In June 2025, the global semiconductor market grew 18.0% YoY, with Integrated Circuits (ICs) up 19.8% on a 2.1% rise in unit shipments and a 17.4% increase in average selling prices (ASPs). Logic ICs led growth at 41.3%, far outpacing Memory’s 11.9% and modest gains in Micro (2.9%) and Analog (2.1%). Discretes rose 6.2% and Optoelectronics rebounded 6.8% after months of decline.
Despite strong headline growth, trends suggest the market is nearing its cyclical peak. Growth rates have drifted down from August 2024’s highs, and the “boom” is driven disproportionately by AI infrastructure demand—especially high-priced GPUs and high-bandwidth memory—while other IC segments face weak end markets, excess inventory, and overcapacity. Once AI-related build-outs slow, ASPs are expected to revert toward historical norms.
Market Drivers & Risks
The AI boom remains the main demand engine, but the report warns of four converging risks:
- AI Ecstasy – Overreliance on AI infrastructure demand could mask weakness elsewhere.
- Trade Barriers – New tariffs and trade restrictions create uncertainty and distort buying patterns.
- Pull-Forwards – Customers are accelerating purchases to beat tariff deadlines, artificially boosting short-term numbers.
- Stockpiling – Inventory builds will eventually unwind, depressing future sales.
Economic Context
Global markets are buoyant despite US economic headwinds from President Trump’s “America First” policies, tariffs, and rising inflation expectations. The US labour market is cooling, with unemployment at 4.2%, and service sector growth nearly stalling. Investors expect potential Fed rate cuts as early as September, but strategists warn of stagflation risk if tariffs persist.
Equities remain strong—S&P 500 up 27% from April lows—but some analysts expect a 10–15% correction in Q3, driven by tariff impacts. Global GDP growth for 2025 has been upgraded to 3.0% by the IMF, citing pre-tariff front-loading and fiscal expansion, but risks remain skewed to the downside.
Regional Trends
In June, Asia Pacific led with 37.8% growth, followed by the Americas at 21.1% and China at 7.7%. Europe grew just 5.9%, continuing its long-term decline in global share to 7.3%. Japan remains in contraction at –1.3%. The US, in contrast, has regained market share to 31.9%, surpassing pre-2000 levels.
Outlook
Future Horizons expects Q3 2025 to be highly unpredictable. The market’s apparent strength masks a bifurcated reality: AI-related sectors are booming, while traditional segments remain in recession. Historical patterns suggest ASPs will normalise, and the current surge could give way to slower growth once stockpiles deplete and pull-forward demand fades.
Malcolm Penn advises industry players to prepare for volatility, recalling Gordon Moore’s “second law” that long-term IC ASPs converge toward $1, and warns that those outside the AI supply chain are facing very different market conditions.
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