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In 2015, the global semiconductor industry pulled in $335 billion in revenue. In 2025, it will more than double that to nearly $690 billion.

We’ve become so accustomed to exceptional growth in this industry that those numbers may not seem remarkable. They are.

Not since the infancy of the industry have semiconductor revenues grown so fast over any 10-year period. Here is something else remarkable. We can expect that pace to continue through the coming 10 years, with revenues at least doubling once again. Driving this growth is a fundamental change in what we do with these tiny machines.

Data from Statista

As the graph below shows, while total semiconductor revenues were soaring, sales of central processing units (CPUs), the logic processors that drive what we think of as “computers,” were moderating. (We show the sales from Intel (INTC) and AMD (AMD) which dominate this market. Thanks to our colleague Dr. Robert Castellano for the data.)

For most of this decade the growth in the industry has come from elsewhere. Nvidia, making AI practical with its GPUs, is a big part of the story, but not the biggest. Nvidia’s growth means the industry is about $100 billion bigger in annual sales compared to 2021, but that still leaves almost $200 billion to be accounted for after considering the relative decline in CPU sales.

The most fundamental change and the one that will continue is the distribution of computation away from computers and its integration into everyday life. AI is a big part of this but not on its own. The big change comes from the combination of AI with ever more precise and capacious sensors feeding data from the physical world directly into an AI that can interpret the data and trigger some action in response.

Governing what went into the computer on your desk, was, well, you. Humans were in charge of input, even when those inputs were data sets too large for any human to grasp. This is less true every day.

Abroad in the world already are some 18 billion semi-autonomous devices connected to the internet, grabbing data from their environments and passing it to increasingly sophisticated processors, which in turn are connected to some actuating machine.

That’s input. What about output? A computer outputs to a human being or some devices under direct human control. The combination of AI and the actuator produce a response—an output—ultimately in accord with human intention, but without present human intervention. Welcome to the animated world.

An animated world
This reach beyond automation to animation is the essence of Industry 4.0. It is the future of everything from medicine to housekeeping to construction to garbage collection to oceanic shipping. Semiconductors are about to become universal, embedded into essentially every man-made device, except that there will be very few men anywhere near the making.

For just these reasons, for years now we have been urging our readers of the Gilder Technology Report to buy into the semiconductor industry, even some of the most obvious and some would say overpriced names. We are not at the end, nor the beginning of the end. We may not even be at the end of the beginning.

More likely, we are at the beginning of the beginning, an inflection point from which the semiconductor will become exponentially more crucial to the world economy, even compared to the past 50 years.

Enabling their growing power will be a return to the planar origins of the industry as flat wafer-scale devices supplant the mounting cost, complexity, and power consumption of today’s klugey “3D” devices. Taiwan Semiconductor (TSM) is already making them for Cerebras, the pioneer of wafer scale.

Orders of magnitude more powerful than even wafer-scale silicon, will be wafer-scale devices made from graphene and other neo-materials with near superconducting performance.

As always, however, we remind our readers that although we expect bountiful returns from semiconductor stocks, the real wealth goes not to the people who make the chips but the people who use them most cleverly. The best investment advice anyone can give you today is to invest in the American economy, as it readies wealth creation beyond any human experience.