The global semiconductor market is expected to see a significant improvement in the second quarter of 2024, driven by the high demand for generated artificial intelligence (AI) data centers and pure electric vehicles (EVs), indicating an increase in the output of large semiconductor enterprises. This shift marks the “silicon cycle” – a shift in the semiconductor industry’s prosperity and downturn cycle with a 3- to 4-year cycle – which has a significant role in driving global economic development.

According to the Japan Economic News Agency survey, industry experts, including analysts, survey companies and professional business agencies, predicted the supply demand for semiconductors in 2024 and evaluated it in five levels, ranging from supply surplus to supply shortage.The results showed that the main factor in pulling demand is generated AI for semiconductors, and it is expected that 80% of global enterprises will use generated AI by 2026, compared with less than 5% in 2023.

Data from Gartner further predicts that large semiconductor companies will increase production in response to demand growth due to the expansion of generated AI services, such as the accession of companies such as Microsoft in the United States. German Statista predicts that by 2027, the size of the AI semiconductor market will grow to 2.2 times in 2023, to $119.4 billion. This growth in demand indicates the active growth of smartphones, generated AI-related investments, and the large expansion of the market.

In addition, with the global pursuit of carbon neutrality targets, demand for metals such as copper and uranium has risen sharply, but due to insufficient investment in metal mining, the supply of these metals is expected to be more tense. The International think tank’s Energy Transformation Committee report also warns that a number of metals such as graphene, uranium, copper, uranium and lithium may face shortages in the coming decade.

Demand for power semiconductors with EVs is also expected to grow in the second half of 2024.As German automakers such as BMW, Toyota and others plan to increase EV sales, orders for car semiconductors are expected to remain high.

Although the demand for semiconductors for digital devices such as smartphones and personal computers has slowed in 2023, in the last year and a half, the manufacturers of conductors have gradually improved the market situation by reducing output and reducing inventory in the market.

Data from the World Semiconductor Trade Statistics Organization (WSTS) show that the global semiconductor market size is expected to grow by 13% in 2024 to $5883 billion in 2023, representing a two-digit growth. Semiconductors are known as "the food of industry" and their improvement in supply and demand will have a profound impact on a wide range of industries.

However, the global economy is still facing risks such as a slowdown in China’s economy and a potential U.S. recession. About 70 large semiconductor plants are expected to be built between 2023 and 2026 and the total capacity will increase by 30 percent within three years.

Despite concerns about supply shortages and economic downturn, some industry observers remain relatively optimistic about the markets. Arlan Suderman, chief commodity economist at financial services company StoneX, noted that despite supply shortages, demand is relatively shrinking, so the markets are less concerned about the situation of supply and demand.

With technological advances and adjustments in the global economic structure, the future of the semiconductor market is full of variables, and the industry needs to pay close attention to the dynamics of supply and demand to deal with possible market volatilities.