2025 Compute Outlook Report
Top 5 Trends Driving AI, Custom Silicon, and Advanced Chip Design
The compute markets are set for a major shift by 2025, with artificial intelligence (AI) moving beyond datacenters to run locally on affordable chips—just $20 in edge devices and around $200 in laptops. As the datacenter server market grows, most servers will function without acceleration, allowing AI to capture an expanding share.
Advancements in system-on-chip (SoC) design, advanced packaging, and chiplet technology are reshaping logic chip design. With diverse architectures emerging and increased demand for intellectual property (IP), the importance of design expertise is more crucial than ever.
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Five Key Market Expectations for 2025
Uncover the transformative expectations for the compute markets in 2025, where advancements in artificial intelligence, chip architecture, and design innovation are poised to reshape the technological landscape.
Here are the five key market trends to watch:
Growth of Accelerator-Backed Servers
The compute server market is set for significant expansion, largely driven by accelerator-backed servers. While NVIDIA remains dominant, competition from hyperscalers creating custom devices is reshaping the market.
Emerging Opportunities in the Chinese Market
A distinct market for China is expected to develop, fueled by domestic solutions and targeted products. US restrictions may slow ambitions, but the country is quickly advancing toward technological autonomy, influencing global trade dynamics.
The Performance Race: AI PCs and NPUs
Microsoft’s new CoPilot+ PC branding requires a neural processing unit (NPU) capable of 40 tera operations per second (TOPS) for local AI applications. While Qualcomm leads with its Snapdragon X Elite processor, x86 is anticipated to reclaim its position by late 2024, igniting a new PC replacement cycle.
Innovative Architectures Transforming Chip Design
Advanced foundries are integrating innovative packaging and nanosheet transistor technologies into new process nodes. As architectures like Arm, x86, and RISC-V evolve, chip design tools will gain importance, with consolidation expected amid increasing silicon complexity.
Advancements in Smart IoT Solutions
Edge microcontroller units (MCUs) featuring NPUs or AI-specific cores are achieving remarkable performance, capable of running complex inference models. This trend, bolstered by AI software offerings, is transforming the value chain and emphasizing the role of AI beyond hardware.
Key Chapters at a Glance: Unlocking 2025 Compute Insights
The global semiconductor market is on the cusp of significant growth, driven by rising demand for AI technologies across various sectors. This surge is reshaping the landscape, impacting sales, pricing, and lead times. As the industry transitions from FinFET to GAAFET technology, innovation and competition are expected to accelerate. This comprehensive outlook covers key market trends, technical advancements, procurement dynamics, price shifts, and lead time expectations.
Market Outlook
The global semiconductor market is primed for growth, fueled by rising AI demand in datacenters and client computing. This surge will boost GPU revenue and elevate average sales prices across all processor categories. As the embedded computing sector rebounds, heightened competition and innovation will reshape the semiconductor landscape.
Technical Outlook
The semiconductor industry is shifting in 2025 with the move from FinFET to GAAFET technology, enabling smaller, more efficient designs. Intel will lead with Backside Power Delivery Network (BSPDN), while UMC and SMIC advance their 5 nm processes. Chiplet and advanced packaging adoption will grow to manage rising costs in high-performance chips for datacenters.
Procurement Outlook
Semiconductor sales are booming in 2024, driven by demand for AI components like GPUs and memory. Lower capital spending and production cuts are easing inventory challenges, boosting prices. This momentum is expected to continue in 2025, with further growth fueled by edge AI devices and a device replacement cycle.
Price Outlook
Memory sales are surging due to demand for edge AI devices and datacenters, with strong needs for DDR5 and HBM. GPUs are experiencing significant growth from AI-driven servers, while edge AI devices boost demand for APUs and mobile devices, despite challenges in the automotive sector.
Lead Time Outlook
Lead times remain stable at 14 weeks this quarter, with expectations for flat rates in the second half of 2024. A slight increase is anticipated in Q4 as inventories decrease and demand rises. The connectors category continues to have the shortest lead times at 10 weeks.
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