Table Of Contents
- Development of AI-powered chips helping the sector flourish
- Adoption of advanced packaging technologies improving the revenue share of the sector
- Expansion of Edge AI and IoT technologies transforming the domain in Q1 2025
- Growing applicability of GaN and SiC semiconductors reshaping the sector
- Advanced semiconductor integration strengthening the automotive technology
- The final word
Sonia Mutreja
Koyel Ghosh
Semiconductor and Electronics Sector: Exploring the Key Trends Redefining the Domain’s Growth in Q1 2025
The growth of the semiconductor and electronics domain is primarily attributed to the development of sophisticated and advanced technologies such as quantum computing, augmented and virtual reality, deep learning etc. In the post-pandemic period, the sector has expanded significantly owing to the increasing support from different governments to boost their semiconductor manufacturing capabilities. Moreover, the advent of software-defined products and the transition toward sustainable chip production have created new investment opportunities in the landscape. AMR, in its newsletter, covers all such factors and trends that have reshaped the dynamics of the semiconductor and electronics domain in the first quarter of 2025.
Development of AI-powered chips helping the sector flourish
AI-powered chips are high-tech semiconductor ICs designed specifically to handle artificial intelligence tasks. The inability of traditional CPUs and GPUs to run modern AI programs efficiently has played an important role in the development of these chipsets. Specialized AI chips such as Application-Specific Integrated Circuits (ASICs) and Field-Programmable Gate Arrays (FPGAs) have become one of the most preferred types of computing devices due to their capability to execute neural network processes. Unlike regular CPUs, these solutions perform parallel processing, which helps them manage complicated workloads easily. Furthermore, studies have shown that the power required for AI chips to carry out these tasks is much less than the conventional systems, thus helping software companies reduce their energy consumption.
The Artificial Intelligence (AI) chip market accounted for $14.9 billion in 2022. The industry is expected to gather a revenue of $383.7 billion by 2032, rising at a CAGR of 38.2% during 2023-2032. The rising demand for smart devices and quantum computers has opened new avenues for growth in Q1 2025. Furthermore, many multinational companies, government agencies, and reputed universities have recently initiated research projects to develop advanced AI chips for deep learning and neural networking applications.
Adoption of advanced packaging technologies improving the revenue share of the sector
The rapid increase in demand for smart devices like laptops, tablets, and smartphones has contributed to the expansion of the semiconductor packaging industry in the first quarter of 2025. Over the years, various types of technologies such as fan-out wafer level, flip-chip, embedded die, and fan-in wafer level packaging have emerged that help semiconductor fabrication companies manufacture different ICs seamlessly. The growing need for smaller form factors and increased power efficiency has become one of the leading factors influencing the rise of the market.
Along with this, multi-chip packaging technologies such as system-in-package (SiP) and chip-on-chip (CoC) have gained significant popularity in Q1 2025. Many leading companies such as Amkor Technology (US), Jiangsu Changjiang Electronics Technology (China), Taiwan Semiconductor Manufacturing Company (Taiwan), and Samsung Electronics (South Korea) have invested heavily in these innovations. As a result, the semiconductor packaging market, which accounted for $27.10 billion in 2020, is projected to gather a sum of $60.44 billion by 2030, rising at a CAGR of 9.10% during 2021-2030.
Expansion of Edge AI and IoT technologies transforming the domain in Q1 2025
Edge computing is a novel computation methodology that processes data closer to its source, at the network's edge, instead of relying on a distant central server. The distributed networking model adopted by edge computing helps reduce latency drastically, thereby improving the efficiency and productivity of operations. Edge AI is a unique concept that involves combining artificial intelligence and edge computing for real-time data monitoring and processing without relying on cloud infrastructure. Apart from minimizing the latency, edge AI also helps preserve bandwidth as the amount of data transferred over the network decreases significantly.
The applicability and utility of edge AI computing has increased with the rising adoption of IoT-based devices and gadgets. Edge AI enables IoT-powered CCTV cameras to detect any suspicious activity through data analytics software programs embedded in it. Furthermore, this innovative technology also assists in the real-time analysis of images and videos captured by these cameras, thereby improving the entire security infrastructure. Similarly, semiconductor manufacturing companies are integrating edge AI computing techniques into IIoT devices to identify potential flaws in supply chains and logistics, thus reducing downtime and the cost of maintenance.
Growing applicability of GaN and SiC semiconductors reshaping the sector
Recently, wide bandgap semiconductors like silicon carbide (SiC) and gallium nitride (GaN) are increasingly being incorporated into advanced electronic devices. The high electron mobility, fast switching speeds, and saturation velocity offered by these chips make them ideal for lengthy and arduous processes and tasks. Moreover, these semiconductors are now used in high-power applications due to their superior breakdown voltage capacities. The increasing trend of miniaturization of electronic devices has also played an important role in improving the revenue share of the wide bandgap semiconductors industry.
Apart from the consumer electronic sector, SiC and GaN chipsets are widely utilized in automotive manufacturing industries also. Furthermore, the advent of electric vehicles has further expanded the scope of this industry in the first quarter of 2025. In addition, the rising concerns related to environmental sustainability and carbon reduction have positively impacted the landscape. Due to these factors, the market is anticipated to gather a revenue of $5.4 billion by 2032, growing at a CAGR of 13.2% during 2023-2032. Driven by the superior thermal management and higher power density of silicon carbide ICs, many semiconductor manufacturers are transitioning to these advanced devices.
Advanced semiconductor integration strengthening the automotive technology
Modern-day ICs perform important automobile operations, including traction control, steering, vehicle dynamic management, and braking. Almost all the fundamental functions that were traditionally performed by ignition systems are today executed by these semiconductors. Moreover, the emergence of sophisticated automotive solutions such as ADAS, battery management systems, infotainment equipment, etc., has created numerous growth opportunities for the semiconductor and electronics sector in Q1 2025. Along with this, the growing use of advanced chipsets in autonomous cars has helped multinational electronics companies expand their operations globally.
Apart from this, the integration of advanced chipsets into vehicles has also become necessary to provide users with functionalities such as GPS navigation, video streaming, telematics, and fleet management. In addition, the deployment of digital signal processors and electronic control units in new-age automobiles has increased the revenue share of the landscape. Over the years, many car manufacturing businesses have invested in automotive-grade microcontrollers and power semiconductors, which is anticipated to open new avenues for growth in the industry in the near future. Also, the growing utility of IoT-enabled devices and solutions in connected vehicles has broadened the scope of the domain significantly.
The final word
The semiconductor and electronics sector has made a remarkable comeback in the post-pandemic period due to the emergence of advanced technologies such as AI and machine learning. Moreover, the advent of wide bandgap semiconductors has played a major role in the growth of the domain in the first quarter of 2025. In addition, innovations in semiconductor packaging and the deployment of high-quality chipsets in modern automobiles have created numerous profitable opportunities for the landscape during the period. The growing investments from multinational companies and the increased governmental support are estimated to help the domain continue its dominance in the near future.
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