The Future of Semiconductors: 3 Technology Trends Fueling Innovation in 2025

As we prepare to enter 2025, technology continues to evolve at an unprecedented pace. As the tech sector changes, so does the semiconductor industry, which is transforming to support new applications. Since semiconductors have always been at the heart of technological innovation, innovation within electronic components is critical for powering the next generation of smartphones and artificial intelligence (AI). 

As new trends emerge across different industry sectors, the global market will see significant shifts within the next year and decade. These trends will influence how semiconductors are designed and what capabilities they require to help new products perform competitively in the technological landscape.

Artificial intelligence, the reigning king of technology, will continue to shape the electronic components supply chain in 2025 and for the next several years. 

1. Artificial Intelligence Contributing to the Rise of HBM Customization 

The rapid evolution of AI has been one of the most significant drivers of semiconductor innovation over the last two years. Throughout 2025, AI will continue to be integrated into a broader array of devices, such as PCs, which debuted in late 2024. The growing demand for customizations within specific component sectors has piqued interest across the semiconductor industry.

For example, Nvidia, Intel, and AMD have been in charge of designing AI-focused processors, including GPUs and CPUs. These components are specifically optimized for natural language processing, deep learning, and generative responses. In the coming years, we can expect these components to see innovations with more innovative neuromorphic designs that mimic human brain-like functions. 

However, there has been heightened attention on high-bandwidth memory (HBM) over the last year, as its capabilities have made it a popular choice amongst large language model (LLM) developers. Due to supplies becoming more constrained, manufacturers have invested greater capacity and resources into developing HBM, leading to new customizations. 

Indong Kim, Vice President and Head of DRAM Product Planning at Samsung Semiconductor, discussed new HBM developments resulting from their capabilities within AI applications.  

“There is a big wave coming in HBM architectures — custom HBM,” said Kim. “The proliferation of AI infrastructure requires extreme efficiency with a scale-out capability, and we are in solid agreement with our key customers that customization of HBM-based AI will be a critical step. PPA — power, performance, and area are the keys for AI solutions, and customization will provide a significant value when it comes to PPA.”

SK Hynix, Samsung Electronics, and Micron Technology are the three leading manufacturers of HBM. They are exploring new ways to increase its performance and processing speed. 

Samsung and Micron are “incorporating a non-conductive film (NCF) and bonding with thermocompression (TCB) at each bump level,” while SK Hynix is “continuing with a flip-chip mass reflow process of molded underfill (MR-MUF) that seals the stack in a high-conductivity molding material in a single step.”

As more AI processing moves to the edge (closer to the source of data), semiconductors designed for edge devices will need to be more power-efficient, faster, and capable of handling complex AI workloads. This trend will require innovation in low-power, high-performance chips, especially for applications like smart cameras, IoT devices, and autonomous drones.

2. Advanced Packaging Will Be the Next Stage for Chip Innovation 

Alongside AI, developing new advanced packaging processes has been one of the breakout stars in 2024. The semiconductor industry is brushing against what might be the end of Moore’s Law, or “the observation that the number of transistors on an integrated circuit will double every two years with minimal rise in cost.” 

OCMs are exploring other options for improving chip performance through packaging as we reach smaller node sizes. Nvidia has been utilizing TSMC’s advanced packaging capabilities to help improve chip performance. This has been accomplished through TSMC’s chip-on-wafer-on-substrate (CoWoS), which provides enhanced performance, reduced footprint, and improved power efficiency. 

CoWoS helps promote semiconductor innovation by stacking chips on a single substrate. Now that advanced nodes are approaching the size of a single nanometer, chip stacking developments are the next foray into semiconductor capabilities. The benefits of CoWoS technology and its ability to be scaled quickly ensure its wide-ranging use in mass production.

These aspects greatly benefit the rising needs of AI applications, including generative and large language models (LLMs).  TSMC plans to increase its capacity for advanced packaging operations as it expands its global footprint. It is rumored that TSMC plans to build news CoWoS advanced packing plants in the U.S. and Japan to satiate this heightened demand.

