Recent analyses from McKinsey and Gartner present a new understanding of the semiconductor industry’s trajectory, revealing a market that is larger and growing faster than previously recognized.
McKinsey’s report re-evaluated their 2024 market prediction to be worth $775 billion, significantly higher than the original estimate. This difference is due to expanded accounting methods that incorporate internal chip design, captive infrastructure, and companies operating in China, which are often excluded from traditional revenue tracking.
In parallel, Gartner reports a 21% increase in global semiconductor revenue for 2025, totaling $793 billion. They report growth is driven by high demand for AI components such as high-bandwidth memory and processing units, which together accounted for nearly one-third of total semiconductor revenue during the year.
Why It Matters: Conventional models of measuring semiconductor growth have not kept up with how the industry actually functions today. Accurate valuation is becoming essential for companies seeking to participate in the ongoing expansion of AI infrastructure and next-gen development. Companies that rely on outdated assumptions risk missing the areas where value is being generated most consistently. These updated assessments provide a framework that better matches industry behavior and investment flows.
- Expanded Valuation Adds Hundreds of Billions to the Market Estimate: McKinsey’s assessment includes companies and business models that are usually left out of sales-based valuations. It accounts for the value created by captive chip development within large technology companies, as well as in-house chip design by original equipment manufacturers. It also incorporates a refined estimate for Chinese manufacturers, where reliable sales figures are limited. These factors contribute to a revised 2024 total of $775 billion, compared to other estimates that generally remain below $700 billion.
- AI Drives a New Revenue Distribution Across the Industry: Gartner identifies AI processors, memory technologies like high-bandwidth memory, and networking chips as the primary contributors to revenue growth in 2025. AI-specific semiconductor components accounted for approximately $200 billion, or nearly one-third of total industry revenue for the year. AI infrastructure spending is expected to surpass $1.3 trillion in 2026, meaning demand for these chips is set to continue increasing. McKinsey also projects a significant role for these components through 2030, identifying high-bandwidth memory and small-node chips as areas of sustained growth.
- NVIDIA Becomes the First Chipmaker to Exceed $100 Billion in Revenue: Gartner reports that NVIDIA earned more than $125 billion in 2025, making it the largest semiconductor vendor by a substantial margin. The company’s focus on AI accelerators and graphics processing units for servers helped it surpass Samsung by over $50 billion. NVIDIA contributed over one-third of the industry’s total year-over-year revenue growth. Other vendors such as SK Hynix and Micron also benefited from demand for memory chips tailored to AI workloads, while companies like Intel experienced declines in market share.
- Different Chip Segments Will Experience Unequal Growth Rates Through 2030: McKinsey forecasts a compound annual growth rate of 13% for the semiconductor market between 2024 and 2030. However, this average conceals significant differences. Leading-edge chip nodes are projected to grow much faster than older technologies. High-bandwidth memory is also expected to expand more quickly than other types of memory. In contrast, chips produced using advanced and mature nodes are expected to see modest demand increases. Many companies operating in this space are facing slower performance gains and lower pricing power, which limits their opportunities for revenue expansion.
- Manufacturers Will Require Different Approaches Depending on Product Segment: Companies producing the most advanced chips for AI and data center use are investing heavily in product development, node shrinkage, and packaging innovation. These activities demand greater manufacturing precision and higher input costs. Customers seeking improved performance in areas such as artificial intelligence training and high-speed communication may gravitate toward suppliers that can deliver consistent improvements. Meanwhile, companies operating in segments with lower performance requirements are facing cost pressure and more competition.
Gartner Says Worldwide Semiconductor Revenue Grew 21% in 2025 – Gartner
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