SEMI Forecasts Q1 2025 Semiconductor Seasonality Amid Tariff Concerns
Overview of Q1 2025 Semiconductor Trends
The semiconductor industry is slated for a turbulent Q1 in 2025, according to SEMI's latest Semiconductor Manufacturing Monitor (SMM) report, prepared in collaboration with TechInsights. Although the typical seasonal patterns have emerged, potential disruptions owing to tariff uncertainties indicate that some segments may face atypical changes throughout the year.
Sales Dynamics
Initial data for Q1 2025 demonstrates that sales in the electronics and integrated circuit (IC) markets have so far evaded direct influences from new tariffs. Despite a notable 16% decrease in electronic sales quarter-over-quarter (QoQ) for the first quarter, the year-over-year (YoY) metrics showed stabilization, maintaining flat growth consistent with historical trends. Contrarily, IC sales dipped by 2% QoQ but experienced a striking 23% increase YoY, reflecting sustained investment in artificial intelligence (AI) and high-performance computing infrastructures.
Clark Tseng, Senior Director of Market Intelligence at SEMI, commented, “While immediate impacts of tariffs on electronics and IC sales are not evident, the underlying uncertainty regarding global trade policies promotes a dual effect among companies—some are ramping up shipments, while others are hesitating to invest.” This dynamic could yield irregular seasonal behaviors as businesses adjust to the constantly evolving tariff and supply chain scenarios.
Capital Expenditures Trend
In terms of capital expenditures (CapEx), the semiconductor sector is observing a downward trajectory with a 7% decline QoQ, yet a significant YoY surge of 27% highlights an unwavering commitment to innovation. Major manufacturers are investing significantly in advanced edge logic, high-bandwidth memory (HBM), and sophisticated packaging solutions vital for AI-driven applications. Capital expenditures related to memory technology soared by 57% YoY, concurrent with a 15% YoY growth in non-memory investments, showcasing a forward momentum toward advanced technological solutions.
The spending on wafer fab equipment (WFE) rose remarkably by 19% over the year, with projections estimating a further 12% increase for Q2 2025. This uptick is predominantly driven by robust commitments towards boosting production capabilities in advanced logic and memory to support a rising wave of AI semiconductor adoption. Additionally, billings for test equipment experienced a staggering growth of 56% year-over-year in Q1 2025, anticipated to continue its upward trend by 53% in the following quarter, showcasing the increased complexity and performance necessities for AI and HBM chip testing. The assembly and packaging domains are also flourishing, illustrating the industry’s transitioning phases towards high-density integration and cutting-edge packaging technologies.
Global Capacity Insights
Reflecting the uptick in capital equipment investments, the global installed wafer fab capacity is on course to exceed 42.5 million wafers per quarter (300mm wafer equivalents), tracking a 2% QoQ and a 7% YoY increase in Q1 2025. China still dominates in capacity expansion; however, expected growth within this region is predicted to slow over the forthcoming quarters. In contrast, Japan and Taiwan are displaying robust quarterly capacity growth rates, fueled by substantial investments in power semiconductor manufacturing in Japan and an enhanced ramp-up of a leading-edge foundry in Taiwan.
Future Outlook
The collaboration between SEMI and TechInsights anticipates industry challenges ahead, predicting atypical seasonal trends in 2025 due to the blend of trade policy uncertainties and needed adaptability in supply chains. As the demand for AI and data center technologies persists, other market segments are likely to face deferred investments or modified demand dynamics in response to evolving geopolitical conditions. The Semiconductor Manufacturing Monitor (SMM) report serves as an essential guide, encompassing comprehensive data and insights on trends and forecasts relevant to the semiconductor manufacturing landscape.
For further insights on the semiconductor market trends, SEMI invites interested parties to reach out for a subscription to the SMM report, designed to provide cutting-edge intelligence crucial for navigating the complexity of the semiconductor industry.