The Impact of Global Trends on Semiconductor Revenue in 2025

Semiconductor giants like TSMC, ASML, Samsung, and Intel have experienced consistent revenue growth over the past five years. However, 2024 is projected to see a 30% decline in revenue across the industry. Several factors, including cyclical demand slowdowns, geopolitical tensions, and technological transitions, contribute to this downturn.

Post-Pandemic Demand Slowdown

The semiconductor industry experienced a surge in demand between 2020 and 2022, driven by increased consumer spending on AI, cloud computing, gaming, and personal electronics. However, as global supply chains stabilized and companies accumulated excess inventory, demand began to weaken in 2023, leading to a significant correction.

Industries that heavily rely on semiconductors, such as smartphones, personal computers, and data centers, have reported slower growth or stagnation. As a result, chip manufacturers have scaled back production, causing revenue declines across the supply chain.

Memory Chip Market Overcapacity

The DRAM and NAND flash markets have been particularly affected by overproduction and falling prices. Leading memory manufacturers, including Samsung and SK Hynix, have aggressively cut production in an effort to stabilize the market.

Despite the rise of AI-driven demand for high-bandwidth memory (HBM), the slowdown in traditional memory markets has created an overall drag on industry revenue. Companies with significant exposure to memory chips have been forced to adjust revenue expectations accordingly.

U.S.-China Chip War and Export Restrictions

Ongoing trade tensions between the U.S. and China have led to new restrictions on semiconductor exports, particularly affecting ASML, TSMC, and Nvidia. The ban on high-end chip sales and lithography equipment has significantly impacted Chinese semiconductor manufacturers, leading to a sharp reduction in orders.

Many Chinese companies stockpiled chips throughout 2023 to prepare for these restrictions. As a result, demand in 2024 has softened, contributing to revenue declines for chipmakers, foundries, and semiconductor equipment suppliers.

Intel’s Market Share Decline

Once the dominant force in semiconductors, Intel has struggled to keep up with competitors like TSMC and AMD. Years of delays in 10nm and 7nm process nodes have led to an erosion of market share in both consumer and data center chips.

Although Intel is investing heavily in its foundry business (IFS) and new fabrication plants, the company has not yet regained a competitive edge. Lower chip production volume and shrinking market share have further contributed to the semiconductor industry's overall revenue decline.

TSMC’s Transition to 2nm & Expansion into the U.S.

TSMC’s 2nm process is fully designed and scheduled for mass production in 2025. However, this transition period is expected to reduce short-term revenues as customers prepare to shift to newer, more efficient nodes.

Additionally, TSMC’s expansion into the U.S. and Japan has introduced high capital expenditures. The construction of advanced fabrication plants in Arizona and Kumamoto has required significant investment, cutting into overall profitability in 2024.

AI Demand Is Not Yet Large Enough to Offset Losses

The rise of AI-driven semiconductors, such as Nvidia’s H100, AMD’s MI300X, and Google’s TPUs, has created a new market for high-performance computing (HPC) chips. However, AI chip demand still represents a relatively small fraction of the total semiconductor market.

Sluggish demand in traditional segments such as PCs, automotive, and consumer electronics has outweighed growth in AI chips, resulting in an overall decline in revenue projections.

Conclusion: A Temporary Decline Before 2025 Growth

While 2024 is expected to bring a 30% drop in semiconductor revenue, the industry is likely to rebound by late 2025 and 2026. Several catalysts for future growth include:

• Increased adoption of AI and HPC chips
• The rollout of TSMC’s 2nm chips
• Intel’s potential recovery in foundry services
• ASML’s deployment of High-NA EUV machines

Despite short-term challenges, the semiconductor industry remains positioned for long-term expansion as AI, 5G, and next-generation computing drive future demand.