), Internet of Things (IoT), and Machine Learning. According to IDC, the global semiconductor industry is projected to grow, with B2B enterprises, B2G enterprises, and B2C enterprises driving demand. Semiconductor companies like Navitas Semiconductor and Polymatech Electronics are making strides in AI semiconductors. Integrated Circuit (IC) manufacturers are focusing on high-energy, power-efficient devices for wireless and portable electronic products. Power semiconductors, including MOSFETs and IGBTs, are essential for efficient power management in various applications. The semiconductor industry is also adapting to emerging technologies like 5G, 6G, VR, and autonomous driving. The telecom sector, automotive industry, and consumer electronics are major markets for semiconductors. The semiconductor materials segment, including silicon and gallium arsenide, is crucial for advanced microelectronics and high-end data centers. Affordability, dependability, and compact size are key factors driving demand. Manufacturing capacity constraints, changes in demand, and customer behavior are challenges for semiconductor companies. Skilled workers, lead times, and capital investments are essential for profitable operations. The post-pandemic era will bring intense competition and widespread adoption of semiconductors in various industries. 

The semiconductor industry faces significant challenges in meeting the increasing demand for these essential components due to the energy-intensive and water-dependent nature of their production. One semiconductor fabrication plant consumes approximately 1 terawatt-hour (TWh) of energy per year and requires two-to-four million gallons of ultra-pure water daily. This demand is driven by emerging technologies like 5G, Artificial Intelligence (AI), and the Internet of Things (IoT). To address these sustainability concerns, industry leaders like Taiwan Semiconductor Manufacturing Company, Limited (TSMC) and Intel Corporation (Intel) are implementing substantial sustainability programs. TSMC's initiatives include water recycling applications, expanding diverse water sources, and developing pollution prevention techniques to optimize water usage efficiency. 

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 Market Challenges

• The semiconductor market is facing significant challenges from emerging technologies such as Artificial Intelligence, Internet of Things, and Machine Learning. According to IDC, the semiconductor industry is expected to grow in the forthcoming years due to the rising need for electronics in various sectors like B2B enterprises, B2G enterprises, and B2C enterprises. However, this growth comes with hurdles such as affordability, dependability, and compact size. Semiconductor companies are investing in AI semiconductors for smart manufacturing and autonomous driving. The chip industry is also focusing on high-energy, power-efficient devices for wireless and portable electronic products. The telecom sector is a major consumer of power semiconductors like IGBT and low-power converters for mobile networks and 5G subscriptions. The semiconductor materials segment is witnessing advancements in materials like gallium arsenide and emerging materials like aluminum nitride and carbon nanotubes. The fab utilization rate is a concern for profitable semiconductor companies, and changes in customer behavior and demand are impacting business revenues and corporate operations. The supply side challenges include lead times, capital investments, manufacturing capacity constraints, and shortages of essential parts and components. Export controls, cyberattacks, and intense competition are also major concerns. Navitas Semiconductor, Polymatech Electronics, ASE/SPIL, Amkor, and other semiconductor companies are addressing these challenges through innovative solutions and strategic partnerships. The semiconductor industry is undergoing transformational changes, and the post-pandemic era is expected to bring more progress and breakthroughs in subsequent technologies. The semiconductor devices segment includes diverse electronics like MOSFET, power MOSFETs, and switching power supplies, among others. The semiconductor materials segment focuses on digitally integrated ICs, process chemicals, photomasks, and other essential materials. The semiconductor market is a critical part of contemporary technology and is essential for a sustainable future in various sectors like automotive, consumer electronics, IT and communications, healthcare, aerospace and defense, and more.
• The semiconductor market has witnessed significant growth due to the increasing use of technology in various sectors. Connected devices, artificial intelligence, machine learning, data centers, and smart technologies are key drivers of this demand. However, the industry faces challenges as supply struggles to keep up. Manufacturers face pressure to meet demand, leading to longer lead times and potential price increases. These factors can impact profit margins for manufacturers and raise costs for end-users, potentially affecting consumer spending on electronics.

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Segment Overview 

This semiconductor market report extensively covers market segmentation by  

1. Application 
• 1.1 N and C
• 1.2 Data processing
• 1.3 Industrial
• 1.4 Consumer electronics
• 1.5 Others
2. Product 
• 2.1 ICs
• 2.2 Optoelectronics
• 2.3 Discrete semiconductors
• 2.4 Sensors
3. Geography 
• 3.1 APAC
• 3.2 North America
• 3.3 Europe
• 3.4 South America
• 3.5 Middle East and Africa

