Global semiconductor revenue soared to $626 billion in 2024, marking an 18.1% jump from the previous year, driven largely by the insatiable demand for artificial intelligence (AI) and generative AI (GenAI) technologies. A key highlight of this surge is the rise of data centers as the second-largest market for semiconductors, according to preliminary results released by Gartner, Inc. The research firm forecasts continued growth, projecting total semiconductor revenue to reach $705 billion in 2025.
“Graphics processing units (GPUs) and AI processors used in data center applications (servers and accelerator cards) were the key drivers for the chip sector in 2024,” said George Brocklehurst, VP Analyst at Gartner. “The rising demand for AI and generative AI (GenAI) workloads led data centers to become the second-largest market for semiconductors in 2024, behind smartphones. Data center semiconductor revenue totaled $112 billion in 2024, up from $64.8 billion in 2023.” This represents a dramatic increase which emphasizes the transformative impact of AI on the data center landscape.
The explosion in AI-related workloads has fueled a massive investment in data center infrastructure, driving demand for high-performance chips capable of handling complex computations. This surge in demand has not only propelled overall semiconductor market growth but also significantly reshaped the competitive landscape.
While smartphones remain the largest market for semiconductors, the rapid ascent of data centers highlights the increasing importance of AI and related technologies. Gartner’s report emphasizes the critical role of GPUs and AI processors in enabling the development and deployment of cutting-edge AI applications.
The report also notes that memory and AI semiconductors will drive near-term growth, with high-bandwidth memory (HBM) projected to account for an increasing share of DRAM revenue.