Semiconductor Plastics 2H24

A Look into the Demand Drivers

If you are like me, you are confused by the inconsistencies of the industry forecast reporting vs. what the living experience is. In my opinion, the jump in demand for  Semiconductor equipment from an all-time high of $64 Billion in 2020 to $91 Billion & $94 Billion in 2021 & 2022 created a false sense of an industry that can maintain a hockey stick level growth.

The fact is, the industry took a giant step in sustained demand that will last decades. However, the microburst of revenues in 2021-22 had as much to do with pent-up demand due to the global pandemic as it did with the new demand level. So where are we?

Plastics Demand is Driven by Three Factors:

• Top-level demand created by IC chip volume
• Wafer process tool demand
• New IC chip fab construction

IC Chip Volume

At the top of the food chain is IC chip volume. A healthy chip demand will drive demand throughout the entire value chain. SIA forecasts 2024 annual chip demand to increase by 15% over 2023 with an additional increase of 12.5% in 2025.

Wafer Process Tools

According to SEMI, Wafer Fab Equipment will modestly grow – 2.8% in 2024 to $98.3B and is forecasted to grow 14.7% to $112B in 2025. This is an industry that had revenues of $40B only ten years ago and $55B five years ago. The Wafer Fab Equipment industry is forecasting to surpass the $150B mark in 2028!

IC Chip Fab & Capacity

New chip fabs drive growth throughout the value chain right down to the raw materials used. Global semiconductor chip manufacturing capacity has increased by 6% in 2024 and is forecasted to post a 7% gain in 2025! This requires increased capacity in plastics in every relevant segment from test to infrastructure and equipment.

The bottom line is the industry remains healthy with forecasted sustainable growth. While the drivers of the chip volume continue to change, driven by emerging technologies, the future for continued top-down demand remains strong for the foreseeable future. Geography and technology shifts will continue to challenge the supply chain for innovative solutions.