1.1 N and C-  The Networking and Communication (N&C) segment is a substantial part of the global semiconductor market, consisting of various semiconductor devices and components used in communication technologies and networking infrastructures. With the world's increasing connectivity and dependence on efficient communication, the demand for semiconductor solutions in this segment continues to expand. The widespread use of smartphones, tablets, laptops, IoT devices, and other connected devices has resulted in heightened data demand. Consumers and businesses seek faster and more dependable communication, necessitating advanced semiconductor solutions for high-speed data transmission. The rollout of 5G technology is anticipated to significantly increase data speeds and reduce latency, enabling a multitude of new applications and services, such as improved mobile connectivity. 5G networks necessitate a vast assortment of semiconductor components, including RF front-end modules, baseband processors, and antennas, which will fuel the demand for communication Integrated Circuits (ICs). Additionally, the burgeoning popularity of IoT devices and applications, ranging from smart homes to industrial sensors, heavily relies on semiconductor solutions for wireless connectivity, data processing, and energy efficiency. The growing preference for video streaming, online gaming, and social media platforms places immense demands on network bandwidth. Semiconductor solutions play a crucial role in facilitating the efficient and reliable transmission of video content. Consequently, the expanding demand for semiconductors is predicted to fuel the growth of the N&C segment of the global semiconductor market throughout the forecast period.

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Research Analysis

The semiconductor market is experiencing significant growth due to the increasing demand for contemporary technology in various industries. Artificial intelligence and the Internet of Things are driving the market, with machine learning algorithms requiring advanced semiconductor devices for processing and analysis. According to IDC, the global semiconductor market is expected to reach USD1.1 trillion by 2026, with B2B enterprises, B2G enterprises, and B2C enterprises being the major consumers. Integrated circuits, memory chips, computer chips, data center chips, and communication chips are the primary semiconductor types in demand. Inventories are being managed carefully to maintain profitability, with fab utilization remaining high. Spring has brought new breakthroughs in semiconducting materials, leading to subsequent technologies such as VAT memory and advanced transistors and diodes. Semiconductors are essential electronic components for contemporary technology progress.

Market Research Overview

The semiconductor market is experiencing significant growth due to the increasing adoption of artificial intelligence, Internet of Things, and machine learning technologies in various industries. The IDC reports a strong demand for integrated circuits from B2B enterprises, B2G enterprises, and B2C enterprises. The semiconductor industry's progress is influenced by factors such as the level of digitization, exchange rates, and changes in demand. In the upcoming years, emerging technologies like VR, 5G, and 6G are expected to drive the market further. Semiconductor devices, including memory chips, computer chips, data center chips, and power semiconductors, are essential parts of contemporary technology. Their affordability, dependability, compact size, and utilization in diverse electronics make them indispensable. The semiconductor materials segment focuses on advanced microelectronics, high-end data centers, and automotive applications. The semiconductor industry faces intense competition, with companies investing in capital and manufacturing capacity to meet the rising need for semiconductors. However, changes in demand, customer behavior, and supply side issues like lead times, manufacturing capacity constraints, and shortages can impact business revenues and corporate operations. Semiconductor companies must adapt to the post-pandemic era by focusing on essential parts of the supply chain and ensuring a profitable and efficient manufacturing process. The semiconductor industry IP, cyberattacks, and export controls are critical concerns for companies in the sector. Semiconductor devices are used in various applications, such as telecom sector switching power supplies, power MOSFETs, mobile networks, and automotive applications. Power semiconductors, including IGBT, low-power converters, and semiconductor switches, are essential for efficient power management and system architectures. The semiconductor materials segment includes materials like silicon, gallium arsenide, and emerging materials like aluminum nitride and carbon nanotubes. These materials are used in digitally integrated ICs, electrical telecommunication industries, energy sector applications, and optoelectronic applications. The semiconductor industry's progress is marked by breakthroughs and subsequent technologies, with fundamental functional units like transistors and diodes at its core. The industry's top-down approach and bottom-up validation ensure the development of high-energy, power-efficient devices for wireless and portable electronic products. The semiconductor industry's future is promising, with a widespread adoption of emerging technologies like autonomous driving, electrification, and automony in electric vehicles, and a sustainable future for electronics in various industries. Skilled workers and lead times are essential for the industry's growth, with capital investments and manufacturing capacity constraints playing a significant role in its success.

Table of Contents:

1. Executive Summary
2. Market Landscape
3. Market Sizing
4. Historic Market Size
5. Five Forces Analysis
6. Market Segmentation
   • Application
     • N And C
     • Data Processing
     • Industrial
     • Consumer Electronics
     • Others
   • Product
     • ICs
     • Optoelectronics
     • Discrete Semiconductors
     • Sensors
   • Geography
     • APAC
     • North America
     • Europe
     • South America
     • Middle East And Africa
7. Customer Landscape
8. Geographic Landscape
9. Drivers, Challenges, and Trends
10. Company Landscape
11. Company Analysis
12. Appendix

About Technavio

Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions.

With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios.

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SOURCE Technavio