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After experiencing shortages and supply chain disruptions both during and after the pandemic, the semiconductor industry may be taking a breather. Some component categories are still experiencing disruption while others are in ample supply. With the timeline from concept to completion on new fabrication plants extending out several years (or more), some factories that were still in the planning stages when the market shifted are now being reconsidered.
Overall the news is fairly upbeat. Global semiconductor sales increased by nearly 18% in January compared to the same period in 2024, according to the Semiconductor Industry Association. In an early-March report, the SIA says that while sales hit the highest-ever total for the month of January, worldwide chip sales decreased 1.7% in January (compared to the prior month).
Regionally, SIA says year-over-year sales (January 2025 vs. January 2024) increased in the Americas (50.7%), Asia Pacific/All Other (9.0%), China (6.5%), and Japan (5.7%), but were down in Europe (−6.4%). Month-to-month sales in January increased in Asia Pacific/All Other (1.6%), but were down in Europe (−1.3%), China (−2.0%), Japan (−3.1%), and the Americas (−3.5%).
“Following its highest-ever annual sales total in 2024, the global semiconductor market maintained momentum in January, hitting its highest-ever monthly sales total for the month of January, despite a slight decline from the month of December,” said SIA’s John Neuffer, in a press release. “Year-to-year sales increased by more than 17% for the ninth consecutive month, driven by a 50.7% year-to-year sales increase in the Americas.”
A Period of Transition
Some companies are already making moves to head off a potential slowdown in demand for semiconductors. Earlier this month Intel announced that it was postponing its $28 billion chip manufacturing project until 2030 in order to “align production with market demand while navigating potential renegotiations,” Technology Magazine reports, noting that the decision comes “during a period of transition and uncertainty in the global semiconductor market.”
The factory in New Albany, Ohio will now begin operations between 2030 and 2031, extending the timeline by at least five years from the original plans. “This delay is announced amid Intel also cutting capital expenses following its strategic pivot to become a contract chip manufacturer for other companies, which has impacted its financial stability,” the publication reports.
A second Intel fab in Ohio is projected to be completed in 2031 and begin operations in 2032, with construction continuing “at a slower pace over the next few years.” According to Technology Magazine, the semiconductor industry as a whole is now “experiencing a complex phase of realignment causing chip manufacturers worldwide to grapple with excess inventory, reduced consumer spending on electronics and cautious enterprise investments in technology infrastructure.”
Demand Tails Off
In another signal of a shift in semiconductor market dynamics, China’s Semiconductor Manufacturing International Corp. (SMIC) says the market for its primary product—mature-node chips—could be oversupplied by the second half of this year (mature-node chips are generally those produced using older, established manufacturing processes).
“SMIC focuses on established chips for consumer electronics and home appliances which enjoyed a demand surge during stay-at-home policies of the COVID-19 pandemic, but suffered as consumer replacement demand tailed off with people returning to offices,” The Economic Times reports.
US export controls restricting access to advanced chipmaking technology have seen Chinese chip firms including SMIC focusing on the mature-node segment, gaining market share from established players such as Taiwan’s Powerchip, the publication adds. And, SMIC has ramped up investment to expand production capacity and strengthen China’s domestic semiconductor capability.
What’s Coming Next?
Looking ahead, ING expects robust demand for semiconductors to continue through the rest of the year—but says not all segments will be buoyed by the rising tide.
“In 2025, we expect 9.5% growth in the global semiconductor market, driven by robust demand for data center services, including AI,” the global financial institution predicts. “However, growth in other, more mature segments is expected to be stagnant. Our forecast is lower than the projections of the World Semiconductor Trade Statistics and others, but slightly exceeds ASML's (a dominant player in the semiconductor lithography market) long-term growth expectations for the sector.”
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