2025 Semiconductor Outlook

Semiconductor sales are projected to increase significantly in 2025, primarily driven by substantial contributions from generative AI (GenAI) chips.

Reflecting on 2024, World Semiconductor Trade Statistics reported that the global semiconductor industry grew approximately 19%, with the sales of US$627 billion and is estimated to reach the all-time high at US$697 billion in 2025, in which the Americas and Asia Pacific regions are anticipated to sustain their double-digit growth on a year-over-year basis at 15% and 10%, respectively. According to Deloitte 2025 Global Semiconductor Industry Outlook, Deloitte predicted that the chip sales could reach US$1 trillion by 2030 with a compound annual growth rate of 7.5% between 2025 and 2030.

In addition, as of mid-December 2024, the aggregate market capitalisation of the 10 largest semiconductor companies worldwide reached US$6.5 trillion, representing an increase of 93% from US$3.4 trillion in mid-December 2023.

Chips are used in various applications, including the enterprise edge, computers, smartphones, other Internet of Things (IoT) devices. Typically, these chips are being used for either generative AI (GenAI), traditional AI (machine learning) or combination of both. A key factor driving the industry sales is the growing demand for GenAI chips and the expansion of data centres, which include central processing units (CPUs), graphics processing units (GPUs), data centre communication chips, memory and power chips. However, demand from PC and mobile markets is expected to experience slow growth in 2025, with the International Data Corporation predicting smartphone unit sales to grow by only 6% compared to the previous year whereas PC unit sales are forecasted to increase by only 4% over the same period.

Indicators for the future

In 2025, executives in the semiconductor industry should remain attentive to the following indicators:

1. There exists a notable disparity between the substantial investment in
   semiconductors for generative AI and the ability of companies to effectively monetise their generative AI products. The prevailing sentiment in 2025 that "the risk of underinvestment outweighs the risk of overinvestment" continues to dominate. However, should this perspective shift, the demand for generative AI chips may weaken more than anticipated.
2. Competition from nimble chip startups is likely to escalate, posing challenges to established players in the semiconductor sector. The latter quarters in 2024 saw chip startups collectively secured approximately US$7.6 billion in venture capital funding with AI chips contributing over 30%. Many of these startups
   provide specialised solutions, including customisable RISC-V-based applications, chiplets, large language model (LLM) inference chips, photonic integrated circuits (PICs) and chip design services.
3. With expectations of declining interest rates in the United States and other significant markets, a favorable credit environment could bolster mergers and acquisitions (M&A) within the chip industry. The emergence of two distinct chip markets—one for AI chips and another for all other types—may further drive M&A and consolidation, particularly if companies with valuable intellectual property lag behind their competitors and become attractive acquisition targets. Nonetheless, potential tightening of regulations and global trade conflicts could hinder deal-making.

Geopolitical Tensions

As geopolitical tensions continue to unfold globally, semiconductor companies must prepare for further disruptions. Traditional partnerships and alliances may be disrupted, even as trends such as reshoring and nearshoring gain traction. The US is actively pursuing reshoring efforts to bring manufacturing and supply chain operations back to the country. China's export controls on essential minerals also impact the chip industry as tungsten and tellurium are essential materials in semiconductor manufacturing. Ongoing regional conflicts could adversely affect the supply of essential materials and inventories, complicating demand planning for semiconductor firms. This necessitates greater agility in adapting supply chain strategies and pricing agreements.

Semiconductor situation in Thailand

According to Thailand’s Trade Policy and Strategy Office, Thailand’s semiconductor trade is classified into two groups: Integrated Circuit and Diodes-Transistors Semiconductor. Reports from Thailand's Ministry of Commerce illustrated that Thailand's semiconductor supplies have improved after the COVID pandemic-related shortage since late 2020 as integrated circuit import increased from 684,263 million baht in 2023 to 869,152 million baht in 2024 or grew 27% from the previous year. The largest source of the import was Taiwan, contributing 380,430 million baht, followed by China with 90,055 million baht and South Korea with 73,326 million baht. Additionally, Japan, which previously ranked among the top three, now ranks fourth with 72,901 million baht. The import for the first 2 months of 2025 (2M2025) valued at 133,281 million baht, which decreased 2.5% from 2M2024.

For diodes-transistors-semiconductor (O-S-D), imports decreased from 124,719 million baht in 2023 to 108,701 million baht in 2024, representing a 13% decline. Although China was the largest contributor to the O-S-D import in 2024, it experienced the most significant drop compared to other regions, with a decline of 34% to 42,275 million baht. Japan and the US followed in the rankings, with Thai imports valued at 14,624 million baht and 14,055 million baht, respectively. The total import value for the first 2 months of 2025 was 17,491 million baht, marking a decline of 9.6% from the previous year. 

Thailand is making a concerted effort to become a more significant player in the global semiconductor supply chain. The Thailand Board of Investment (BOI) announced in December 2024 the granting of investment privileges for a 10.5 billion-baht investment by a subsidiary of a Taiwanese company which is the world’s largest contract electronics manufacturer, to establish a manufacturing facility for the production and export of high-precision machinery parts and equipment utilised in the semiconductor industry.

The world's largest company in semiconductor power electronics is also developing a new semiconductor backend production site in Samut Prakan to support electric vehicle and data centre industries, and businesses utilising clean energy management equipment, with operations set to begin in 2026.

In addition, National Semiconductor and Advanced Electronics Policy Committee (National Semiconductor Board) approved the framework for Thailand’s National Semiconductor Strategy as well as development plan of a skilled workforce to prepare for a new wave of foreign direct investments (FDI) totalling at least 500 billion baht by 2029.

Thailand’s semiconductor sector is poised for remarkable growth, driven by strategic investments, government incentives, and a future workforce. With these initiatives and investments, Thailand is set to become a key player in both front-end and back-end manufacturing processes. This trajectory would position the country as a vital hub in the global semiconductor supply chain.

The article is written by Ing Houw Tan, Assurance Leader, and contributed by Tasada Sangmanacharoen, Senior Consultant, Growth, Deloitte Thailand