Global AI and HPC demand to surge over 15% in 2025

The global demand for artificial intelligence (AI) and high-performance computing (HPC) will continue to rise, growing by over 15% in 2025, according to IDC ’s latest Worldwide Semiconductor Technology Supply Chain Intelligence report. Major application markets, ranging from cloud data centers to specific industry segments, are expected to undergo upgrades, heralding a new boom for the semiconductor industry.

“As AI continues to drive demand for high-end logic process chips and increases the penetration rate of high-priced high bandwidth memory (HBM), the overall semiconductor market is expected to have double-digit growth in 2025. The semiconductor supply chain – spanning design, manufacturing, testing, and advanced packaging –will create a new wave of growth opportunities under the cooperation between the upstream and downstream industries, “said Galen Zeng, Senior Research Manager at IDC Asia/Pacific.

IDC also predicts eight major trends in the semiconductor market in 2025:

AI-Driven Rapid Growth Will Continue Next Year
The global semiconductor market is poised to grow by 15% in 2025. The memory segment is expected to surge by more than 24%, mainly driven by the increasing penetration of high-end products such as HBM3 and HBM3e, which are required for AI Accelerator, as well as the new generation of HBM4, which is expected to be introduced in the second half of 2025. The non-memory segment is expected to grow 13%, mainly due to the strong demand for advanced node ICs for AI servers, high-end mobile phone ICs, and WiFi7.The mature node ICs market is expected to recover supported by a rebound of the consumer electronics market.

Asia-Pacific IC Design Market Heating Up, 15% Growth Expected in 2025
Asia-Pacific IC design product lines are rich and diversified, with applications all over the world, including Smartphone AP, TV SoC, OLED DDIC, LCD TDDI, WiFi, PMIC, MCU, ASIC, and other essential chips. With inventory levels stabilizing, personal devices demand picking up, and AI computing extending to a wide range of applications, overall demand for IC design will increase.

TSMC Will Continue to Dominate the Foundry 1.0 and Foundry 2.0 Industry
Under the traditional Foundry 1.0 definition, TSMC’s market share is projected to climb steadily from 59% in 2023 to 64% in 2024 and 66% in 2025, far outpacing competitors such as Samsung, SMIC, and UMC. TSMC’s market share in Foundry 2.0 (includes foundry, non-memory IDM manufacturing, packaging and testing, and photomask manufacturing) was 28% in 2023. With the significant increase in demand for AI-driven advanced nodes, TSMC market share for Foundry 2.0 is expected to grow rapidly in 2024 and 2025, demonstrating an all-around competitive advantage across both traditional and modern industry structure.

Strong Demand for Advanced Nodes and Accelerated Foundry Expansion
The expansion of advanced nodes (below 20nm) is accelerating due to the demand for AI. TSMC not only continues to build 2nm and 3nm in Taiwan but also 4/5nm in the U.S. which will soon be in mass production. Samsung is honing its 2nm in Hwaseong, Korea, capitalizing on its experience of entering the GAA generation first. Meanwhile, Intel is focusing on 18A process development under its new strategic plan and aiming to attract more external customers over the coming years. Overall, wafer manufacturing is projected to increase by 7% annually in 2025, with advanced nodes capacity rising by 12% annually. Average capacity utilization rate is expected to remain above 90% and the AI-driven semiconductor boom will continue.

Mature Nodes Market is Warming Up, and the Capacity Utilization Rate Exceeds 75%
Mature nodes (22nm-500nm) have a wide range of applications covering consumer electronics, automotive, industrial control, and other industry segments. In 2025, demand is expected to improve after this year’s correction and oversupply, driven by consumer electronics and sporadic inventory replenishment in the automotive and industrial control sectors. 8-inch fabs are expected to see their average capacity utilization rate climb to 75% from 70% in 2024, while 12-inch mature nodes will see their average capacity utilization rate rise to more than 76%. Foundry capacity utilization is expected to increase by an average of 5 percentage points in 2025.

2025 Will be a Critical Year for 2nm Technology
With all three major wafer makers entering 2nm mass production, 2025 will be a critical year for 2nm technology. TSMC is actively expanding its fabs in Hsinchu and Kaohsiung, which is expected to enter mass production in the second half of the year. Samsung, following past trends, is expected to enter production earlier than TSMC. Intel will focus on 18A, which already has Backside Power Delivery Network, BSPDN, under strategic adjustment. The above three major players will confront critical optimization challenges in balancing performance, power consumption and cost per area with the 2 nm technology. In particular, the 2nm technology will simultaneously start mass production of key products, such as Smartphone AP, Mining Chip, AI Accelerator, etc. By then, the yield rate of each company will improve, and the pace of production expansion will become the focus of market attention.

Reorganization of the Packaging and Testing Industry Greatly Benefits China and Taiwan
Under the influence of geopolitics, the global packaging and testing landscape is being restructured. Driven by the policy of “semiconductor sovereignty,” China’s foundry mature nodes capacity continues to grow, and the downstream OSAT industry is expanding in parallel, forming a complete manufacturing ecosystem. Taiwan manufacturers, meanwhile, are showing a different side of their industrial advantages, not only accelerating the layout of production capacity in Taiwan and Southeast Asia, but also deeply cultivating advanced packaging technology for AI chips. In 2025, China’s packaging and testing market share will continue to rise, while Taiwanese players will consolidate their packaging advantages in high-end chips such as AI GPUs. The overall packaging and testing industry is expected to grow by 9% in 2025.

Advanced Packaging: FOPLP Layout and CoWoS Production Doubling
As the functionality and performance requirements of semiconductor wafers continue to improve, advanced packaging technologies are becoming increasingly important. FOPLP will grow rapidly from 2025 onwards. At present, it is mainly based on the glass base process, which is applied to PMIC, RF, and other smaller analog chips. It is expected that after a few years of technology accumulation, FOPLP will be able to enter the AI chip market, which requires a larger packaging area, and to implement the glass base products with a higher technological threshold. In addition, driven by the demand of high-performance computing customers such as NVIDIA, AMD, AWS, Broadcom, and cloud service providers (CSPs), TSMC’s CoWoS production capacity continues to multiply, with the target of expanding from 330,000 wafers in 2024 to 660,000 wafers in 2025, an annual increase of 100%, with the CoWoS-L product line increasing by 470% per annum as the main driving force. Taiwan’s equipment supply chain, including wet etching, dispensing, crystal picking, and other key process equipment vendors, will have more growth opportunities in this wave of production expansion. IDC