The primary motivator behind this strategy is the growing need for Nvidia chips in AI applications. 

Likewise, CoWoS technology’s small form factor helps enable more efficient thermal management in advanced cooling solutions like heatsinks and axial fan designs. This will likely contribute to heightened demand for advanced packing applications as data centers expand to meet the rising use of AI.

According to research, the continued integration of CoWoS technology will help OCMs push the boundaries of traditional limitations within chip packaging, improving applications through higher performance and greater interconnectivity. Likewise, the growing use of 3D stacking in memory, specifically DRAM and NAND flash, will likely grow during 2025 to better support AI applications. 

3. Power Component Demand will Boom due to Data Center Growth 

As AI continues to be integrated into different businesses and market sectors, the need for data centers to host this information is rising. The data center industry has quickly encountered a significant problem with the heightened demands of AI, primarily because there is simply not enough power or space. 

In a report by CNBC, experts warned that AI applications’ growing need for power has the potential to grow so large that an individual data center’s demand could use more electricity than some major cities and even entire U.S. states.

Wall Street Journal states that the high demand for AI has diminished the capacity for parts, leading to custom cooling systems requiring lead times over 5 times longer than only a few years ago. Even the delivery time for backup generators has surpassed its typical month to two years. 

Electricity and power have become among the most prominent parts in short supply since the explosion of AI. Over the last several years, electrification efforts have added to the rising need for power. The electric grid is the backbone of every country’s economy, national security, and community health and safety, and its stability is growing more vulnerable due to the growing requirements of numerous industries. 

Most power grids in various countries are decades old and approaching the end of their 50-80-year lifecycles. This old age makes them more vulnerable to power outages, cyber-attacks, or community emergencies. According to Princeton professor Jesse Jenkins, the demand for electricity in 2030 could be 14% -19% higher than in 2021. 

“A 21st-century grid has to accommodate steadily rising electricity demand to power electric vehicles, heat pumps, industrial electrification, and hydrogen electrolysis, and it needs to extend to new parts of the country to harness the best wind and solar resources. Both factors mean we simply need a bigger grid with more long-distance transmission.”

This problem is leading to new developments within the power components industry. High-efficiency power converters will help reduce data centers' energy loss by utilizing new materials that are more efficient than traditional silicon-based components. These include silicon carbide (SiC) and gallium nitride (GaN) components, which offer significantly higher breakdown voltage, faster switching speeds, higher power density, and smaller size.

Wolfspeed, STMicroelectronics, and Infineon are three companies that produce SiC and/or GaN components. Wolfspeed, one of the leaders in SiC technology, has been working to expand its global footprint and increase production capacity worldwide. Likewise, GaN, once a component solely utilized in aerospace and defense applications, is now increasingly used in communications and data centers. 

Similarly, these components can help the semiconductor industry work toward achieving sustainability goals faster than traditional silicon components thanks to their power efficiency, which ultimately reduces electricity demand. SiC and GaN components also produce less emissions than conventional silicon, which can reduce the end product’s emissions by up to 30%.

This will be a necessary path to pursue in the future construction of data centers due to their power demands, as their ravenous requirements for electricity could increase carbon emissions. 

The Semiconductor Industry is Pushing the Boundaries of Innovation 

As we approach 2025, the semiconductor industry is poised to play an even more critical role in shaping the future of technology, thanks to AI's push for change in the semiconductor landscape. HBM customization, advanced packaging, and innovation in power components will be some of the few trends seen through 2025. To meet these challenges, semiconductor companies must invest in cutting-edge materials, new manufacturing processes, and innovative chip architectures.

Global electronic component distributors must rely on their franchise partnerships, global supplier networks, and market intelligence tools to help customers source these upcoming components. As the semiconductor industry adapts to these trends, it will continue to be a key enabler of the technological breakthroughs that will define the next decade.

Sourceability’s team of sourcing experts, extensive franchise partnerships, global e-commerce platform, and market intelligence tool can help companies of any size strategize for the upcoming year. Contact our experts today for organizations eager to learn how Sourceability’s solutions can help your business with supply chain solutions.