In 2025, the semiconductor industry will be affected by various external factors. Both for good and for bad. On the positive side, AI will continue to be deployedwhich will pull the sector upwards. in the negativewhich could lead the industry to suffer a notable slowdown, there is the retention of talent, but above all, the doubts about geopolitics that lurk globally. This is clear from the predictions for 2025 in the 20th annual Global Semiconductor Forecasts report by KPMG and the Global Semiconductor Alliance (GSA).
The vast majority of sector managers surveyed for the report, 92%, predict that in general, the sector will grow in 2025. In fact, their responses reveal notable optimism among them about the industry’s behavior next year, due mainly to AI, but also to data centers and automotive and wireless communications applications.
In fact, the KPMG Semiconductor Sector Confidence Index has risen to 59, five points higher than it reached in 2023, indicating greater optimism about the sector than then. In this index, values above 50 indicate more positive than negative forecasts. In general, managers in the sector show more confidence in the following aspects: growth in company income, growth in profitability, increase in staff, investment in R&D and capital investment.
But despite the general optimism, managers also predict that in 2025 there will be notable difficulties. Among them are geopolitical territorialism, reflected in tariffs and trade restrictions. Also, as we have mentioned, the shortage of talent in the sector, and the problems of retaining it. Therefore, strengthening the resilience and flexibility of the supply chain, as well as improving the retention and development of talent, will be crucial for the sector, given that everything indicates that demand for chips will continue to grow. .
156 managers from the sector participated in the survey, in which they reflected their forecasts for 2025 and the coming years. More than half work in companies with annual revenues equal to or greater than $1 billion. Everyone has positive forecasts for next year in all areas, and it is those of the smallest companies, those with less than $100 million in annual revenue, that are most positive about the sector’s progress in 2025.
They are all very optimistic about the revenue growth of their company in particular and the sector in general. 86% suggest that their company’s income will grow in 2025 and 46% that it will rise above 10%. 92% are convinced that the income of the sector in general will grow, and 36% believe that this growth will exceed 10%.
Drivers and challenges of the semiconductor sector in 2025
For the first time in the history of annual semiconductor industry forecasts, AI is going to be the main driver of income from chip sales, surpassing automotivewhich has taken the top spot as a growth catalyst over the past two years. As a result, microprocessors, including GPUs, used for AI are considered the main product opportunity for the sector to grow.
Additionally, AI drivers, such as high-bandwidth memory, are the production technology expected to have the most impact on the industry in the next three years. Other key drivers for 2025 will be data centers and cloud, second; wireless communications, third; and the automotive industry, in fourth place.
Concerns related to geopolitics, especially territorial tensions and tariff-type trade restrictions, are the most important issues affecting supply chains. The danger of a talent shortage, however, continues to worry as demand for chips rises. Both territorialism and talent are the main problems facing the chip industry in the next three years, the former being the main problem for large companies with at least $1 billion in annual revenue.
Of the territorial problems for the sector, the main ones that could most affect the semiconductor ecosystem in the next two years for the managers of their companies are armed conflicts and tariffs. There are also concerns about government subsidies and the nationalization of semiconductor technology.
To address them and improve supply chain resilience, top industry leaders are increasing geographic diversity. They are also working to make the supply chain more flexible and adaptable based on geopolitical changes, which has become a top priority.
Managers are also attentive in case companies that are not traditionally dedicated to semiconductors, such as technology companies or automotive companies, want to gain a foothold in the market.
Thus, although 39% of the managers surveyed still see competition for talent as the main factor that can have an impact on the sector in the next three years, 35% see the appearance of new competitors as one of the main factors to monitor. It is a concern that has increased significantly since last year, when only 19% of managers took it into account.
