Semiconductor mergers and acquisitions.

Another major theme in 2024 was consolidation, with 44 mergers and acquisitions recorded by mid-year. For instance, Synopsys acquired Ansys for $35 billion, the largest industry deal since AMD’s purchase of Xilinx in 2020. Meanwhile, Cadence acquired BETA CAE Systems for $1.24 billion, while Renesas purchased Altium for $5.9 billion. 

2025 Projections and Technological Trends

One area of significant potential lies in advanced process technologies. The introduction of 2-nm Gate-All-Around (GAA) chips marks a pivotal development in node miniaturization, with production capacity expected to grow by 17%. These chips promise higher performance and energy efficiency, essential for supporting AI workloads and next-generation computing demands. Leading-edge manufacturing, spearheaded by companies like TSMC, will play a central role in driving this innovation.

The proliferation of IoT devices and edge computing solutions is another major trend to watch. These technologies are expanding the need for smaller, more efficient devices that can process data closer to the source. This shift not only reduces latency but also enhances energy efficiency—a critical consideration for battery-powered devices and industrial applications.

High-bandwidth memory is expected to grow by over 24%, fueled by its role in AI accelerators and GPUs. AI workloads, which require immense computational power and rapid data access, are pushing demand for specialized chips and advanced packaging techniques. 

KPMG's semiconductor market forecast.

In parallel, the ongoing development of 5G and early-stage 6G technologies is driving innovation in RF components, baseband processors, and network infrastructure. Qualcomm is heavily invested in this space, aiming to meet the growing demand for faster and more reliable wireless connectivity.

Emerging areas such as silicon photonics, wide bandgap semiconductors (e.g., GaN and SiC), and neuromorphic computing are opening new frontiers in performance and efficiency. Silicon photonics, for instance, integrates optical components into chips to enable faster data transmission, while wide bandgap materials are revolutionizing power electronics by enabling smaller, more efficient devices. Inspired by the human brain, neuromorphic architectures promise AI performance and energy efficiency breakthroughs.

Challenges and Key Factors to Watch

Despite these positive growth predictions, several challenges could shape the semiconductor industry’s trajectory in 2025. 

With new chip fabs coming online, the industry faces the risk of oversupply in certain segments, such as commodity memory chips. Balancing production with demand will be essential to maintaining profitability and avoiding downward price pressure.

Economic conditions will also play a significant role. Global policies around industrial subsidies, trade tariffs, and interest rates could support or hinder growth. For instance, some subsidy programs in the U.S. and Europe are designed to reduce reliance on imports and bolster local production, but their long-term effects remain uncertain. 

Despite these challenges, innovations are coming thick and fast. Companies like Nvidia are pushing the envelope in AI accelerators, while Samsung continues to invest in advanced memory technologies and logic processes. Intel is focused on regaining its process leadership and expanding its foundry services, an area critical to diversifying its revenue streams. Meanwhile, TSMC remains a leader in advanced node manufacturing, driving innovation across multiple application domains.

As we enter 2025, the semiconductor industry is at a crossroads of ongoing innovation and lurking uncertainty. Advances in process technologies, packaging, and computing paradigms will continue to change what is technically possible. Meanwhile, supply chain dynamics, economic conditions, and geopolitical factors will keep the industry on its toes.