Global Demand Shifts Challenge Semiconductor Industry in 2025

2025-07-02 business

Brussels, Wednesday, 2 July 2025.
The Semiconductor Industry Association highlights urgent needs for innovation and policy reform amid rising demand from electric vehicles and advanced computing sectors.

Market Dynamics and Growth Expectations

The semiconductor industry is expected to reach a market size of USD 702.44 billion in 2025, growing at a compound annual growth rate (CAGR) of 6.25% to reach USD 950.97 billion by 2030. This growth is primarily driven by advancements in artificial intelligence and the Internet of Things (IoT), which have increased the demand for high-performance computing and connected devices [5]. Additionally, the integration of AI accelerators in North America, China, and Western Europe is expected to contribute significantly to the growth, adding around +1.8% to the overall CAGR in the medium term [5].

Challenges in Talent Acquisition

The global demand for skilled workers in the semiconductor industry is projected to rise significantly, with an estimated need for one million additional skilled workers by 2030. Europe alone anticipates a shortage of over 100,000 engineers, highlighting a critical gap that could undermine regional growth targets [4]. In response, the European Chips Act aims to capture a 20% share of semiconductor production within the EU by 2030, supported by €43 billion in incentives to boost local manufacturing and R&D capabilities [4].

Supply Chain Vulnerabilities and Policy Needs

Supply chain vulnerabilities remain a significant concern for the semiconductor industry. The Semiconductor Industry Association (SIA) has highlighted the importance of cohesive policy frameworks to enhance global competitiveness and mitigate risks associated with supply disruptions [1]. Rising tensions in global trade, particularly between the U.S. and China, have exacerbated these risks, underscoring the need for strategic policy interventions [5]. Efforts such as the U.S. CHIPS and Science Act, which allocates USD 52 billion to domestic manufacturing and R&D, aim to strengthen supply chain resilience [5].

Implications for the European Electronics Sector

European manufacturers face the urgent challenge of adapting to market shifts as demand for advanced semiconductor applications, particularly in electric vehicles and AI-driven services, continues to rise [2]. Failure to innovate may lead to a competitive disadvantage, as technological advancements increasingly drive semiconductor integration across automotive, consumer electronics, and industrial sectors [5]. Collaborations with academic institutions and government initiatives could be vital in addressing skill shortages and fostering an environment conducive to innovation [1][4].

sources

semiconductor challenges global demand