[Chiptalk] "Next Year AI Server Demand Explodes, Memory Growth 66%"... Semiconductor Boom Signals Everywhere

Pink Outlooks on the Semiconductor Market

The global economic slowdown in 2023 led to a downturn in the semiconductor industry. However, at the end of this period, there is a rosy outlook that a boom will return to the semiconductor industry in 2024. It is expected that the overall semiconductor industry sales, which declined this year, will not only recover next year but also show double-digit growth. Companies are anticipated to turn their deficits into profits and hire more people to meet excess demand, creating a virtuous cycle of semiconductor prosperity.

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The World Semiconductor Trade Statistics (WSTS), a semiconductor market research organization, predicted that the global semiconductor market sales will reach $588.4 billion (approximately 774 trillion KRW) next year, a 13.1% increase compared to this year. The global annual sales for this year are estimated at $520 billion (about 684 trillion KRW), a 9.4% decrease from last year. However, with semiconductor sales increasing month-over-month for eight consecutive months recently, the market conditions are steadily improving. It is expected that next year will see a strong rebound beyond mere recovery, achieving double-digit growth. This would surpass the total sales of $574 billion in 2022 (a 3.3% growth rate from the previous year).

Another market research firm, Gartner, offers an even more optimistic forecast. It expects the global semiconductor sales to reach $624 billion next year, a 16.8% growth compared to this year. This year’s sales are estimated to decline by 10.9%. The prediction of a semiconductor boom is largely due to the anticipated revival of the memory semiconductor market, which experienced an exceptionally severe downturn this year. Gartner projects that although the memory semiconductor market will shrink by 38.8% this year, it could grow by 66.3% next year due to explosive demand for artificial intelligence (AI) servers.

Leading the memory market, Samsung Electronics’ Semiconductor (DS) division and SK Hynix are expected not only to return to profitability next year but also to achieve operating profits exceeding 20 trillion KRW. Dongwon Kim, a researcher at KB Securities, stated, "Demand for DRAM and NAND is expected to increase by 20% year-over-year next year, but production will be less than 10%, resulting in a supply shortage." He added, "As demand for servers, smartphones, and PCs recovers, companies face limitations in significantly increasing total production due to transitions to finer processes and focusing on high-value memory production." Yuak Park, a semiconductor researcher at Kiwoom Securities, also explained, "The operating rates of Samsung Electronics and SK Hynix’s memory semiconductor factories are showing a sharp rebound toward the end of the year."

The government plans to announce a system semiconductor development strategy in February next year and will work on strengthening relatively weaker areas such as semiconductor design intellectual property (IP), design houses, and foundry sectors compared to memory semiconductors. The strategy aims to build a semiconductor ecosystem where memory and system semiconductors are interconnected to maximize the effects of the industry boom.

Companies are expanding their workforce in anticipation of the upcoming semiconductor boom. Samsung Electronics is accepting applications for experienced professionals in most semiconductor areas, including the Memory Business Division, System LSI Business Division, and Foundry Business Division, until January 8 next year. SK Hynix is also recruiting experienced employees in 28 positions, including DRAM design, HBM package (PKG) product development, advanced packaging, quality assurance, and product planning, until the 20th. Both Samsung Electronics and SK Hynix have relaxed their criteria to allow anyone with more than two years of semiconductor-related experience to apply and recognize the duration of master’s and doctoral degrees as separate experience periods, thereby broadening the pool of semiconductor talent.

A green light has also turned on for the Korean economy, which heavily depends on semiconductor exports. The Korea Development Institute (KDI), a government research institute, noted in its December economic trend report that "exports are gradually recovering from the slump centered on semiconductors," highlighting that semiconductor exports shifted from -3.1% to a 12.9% increase in November by product category. Moon Sung-kyu, Minister of Trade, Industry and Energy, forecasted that semiconductor exports will increase by 18% next year and predicted that semiconductors will show the fastest export recovery among all product categories.