The global semiconductor industry is heading into another record year, with revenue projected to hit $800 billion in 2025, according to new data from International Data Corporation (IDC). That figure represents a 17.6% increase from the $680 billion forecast for 2024, itself a year of strong recovery with 22.4% growth after a period of contraction.
IDC attributes the expansion primarily to data center demand, particularly the surge in AI infrastructure, accelerated computing, and networking technologies.
The compute segment of the semiconductor market is expected to grow 36% year-over-year to $349 billion in 2025, driven by hyperscale AI workloads. IDC projects this segment to sustain a compound annual growth rate of 12% through 2030. The acceleration is so pronounced that, for the first time, a single semiconductor vendor is expected to surpass $200 billion in annual revenue, underscoring the dominance of AI-driven data center spending. Adjacent markets such as rack-scale systems, high-speed interconnects, memory, and networking semiconductors are also benefiting from this momentum.
Networking is emerging as a critical bottleneck in AI workloads, with data movement increasingly constraining system performance more than compute power itself. To address this, cloud providers, telecommunications firms, and enterprises are ramping up investment in networking chips and optical interconnects. IDC forecasts networking and connectivity semiconductor demand to grow 13% in 2025, led by high-capacity Ethernet switches, SmartNICs, and DPUs, which help offload network processing from CPUs and GPUs. Optical technologies are also gaining traction as data-intensive AI applications push traditional copper-based systems to their limits.
Beyond data centers, other markets are beginning to rebound after periods of weakness. Automotive and industrial semiconductors, which suffered from excess inventory and demand softness in 2024, are now stabilizing. Automotive suppliers are reporting sequential growth as inventory levels normalize, though headwinds remain from expiring subsidies in China, ongoing price pressure, and trade uncertainty. Still, rising semiconductor content per vehicle, driven by electrification, silicon carbide (SiC) and gallium nitride (GaN) adoption, and the shift toward domain and zonal controllers, will sustain growth. IDC expects the automotive semiconductor sector to increase by 3% in 2025.
Improved Visibility and Recovery
IDC’s industrial semiconductor market is on a stronger recovery path, with 11% growth expected in 2025 after contracting nearly 14% the previous year. Demand is being bolstered by military and aerospace applications, manufacturing, edge AI adoption, and electrification trends. While macroeconomic uncertainty and cautious capital spending remain challenges, industrial chip suppliers are reporting improved visibility and backlog recovery.
Smartphone semiconductors, while no longer driving growth through unit volume, are seeing higher revenue per device. The wireless semiconductor segment is forecast to grow 5% in 2025, with adoption of 5G, richer multimedia capabilities, and on-device AI driving higher content. Average selling prices are climbing as smartphones integrate neural processing units (NPUs), GPUs, and advanced connectivity features. However, tariff policies and trade restrictions may distort shipment timing and affect consumer pricing into 2026.
Industry analysts emphasize that while markets like automotive and industrial are only beginning to recover, their long-term trajectory remains strong due to increased chip content and electrification. “While these markets are not experiencing the explosive growth of the datacenter, the increase in semiconductor content per system, increased compute capabilities, and electrification will help ensure long-term revenue resilience,” said Nina Turner, research director at IDC.
Mario Morales, group vice president for semiconductors at IDC, noted that the industry is experiencing a structural shift: “Explosive demand for compute and networking at scale is creating a step-function in revenue growth, while adjacent markets from cloud to connectivity benefit from the shift to rack-scale systems. The overall industry is set on a strong trajectory that extends well beyond 2025.”
IDC now forecasts that the semiconductor market will surpass $1 trillion in revenue by 2028, nearly two years earlier than previous consensus estimates, cementing its place as one of the fastest-growing and most strategically critical sectors in the global economy.
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