AI and IoT Pave the Way for the Booming $1 Trillion Semiconductor Market

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Welcome to this week’s edition of the Thomas Index Report.

According to DataM Intelligence, the semiconductor and electronics market is expected to reach $1 trillion by 2029, a compound annual growth rate of 7.4%. This growth stems from advancements made in artificial intelligence (AI), the Internet of Things (IoT), and machine learning. Additionally, consumer demand for electronic devices and advanced memory chips continue to drive market growth. Semiconductor chips for smartphones are expected to reach $155 billion in 2024.

Domestically, we are seeing a surge of investments in reshoring advanced manufacturing. The world’s leading chips manufacturer, TSMC, recently announced the development of a $12 billion factory in Arizona. This facility will have the capacity to produce 20,000 semiconductor wafers each month. And this is just the beginning, as TSMC plans to build as many as six factories at the Arizona site in the next 15 years.

With the number of chips manufactured in the U.S. decreasing by 25% over the last 30 years, several initiatives have been established to boost domestic production. One is the CHIPS and Science Act, signed into law on August 9, which unlocks $53 billion for U.S. chip makers. The U.S. Department of Energy is also loaning a whopping $2.5 billion for battery cell manufacturing; the first program investment of its type. Additionally, the Inflation Reduction Act is expected to boost demand for electric vehicles by strengthening the regulations around the domestic sourcing of EV batteries.

The production of materials needed for batteries is also on the rise. Two subsidiaries of Lotte Group recently joined forces to open a cathode foil factory in Kentucky. Cathode foil is a thin, aluminum material and one of the four major components of an EV battery.

We are seeing a parallel growth trend on the Thomasnet.com platform. Demand for semiconductors has increased 150% quarter over quarter and 129% percent year over year.

I’m Anna Wells, and this is the Thomas Index Report.