Global revenue surpassing projected 2024 levels, according to GlobalWafers' predictions
The semiconductor industry is experiencing an uneven recovery, with robust growth in AI and data center demand contrasting a sluggish rebound in PC and consumer electronics markets. This divergence is due to several factors, including shifting end-market dynamics, supply chain challenges, geopolitical tensions, and investment focus.
Key factors affecting the differential growth include a boom in AI and data center demand, sluggish PC and consumer electronics market, supply chain and geopolitical risks, supply chain fragility and targeted shortages, talent shortages and reshoring impact, capital allocation and strategic focus.
AI-related chips and data center components are experiencing robust growth, with AI applications now accounting for over 20% of semiconductor sales, projected to rise to 30% by 2026. The growth in cloud computing infrastructure and AI processing drives demand for logic and memory chips, the industry's main growth engines in 2025. On the other hand, the PC market is only expected to grow modestly, while smartphone sales are projected to rise only single-digit percentages.
Ongoing U.S.-China trade tensions and tariffs create uncertainty and volatility, especially affecting companies exposed to these markets. Export restrictions on advanced semiconductors and materials hinder access to key growth regions like China. The risk of reciprocal tariffs on chip manufacturing hubs such as Taiwan adds further volatility.
GlobalWafers, the world's third-largest silicon wafer supplier, is navigating these challenges by focusing investments on future growth engines while managing traditional segment risks. The company reported a second-quarter net profit of NT$1.68 billion, up 15% from the previous quarter but down 41% from a year earlier.
Despite the decline in gross margin due to higher depreciation expenses and increased costs associated with the company's global capacity expansion plans, GlobalWafers is accelerating qualification processes and ramping up production at overseas sites to ensure resilient local supply. The company's revenue in the first half of this year expanded 3.9 percent annually to NT$31.6 billion (US$1.06 billion). GlobalWafers expects full-year revenue to exceed last year's level, excluding foreign exchange rate fluctuations.
GlobalWafers' chairwoman, Doris Hsu, stated that the most challenging phase is behind the company. The company operates production facilities in Taiwan, Japan, South Korea, Europe, and elsewhere, allowing for production and shipment flexibility to regions with optimized cost structures.
As the industry continues to recover, GlobalWafers may consider advancing the next phase of capacity expansion if strong US demand persists. However, a potential 20% tariff on Taiwanese semiconductor companies, following a US Section 232 investigation, could impact GlobalWafers.
Customer procurement decisions are increasingly influenced by geopolitical tensions and tariff-related considerations, prompting a shift toward regional sourcing strategies. GlobalWafers' rivals are to be levied at a lower rate of 15%.
Positive signals are beginning to emerge from the automotive and industrial sectors, providing hope for a more balanced recovery in the semiconductor industry. GlobalWafers expects modest revenue growth next year, supported by a continued recovery in the semiconductor industry. The company's first-half revenue performance was the third-highest in the company's history.
Technology advancements in AI and data centers are driving the growth of the semiconductor industry, as AI applications account for over 20% of semiconductor sales, projected to reach 30% by 2026. On the other hand, the finance sector may be impacted by geopolitical tensions and tariff-related considerations, as customer procurement decisions are increasingly influenced by these factors, prompting a shift toward regional sourcing strategies. For instance, GlobalWafers, a leading silicon wafer supplier, faces potential tariffs on their Taiwanese operations, which could affect their revenue and expansion plans.
