Navigating the future: Comprehensive look at semiconductor industry predictions for 2024

Semiconductors have emerged as one of the crucial components that underpin modern-day society owing to their presence in products we depend on every day. They are essential to the manufacturing of smart devices, automobiles, and several other key products that make modern life possible. This factor has led to a surge in demand for semiconductors over the past few years.

According to data of the International Data Corp. (IDC), the global semiconductor market stood at $598 billion in 2022, which is further anticipated to reach $633 billion by 2024 at a CAGR of 20.2%. With semiconductor demand set to rise, the market leaders will benefit from a comprehensive analysis of where the market is headed and what will drive demand in the upcoming years. Let us delve into some of these trends that are anticipated to reshape the future of industry in the years to come.

Broadening markets fuelled by industry needs
As we navigate the future, three main industries, namely automotive computation, data storage, and wireless, are anticipated to increase the demand for semiconductors. According to research by McKinsey, 70% of the industry’s growth will be driven by these three domains.

Among them, the strongest segment will emerge as the automobile sector, which could represent a demand of 20% by the end of the decade. If we talk about the data storage and computation market, 4–6% of the market will be fuelled by servers required to support applications such as Artificial Intelligence (AI) and cloud computing. In the wireless segment, smartphones could account for the majority of the demand, backed by the growth of 5G.

Rise in requirement for skilled talent
The manufacturing of semiconductors requires a higher degree of skill and knowledge. In this context, the demand for skilled talent is anticipated to surge in 2025. The rapid upwelling of the semiconductor industry basically exacerbated a shortage of specialists in the domains of design, controls, and other aspects of manufacturing.

As the demand for semiconductors is rising rapidly, it will lead to a rise in R&D, as well as manufacturing plants, which tends to propel the need for talent. Businesses in the talent solutions domain will have a crucial role to play. Their holistic offerings, such as talent as a service, hire, train, and deploy models, are likely to bridge this gap in the semiconductor industry.

More focus on transparency and collaboration
The industry is now focusing more on achieving supply chain transparency, and the same trajectory is anticipated to be followed in 2025, but with nuanced advancements. The companies are willing to collaborate and share knowledge and information in a bid to achieve this common goal.

A seamless supply chain is considered to be built by building partnerships with suppliers during the design, development, and later stages. It will lead the suppliers to be more business partners, fostering a positive change in the industry. Furthermore, the emphasis is also on building traceability or digitalization in the supply chain.

All things considered
The future of the semiconductor industry looks bright, notwithstanding short-term volatility challenges, supply chain disruptions, or a rapidly changing geopolitical and global economic outlook. The industry is already working on addressing these challenges via comprehensive solutions, and based on that, the growth of the industry is crystal clear. The market growth will be driven by automotive computation, data storage, and wireless.

Furthermore, there will be a rise in demand for skilled talent, and lastly, the industry will focus on supply chain transparency and collaboration. With the growth set to continue in the long term, industry leaders will have to focus on R&D, manufacturing capabilities, and sourcing in a bid to unlock new opportunity areas.
 
-- Aditya Joshi, CEO and MD, Opalforce.