Global semiconductor chip sales rose 19.1% to $627.6 billion in 2024 and growth is expected to grow double-digit percentages in 2025, according to a report by the Semiconductor Industry Association (SIA).
The SIA said the 2024 numbers hit a new record and compared to the 2023 total of $526.8 billion. The reason, of course, was spectacular demand for AI processors and memory, said John Neuffer, CEO of the SIA, the chip industry’s lobbying group, in an interview with GamesBeat.
The 19.1% actual growth was above the 13% forecast that the SIA made, and the 2024 growth compares to an 8.2% contraction in 2023. That’s a huge swing in demand thanks to AI. And it’s one reason why Nvidia is one of the most valuable companies in the world with a valuation of $3.15 trillion.
And in 2025, chip sales are expected to hit 11.2% growth, said Greg LaRocca, director of market research and economic policy at the SIA, in an interview. This is important for the economy as chips are the heart of everything electronic and are a vital part of the technology food chain.
The data comes at an important time in the national discourse, as President Donald Trump has pledged to place tariffs on semiconductor chips coming not only from China but also our ally Taiwan. While he took action against Mexico, China and Canada last weekend, he did not yet place tariffs on Taiwan or chips. (The Mexico and Canada tariffs were delayed 30 days).
Jensen Huang, CEO of Nvidia, visited Trump last Friday at the White House to emphasize the importance of the semiconductor industry and U.S. leadership in AI. Nvidia gets its chips from Taiwan. The Consumer Technology Association estimates that tariffs could make game consoles 40% more expensive for U.S. consumers, with a 26% price increase for smartphones and 46% price increase for laptops.
The SIA has also been a big advocate for the Chips & Science Act, a bipartisan-supported law that earmarked $52 billion for rebuilding chip manufacturing in the U.S. Intel noted it has already received $2 billion in funds for its U.S. chip factories. It remains to be seen if the new administration will continue to support the act, as advocates call for more money to be earmarked for it.
“After all of the plants that are in the process of being built and started and launched, at the end of all of that, by 2032, the U.S. may be up around 14% or something. It takes time. It is an absolutely massive industry. And moving the needle from 10% to 14% is in fact a remarkably good number. It’s a sign of how hard it is to move. And it’s the same for Europe, of course,” Duncan Stewart, a chip leader at Deloitte, told me in an interview for a report this week.
As for the chip numbers, fourth-quarter sales of $170.9 billion were 17.1% more than the fourth quarter of 2023, and 3.0% higher than the third quarter of 2024. And global sales for the month of December 2024 were $57.0 billion, a decrease of 1.2% compared to the November 2024 total.
Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average. SIA represents 99% of the U.S. semiconductor industry by revenue and nearly two-thirds of non-U.S. chip firms.
“The global semiconductor market experienced its highest-ever sales year in 2024, topping $600 billion in annual sales for the first time, and double-digit market growth is projected for 2025,” said Neuffer. “Semiconductors enable virtually all modern technologies – including medical devices, communications, defense applications, AI, advanced transportation, and countless others – and the long-term industry outlook is incredibly strong.”
Regionally, yearly sales were up in the Americas (44.8%), China (18.3%), and Asia Pacific/All Others (12.5%), but down in Japan (-0.4%), and Europe (-8.1%). Month-to-month sales in December increased in the Americas (3.2%), but were down in Asia Pacific/All Others (-1.4%), China (-3.8%), Japan (-4.7%), and Europe (-6.4%).
“As semiconductor sales rise globally, America is projected to triple its domestic chip manufacturing capacity by 2032, putting our country in a strong position to reinforce its supply chains and help meet rising global demand,” Neuffer said. “To keep America on top in chip technology, leaders in Washington should advance policies that promote semiconductor production and innovation, strengthen the high-tech workforce, and restore U.S. trade leadership.”
