Electronics Weekly
Electronics sales declined 16% QoQ in Q1 2025 and remained flat YoY. IC sales contracted by 2% QoQ but grew 23% YoY, reflecting ongoing investment in AI and high-performance computing infrastructure.
“While the first quarter of 2025 did not see a direct 
impact from new tariffs on electronics and IC sales, the uncertainty around global trade policies is prompting some companies to accelerate shipments and others to pause investments,” says SEMI’s Clark Tseng, “this push-pull dynamic could lead to atypical seasonality for the remainder of the year as the industry adapts to shifting supply chain and tariff landscapes.”
Semiconductor CapEx declined 7% QoQ but surged 27% YoY, as manufacturers continued to invest heavily in leading-edge logic, high-bandwidth memory (HBM) and advanced packaging to support AI-driven applications.
Memory-related CapEx soared 57% YoY in Q1 2025, while non-memory CapEx expanded by 15% YoY.
Wafer fab equipment (WFE) spending rose 19% year-over-year in Q1 2025 and is projected to increase another 12% in Q2, driven by strong investments in advanced logic and memory production to support the rapid adoption of AI semiconductors.
Test equipment billings surged 56% year-over-year in Q1 and are expected to grow by 53% in Q2, reflecting the heightened complexity and stringent performance requirements of AI and HBM chip testing.
Assembly and packaging equipment also registered double-digit growth, benefiting from the industry’s push toward higher-density integration and advanced packaging solutions.
“The WFE market is poised for steady growth driven by government investments and semiconductor advancements, particularly in AI and emerging technologies,” says TechInsights’ Boris Metodiev,“however, geopolitical uncertainties, including export restrictions and potential tariffs, pose significant risks that could impact this positive trajectory.”
Aligned with the growth in capital equipment investments, global installed wafer fab capacity is on the rise and is projected to surpass 42.5 million wafers per quarter (in 300mm wafer equivalents), reflecting a 2% QoQ and 7% YoY increase in Q1 2025.
China continues to lead all regions in capacity expansion, though the pace of growth is expected to moderate in the coming quarters.
Notably, Japan and Taiwan are experiencing the strongest quarterly capacity gains, driven by significant investments in power semiconductor manufacturing in Japan and the ramp-up of a leading-edge foundry in Taiwan.
SEMI and TechInsights expect the industry to experience atypical seasonal patterns in 2025 as companies navigate the dual challenges of trade policy uncertainty and supply chain adaptation. While demand for AI and datacentre technologies remains a bright spot, other segments may see delayed investment or demand shifts as the market responds to evolving tariff and geopolitical uncertainties.
