By Jonathan Cassell
Following the downturn of 2023, global demand for integrated circuits (ICs) is set to rebound robustly in 2024 on the strength of surging memory sales, a phenomenon that will place renewed stress on buyers.
Global IC revenue in 2024 will rise by 15.5% to reach $487.5 billion, a 26.5 percentage point swing from the 11% drop in 2023, according to World Semiconductor Trade Statistics (WSTS). ICs will represent the fastest-growing segment of the semiconductor market, with discretes, optoelectronics and sensors all limited to low-to-mid single-digit growth for the year.
Within the IC segment, the memory business is set for the strongest growth by far, with a 44.8% surge in revenue, per the WSTS. After a stunning 31% drop in memory revenue in 2023, this represents a stunning 79.8 percentage-point shift from negative to positive territory.
The electronics market is already showing signs of strength in early 2024, with the Commodity IQ Demand Index for all electronic components rising to 103 in March, up from 87 in February. The above-the-baseline reading indicates that demand is on the rise.
All but one IC type tracked by the Commodity IQ Demand Index generated double-digit growth in sourcing activity in March compared to February. Memory was the second-fastest growing component category, with the Commodity IQ Demand Index for memory rising by 31.3%. However, the memory market is coming off a weak month in February, when the index plunged to well below the baseline level.
The memory index totaled 93.9 in March, rising to near the baseline level. If memory-sourcing actions continue to rise in April and/or the following months, the index is expected to elevate into expansion territory, indicating an increase in overall sales.
The rise in memory-sourcing actions is being propelled by soaring average selling prices (ASPs) for DRAM, specifically for the high-bandwidth memory (HBM) DRAM used in AI data center servers. Due to high demand and limited supply, HBM carries an ASP that’s 500 times higher than mainstream DDR4 DRAM. Global HBM market revenue is set to rise by nearly 40% in 2024, according to one market watcher.
For memory buyers accustomed to the inflated inventories at suppliers and distributors in 2022 and 2023, the surge in HBM demand and ASPs is yielding more challenging purchasing conditions. With the HBM boom expected to last for years, HBM buyers need to solidify pricing and secure long-term agreements with suppliers.
Jonathan Cassell is the lead analyst for Supplyframe Commodity IQ.