AI drives record revenue for semiconductor market at $683b
But automotive and industrial challenges persist.
The strong demand for AI-related chips, especially high bandwidth memory crucial for AI GPUs, has driven a record-breaking revenue for the semiconductor market in 2024.
The annual revenue increased by approximately 25% to $683b, as reported by Omdia’s Competitive Landscaping Tool.
This significant growth was primarily driven by strong demand for AI-related chips, especially high bandwidth memory (HBM), which is crucial for AI GPUs. The memory segment experienced an impressive 74% year-over-year growth, aiding the overall market recovery following a difficult 2023.
Despite this record-setting performance, there were mixed outcomes across different sectors of the industry. The data processing segment saw robust growth, while other key areas—automotive, consumer, and industrial semiconductors—faced declines in revenue during 2024. These struggles reveal underlying weaknesses in what otherwise appears to be a booming market.
AI and memory propel a strong 2024
Throughout 2024, AI significantly influenced the semiconductor landscape, driving record revenues and altering industry dynamics. NVIDIA emerged as the leading player, climbing the market share rankings thanks to substantial revenue growth spurred by its AI GPUs. HBM, an essential component for AI applications, also surged, which greatly increased revenues for memory companies. While HBM growth outpaced other DRAM segments, improved supply-demand conditions led to higher average selling prices (ASPs) and revenue gains across the broader memory market.
Industrial Segment Faces Second Consecutive Year of Decline
The downturn in the industrial semiconductor segment, which began in 2023, intensified in 2024, posing challenges for companies focused on this area. “Historically, the industrial semiconductor market has grown around 6% annually; however, after two years of above-average growth in 2021 and 2022, semiconductor market revenue fell by double digits in 2024,” said Cliff Leimbach, principal analyst at Omdia. “Reduced demand combined with inventory adjustments made 2024 a tough year for the industrial sector. Companies heavily invested in this segment saw their market share rankings decline as a result.”
Automotive market stalls
Although the automotive semiconductor market fared better than the industrial sector, it still recorded a revenue drop in 2024. After experiencing nearly doubling growth between 2020 and 2023—far exceeding the historical annual growth rate of 10%—the sector faced an abrupt slowdown. Diminishing demand resulted in contraction in 2024, interrupting the steady upward trend the market had enjoyed in recent years.
NVIDIA takes the lead
NVIDIA's dominance in AI-driven GPUs propelled it to the top spot among semiconductor companies by revenue, surpassing Samsung, which held the number one position in 2023. The robust memory market also reshuffled the leaderboard, placing Samsung, SK Hynix, and Micron among the top seven largest semiconductor companies by revenue. Each of these companies gained at least one position from their rankings in 2023, marking a notable change from the previous year when they occupied positions across the top eleven.
