Hiding in plain sight: The underestimated size of the semiconductor industry

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Market analysts may disagree about specific trends and forecasts, but they typically share the same optimistic attitude about the semiconductor market. According to most assessments, the semiconductor industry was valued in the range of $630 billion to $680 billion in 2024 and is expected to reach $1 trillion to $1.1 trillion by 2030, largely fueled by the growth of AI and data centers.

This view—although positive—could be a significant underestimation of the semiconductor industry’s true worth. That’s because traditional estimates, which are largely based on sales volumes, may partially or completely overlook the value of chips created by OEMs with in-house design capabilities, captive chip designers, and fabless operators (for some advanced packaging technologies). This oversight could have meaningful consequences, as these categories are now demonstrating the highest growth rates. What’s more, current analyses often undervalue Chinese semiconductor companies because information on their sales is incomplete or opaque.

Accurate value assessments are more important than ever, as AI is expected to push the semiconductor industry’s average CAGR well above the 9 percent recorded from 2014 to 2024. To assess semiconductor value more accurately, the authors analyzed all company types, including those in China. Rather than relying on sales volumes, which do not accurately reveal value when companies are not directly selling chips on the market, they conducted customized analyses for each type of semiconductor company. For example, for OEM players with in-house chip design, such as smartphone manufacturers, we estimated their contribution to the market based on the cost of goods sold (COGS), combined with a typical gross margin for the product.

The main takeaway: The value of the semiconductor market totaled $775 billion in 2024 and could reach $1.6 trillion (ranging from $1.5 trillion to $1.8 trillion) by 2030—figures that far surpass other estimates. But not all semiconductor companies will benefit equally, because most growth will relate to leading-edge chips and high-bandwidth memory (HBM). A few highly innovative companies will likely account for the most value in these segments, given the semiconductor industry’s winner-take-all dynamic. In other market segments—such as advanced and mature nodes, or DDR1 DRAM and NAND memory—the top companies aggressively reduce costs, either by increasing scale or undertaking traditional cost excellence programs. They also strive to expand their presence in higher-growth segments and attempt to differentiate their offerings.

Future growth trajectories for leading verticals.  The leading segments in 2030 will be the three that now dominate the market, but their growth trajectories and demand drivers will differ:  Computing and data storage, wireless and automative.

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