The global semiconductor manufacturing industry showed continued improvement in the second quarter of 2024, with notable growth in integrated circuit (IC) sales, stabilising capital expenditure, and increased wafer fab capacity, according to the Q2 2024 Semiconductor Manufacturing Monitor (SMM) Report released by SEMI in partnership with TechInsights.
While a slower recovery in some end markets tempered growth earlier in the year, a surge in demand for AI chips and high bandwidth memory (HBM) provided significant momentum for the industry’s expansion.
The first half of 2024 saw a 0.8% year-over-year (YoY) decline in electronics sales due to seasonality and weaker-than-expected consumer demand. However, forecasts for Q3 2024 predict a rebound, with electronics sales expected to grow 4% YoY and 9% compared to Q2 2024. IC sales demonstrated strong performance with a 27% YoY increase in Q2 2024, and projections suggest a further 29% surge in Q3 2024, surpassing the record levels of 2021, driven by AI-fuelled demand. This uptick in demand also contributed to a 2.6% YoY decrease in IC inventory levels in the first half of the year.
Installed wafer fab capacity reached 40.5 million wafers per quarter (measured in 300mm wafer equivalents) in Q2 2024 and is expected to grow by 1.6% in Q3 2024. Capacity related to foundry and logic operations grew by 2.0% in Q2 2024, with a further 1.9% increase anticipated in Q3 2024, driven by investments in advanced nodes. Memory capacity, bolstered by strong demand for HBM and improving pricing conditions, rose 0.7% in Q2 2024 and is forecasted to grow by 1.1% in Q3 2024. All regions tracked by the report saw increases in installed capacity, with China leading the growth despite modest fab utilisation rates.
Semiconductor capital expenditures were conservative in the first half of 2024, showing a 9.8% YoY decrease. However, a positive trend is expected to begin in Q3 2024, spurred by the growing demand for AI chips and the rapid adoption of HBM. Memory-related capital expenditures are anticipated to lead this growth with a 16% quarter-on-quarter (QoQ) increase, while non-memory CapEx is projected to rise by 6% QoQ.
“Despite moderate semiconductor capital expenditures in the first half of the year, we expect a positive trend to begin in Q3 2024, led by memory CapEx,” said Clark Tseng, Senior Director of Market Intelligence at SEMI. “Strong demand for AI chips and high bandwidth memory is boosting results across various segments of the semiconductor manufacturing ecosystem.”
Boris Metodiev, Director of Market Analysis at TechInsights, added: “The entire semiconductor supply chain is recovering this year as the market prepares for a surge in 2025. AI is continuing to drive high-value ICs to market and supporting CapEx for capacity expansion of AI chips, particularly HBM. As consumer demand recovers and new technologies like AI push to the forefront, unit volumes and revenues are expected to recover, supporting the broader semiconductor manufacturing sector.”
