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TrendForce forecasts that despite continued oversupply in 1Q25, the NAND Flash market will see significant improvement in supply-demand dynamics in 2H25, leading to a price rebound. This is driven by suppliers' proactive production cuts, growing AI-related demand, and faster inventory depletion. Chinese government subsidies, AI server demand, and AI PC/smartphone demand spurred by DeepSeek will contribute to the NAND Flash market recovery.
TrendForce forecasts uncertain growth for AI server shipments in 2025, influenced by US export controls, the rise of DeepSeek, and GB rack preparation progress. The base case projects 28% growth; the worse case, 20-25%; and the bullish case, nearly 35%. While DeepSeek may reduce demand for high-end AI training servers, it will drive edge AI inference server development and encourage CSP investment in custom ASICs, benefiting long-term AI market growth. AI inference is expected to gradually approach a 50% market share.
TrendForce indicates that DeepSeek and other Chinese AI companies are challenging the hardware-centric AI development model by focusing on operational efficiency, potentially prompting CSPs to reassess their AI infrastructure investments. While CSP capital expenditures will remain high in 2025, investments in in-house ASICs will increase to reduce costs and reliance on NVIDIA GPUs. US export controls will further accelerate the development of indigenous chips and algorithms in China's AI sector. In the long term, DeepSeek's emergence may lead to a downward revision in AI GPU demand and shift AI development towards efficiency-focused strategies.
TrendForce forecasts a continued slump in the NAND Flash market in 2025, driven by weak demand and oversupply, leading to price declines. To stabilize the market, Micron has initiated production cuts, with other suppliers expected to follow. Suppliers will reduce capacity utilization and delay process upgrades. While these cuts may stabilize prices short-term, long-term market consolidation will accelerate. Suppliers need to focus on innovation and explore new markets, while competition from Chinese suppliers will intensify.
TrendForce indicates that the US export control updates on January 16th extend KYC review standards to packaging technologies and expand controls to logic ICs at 16/14nm and below, 3D NAND with 128+ layers, and specific DRAM specifications. New measures require stricter due diligence from foundries and OSATs and establish ""Approved IC Designers"" and ""Approved Manufacturing and OSAT Companies"" lists. While non-AI chip production may continue, these measures will increase difficulties for Chinese customers and could impact TSMC's revenue by 1-3%.
TrendForce indicates that NVIDIA will increase shipments of Blackwell GPUs featuring CoWoS-L in 2025, while US trade restrictions may reduce demand for CoWoS-S. NVIDIA's adjusted CoWoS order allocation strategy will shift 60% of demand from CoWoS-S to CoWoS-L, despite tight CoWoS-L capacity. Potential delays in GB Rack shipments and US export controls on AI chips could lead to NVIDIA revising its CoWoS demand downward.
TrendForce indicates that foundry capacity utilization in 1Q25 is exceeding expectations due to geopolitical risks and Chinese subsidies. Despite weak end-market demand for consumer electronics, the supply chain is stockpiling to mitigate potential tariffs and capitalize on Chinese subsidies, leading to increased utilization rates for mature nodes at Tier-2 foundries. This early stockpiling, however, may reduce future demand, potentially slowing capacity utilization growth in 2H25.
TrendForce forecasts that CoWoS capacity will double in 2025, driven by demand for Blackwell and CSPs' ASICs. TSMC, the major supplier, will expand capacity to meet the demand, with NVIDIA's Blackwell platform accounting for the largest share and CoWoS-L exceeding 50%. AWS's in-house ASIC demand will also significantly increase. While TSMC's capacity expansion may face challenges, overall market demand for CoWoS remains robust.
Content:
1. 2023-2028F Global AI Server Market Supply and Demand Analysis
2. 2023-2028F Forecast for Global AI Server Market
3. Future Trends and Outlook for Key AI Server Supply Chain Development
4. Key Takeaways
TrendForce indicates that heightened geopolitical tensions are driving IDMs to seize ""China for China"" opportunities through collaborations with Chinese foundries. Driven by localization and cost-cutting demands in China's automotive market, European and Japanese IDMs like STMicroelectronics, Infineon, NXP, and Renesas are actively partnering with Chinese foundries such as SMIC and HHGrace to develop automotive MCUs and other products. This collaboration will help Chinese foundries enhance their technology platforms and achieve a more autonomous supply chain. These partnerships are expected to contribute to wafer output and revenue starting in 2H25 at the earliest.