As we approach 2025, technology continues to evolve at an unprecedented pace. As the technology sector changes, so too does the semiconductor industry, changing to support new applications. Semiconductors have always been at the center of technological innovation, so innovation within electronic components is critical to powering the next generation of smartphones and artificial intelligence (AI).
Global markets will undergo significant changes over the next year to 10 as new trends emerge across various industry sectors. These trends impact how semiconductors are designed and the capabilities new products need to be competitive in the technology environment.
Reigning as the king of technology, artificial intelligence will continue to shape the electronic component supply chain in 2025 and for years to come.
1. Artificial intelligence contributes to the rise of HBM customization
The rapid evolution of AI has been one of the most important drivers of semiconductor innovation over the past two years. Throughout 2025, AI will continue to be integrated into a wider range of devices, including PCs arriving in late 2024. The growing demand for customization in specific component areas is driving interest across the semiconductor industry.
For example, Nvidia, Intel, and AMD have been responsible for designing AI-focused processors such as GPUs and CPUs. These components are specifically optimized for natural language processing, deep learning, and generative responses. In the coming years, we can expect innovations in these components with more innovative neuromorphic designs that mimic human brain-like functionality.
However, high-bandwidth memory (HBM) has received increased attention in the last year, as its capabilities have made it a popular choice among large-scale language model (LLM) developers. Increasing supply constraints have led manufacturers to invest more capacity and resources in HBM development, leading to new customizations.
Indong Kim, vice president and head of DRAM product planning at Samsung Semiconductor, discussed the development of new HBMs arising from features within AI applications.
“There’s a big wave in HBM architecture, custom HBM,” Kim says. “We strongly agree with our key customers that the proliferation of AI infrastructure requires ultimate efficiency through scale-out capabilities, and customization of HBM-based AI is a critical step. PPA — Power, performance, and area are the keys to an AI solution, and customization brings great value when it comes to PPA.”
SK Hynix, Samsung Electronics, and Micron Technology are the three main manufacturers of HBM. They are looking for new ways to improve their performance and processing speed.
Samsung and Micron have “incorporated non-conductive film (NCF) at each bump level and bonded using thermocompression bonding (TCB),” while SK Hynix has “flip-chip mass reflow molded underfill (MR-MUF).” The process continues, sealing the stack with a highly conductive molding compound in one step.”
As AI processing moves to the edge (closer to the data source), semiconductors designed for edge devices must be more power efficient, faster, and capable of handling complex AI workloads. This trend requires innovation in low-power, high-performance chips, especially for applications such as smart cameras, IoT devices, and autonomous drones.
2. Advanced packaging will be the next stage of chip innovation
Along with AI, the development of new advanced packaging processes will be one of the hottest areas in 2024. The semiconductor industry is facing the end of Moore’s Law, or the observation that the number of transistors on an integrated circuit doubles every two years. It can last for years with minimal cost increases. ”
OCM is exploring other options to improve chip performance through packaging as node sizes shrink. Nvidia has been leveraging TSMC’s advanced packaging capabilities to improve the performance of its chips. This is enabled by TSMC’s Chip-on-Wafer-on-Substrate (CoWoS), which delivers increased performance, reduced footprint, and increased power efficiency.
CoWoS helps accelerate semiconductor innovation by stacking chips on a single substrate. As advanced nodes approach single nanometer sizes, the development of chip stacking is the next foray into semiconductor functionality. The advantages and rapid scalability of CoWoS technology ensure its wide use in mass production.
These aspects greatly benefit the growing needs of AI applications such as generative language models and large-scale language models (LLMs). TSMC plans to increase its capabilities in advanced packaging operations as it expands its global footprint. TSMC is rumored to be planning to build New CoWoS advanced packaging plants in the US and Japan to meet this growing demand.
The main motivation behind this strategy is the growing need for Nvidia chips in AI applications.
Similarly, CoWoS technology’s small form factor enables more efficient thermal management with advanced cooling solutions such as heat sinks and axial fan designs. This is likely to contribute to the growing demand for advanced packaging applications as data centers expand in response to the increased use of AI.
Research shows that the continued integration of CoWoS technology allows OCM to push the boundaries of traditional limitations within chip packaging and improve applications through higher performance and better interconnectivity. Similarly, the use of 3D stacking in memory, especially DRAM and NAND flash, is likely to increase during 2025 to better support AI applications.
3. Demand for power components surges due to data center growth
As AI continues to be integrated into various business and market sectors, the need for data centers to host this information is increasing. The data center industry quickly faced significant challenges with the growing demand for AI. The main reason is simply not having enough power or space.
In a CNBC report, experts say the increased demand for electricity from AI applications could mean the demand for individual data centers could use more electricity than some major cities or entire U.S. states. I warned you.
The Wall Street Journal notes that high demand for AI has reduced component production capacity and lead times for custom cooling systems are more than five times longer than just a few years ago. Even the turnaround time for backup generators is two years, rather than the usual one month.
Electricity and power have been one of the most scarce components since the explosion of AI. In recent years, the demand for electricity has increased due to electrification efforts. Electric power grids are the backbone of countries’ economies, national security, and community health and safety, but their stability is becoming increasingly fragile due to the increasing demands of many industries.
Most power grids in different countries are decades old and nearing the end of their 50-80 year lifecycles. This aging population makes them more vulnerable to power outages, cyberattacks, and local emergencies. According to Princeton University professor Jesse Jenkins, electricity demand in 2030 could be 14% to 19% higher than in 2021.
“21st century power grids will need to meet steadily increasing electricity demands to power electric vehicles, heat pumps, industrial electrification, hydrogen electrolysis, and to harness the best wind and solar resources. need to expand into new areas of the country. Both factors mean a larger power grid is needed to enable long-distance transmission.”
This issue is creating new developments in the power component industry. High-efficiency power converters help reduce energy losses in data centers by utilizing new materials that are more efficient than traditional silicon-based components. These include silicon carbide (SiC) and gallium nitride (GaN) components and offer significantly higher breakdown voltages, faster switching speeds, higher power densities, and smaller sizes.
Three companies, Wolfspeed, STMicroelectronics, and Infineon, manufacture SiC and/or GaN components. As one of the leaders in SiC technology, Wolfspeed is committed to expanding its global footprint and increasing production capacity around the world. Similarly, GaN, once a component used only in aerospace and defense applications, is now increasingly used in communications and data centers.
Similarly, thanks to their power efficiency, these components will help the semiconductor industry reach sustainability goals faster than traditional silicon components, ultimately reducing power demand. SiC and GaN components also have lower emissions than traditional silicon, reducing end product emissions by up to 30%.
This will be a necessary measure in future data center construction, as strong demand for electricity can increase carbon emissions.
The semiconductor industry is pushing the boundaries of innovation
As 2025 approaches, the semiconductor industry is poised to play an even more important role in shaping the future of technology, with AI driving change in the semiconductor industry. HBM customization, advanced packaging, and power component innovation will be some of the few trends we will see by 2025. To address these challenges, semiconductor companies must invest in advanced materials, new manufacturing processes, and innovative chip architectures.
Global electronic component distributors should leverage franchise partnerships, global supplier networks, and market intelligence tools to help customers source these upcoming parts. As the semiconductor industry adapts to these trends, it will continue to be a key enabler of the technological advances that will define the next decade.
Sourceability’s team of sourcing experts, extensive franchise partnerships, global e-commerce platform, and market intelligence tools help businesses of all sizes plan for next year. If your organization is interested in learning more about how Sourceability’s solutions can help your business with supply chain solutions, contact our experts today.