Several semiconductor product segments stood out in 2024. Sales of logic products totaled $212.6 billion in 2024, making it the largest product category by sales. Memory products were second in terms of sales, increasing by 78.9% in 2024 to a total of $165.1 billion. DRAM products, a subset of memory, recorded an 82.6% sales increase, the largest percentage growth of any product category in 2024.
Neuffer said that the logic (including processors), memory and analog segments are often on different trajectories, as there are many different kinds of semiconductors serving all of the electronics industries. Logic and memory have been driven by demand for AI servers in data centers and AI PCs in offices and homes. But sometimes there’s a good year for logic and a bad year for memory, depending on capacity.
LaRocca said the SIA does not yet classify AI chips separately, but much of the AI tech is embedded in computer systems using logic chips. That category grew 81.% in 2024, he said.
“It’s an astounding rate of growth that we’ve never seen before,” Neuffer said. “It’s really fast growth across the board.”
But he noted the industry can be “incredibly volatile” when it comes to oscillations in areas like memory chips.
Problematic trade war?
In an understatement, Neuffer said the prospects of a trade war are “problematic.”
“Our supply chains are deeply dependent on global trade. The operation of those supply chains is everything for us. And on the other side, something like three quarters of our customers are overseas. So global trade is just a huge piece of our success,” Neuffer said.
Neuffer said he didn’t want to get into hypotheticals about what cold happen. He noted the details matter, like what happens with a chip that ships back and forth before it winds up in an electronics product purchased in the U.S. It also depends on what countries get hit with the tariffs and retaliation.
In terms of educating politicians, he said there is still some terrain to cover in terms of helping everyone understand how supply chains work.
“We view measures that raise the cost of manufacturing in the U.S. as problematic at a time when our companies have made very big, very substantial commitments to manufacture more (in the U.S.) and how that has been identified by this administration as a priority to have more manufacturing here,” Neuffer said. “We really think there’s an opportunity here to put in place kind of a comprehensive strategy that includes a number of things, like continuing with incentives that make America attractive for manufacturing, double down with some design incentives, put in place a policy to recapture our trade leadership around the world since we’re so dependent on global trade as an industry.”
Support for subsidies
Neuffer said the Chips & Science Act was incredibly important to the industry and pivotal for the country.
“But standing alone is not a strategy. It’s a piece of a bigger strategy. And the bigger strategy has immigration policy that makes sure the talent that we train here stays here, and a broader workforce strategy to train the talent here domestically,” he said.
Funding applied science and basic science is also critical in terms of keeping the U.S. competitive, he said. Some politicians have objected to giving money to corporations to build chip factories. But Neuffer noted that other countries have used subsidies to pull manufacturing out of the U.S. and now we’re behind.
“That’s why we drove into the ditch on this, is over the years. Our federal government was not in the game. Other governments around the world with chip industries had been running circles around us and were probably bemused that we were stuck and as a result our manufacturing declined dramatically over the last 30 years or so,” he said. “The Chips Act has turned that around and if somehow the incentives taper off again, so will our manufacturing footprint. That’s just the reality.”
LaRocca said that the disparity in incentives meant that it was 25% to 50% more expensive to build and operate a fab in the U.S. in the absence of any U.S. incentives compared to other countries. There are also reasons like supply chain resilience and national security to keep chip manufacturing onshore, Neuffer said. He noted that the Chips & Science Act incentives have generated nearly $500 billion in investments in the U.S. By 2032, chip manufacturing capacity in the U.S. could triple. That’s a higher rate of growth than anywhere else in the world, Neuffer said.
Chip sales were disrupted during the pandemic. While demand for PCs skyrocketed as people worked from home, factories were disrupted and the supply chain couldn’t function during COVID. The industry had a decline starting in the second half of 2022, and that led to a 8.2% drop in global sales in 2023, the SIA said. Memory chip growth in 2024 hit 70% compared to 2023.
By and large, the chi industry moves in 18-month economic cycles from oversupply to shortages. Part of the reason is it costs billions of dollars and considerable time to build a brand new factory. As demand changes, it’s hard to bring on more capacity quickly, and as a result prices change.
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