Semiconductor WFE Revenues Increase ~7% YoY In 2024. 2025 Looks Much The Same. So, Where's The AI Effect?

after all, data centre CapEx is set to grow >50% YoY in 2025

Q424 revenues for the top 5 WFE players amounted to $28.7 billion, up 10% QoQ and up 21.7% YoY. This represented an all time record high quarterly revenue for the segment.

Net income came in at $7.4 billion, up 6.3% QoQ and up 14% YoY. This also represented a record quarterly net income.

For the full year 2024, revenues amounted to $99.74 billion, up 7% sequentially, and slightly exceeding our forecasted 5% growth.

Looking ahead to 2025, we expect more of the same. After reviewing the recent earnings calls of the top 5 players, we expect current year growth in the 5% range. At the same time we know that data center CapEx is on track to grow >50% YoY this year, as we recently discussed here:

However, we need to take into account the extraordinary CapEx numbers put forward by the Mag 7 during the current earnings season, details here:

Meta, Amazon, Alphabet and Microsoft intend to spend as much as $320 billion combined on AI technologies and data center build outs in 2025, based on comments from their CEOs early this year and throughout earnings calls in the past two weeks.

That’s up from $230 billion in total capital expenditures in 2024.

At $320 billion, that represents a 40% YoY increase. While it won’t all translate into semiconductor sales, much of it will in the form of networking gear, GPUs, custom ASICs, CPUs etc. etc.

So what’s going on? How is it possible that a >50% increase in data center CapEx isn’t translating into stronger growth for the WFE sector in 2025? Let’s dig in….