The global semiconductor market, which was upended by Covid-induced supply chain frictions in 2020 and 2021, is projected to reap nearly 14 per cent more in revenue this year compared to 2021, to reach $676 billion, according to a new report by Gartner.
Driven by increasing demand and rising chip prices, the industry will hit $700.6bn in 2023, a yearly rise of 3.6 per cent, the US researcher said.
The average selling price (ASP) rise from the global chip shortage will be a major driver for growth, Alan Priestley, research vice president at Gartner, said.
However, as markets open and supply chain disruptions reduce, semiconductor component supply constraints are “expected to gradually ease through 2022 and prices will stabilise with the improving inventory situation”, Mr Priestley said.
Semiconductors are important components in electronic devices and particularly in electric and self-driving vehicles. They are used to manage functions such as navigation and parking, and for monitoring engine performance.
Car makers, particularly, have been affected as the lack of chips has halted production in factories around the world.
Various automotive applications will continue to experience component supply constraints until next year, Connecticut-based technology research and consulting company Gartner predicted.
“Although unit production of automotive vehicles will grow below expectation at 12.5 per cent in 2022, semiconductor device ASPs are expected to remain high because of continued tight supply driving the automotive semiconductor market to double-digit growth [19 per cent],” Mr Priestley said.
The global semiconductor shortage will drive nearly 50 per cent of the top 10 car makers to design and produce their own chips by 2025, Gartner said in an earlier report.
Supply chain disruptions, severe chip scarcity and trends such as electrification of vehicles and autonomy, will propel manufacturers to reduce their reliance on traditional chip makers. This will give car makers more control over their product road map and supply chains, according to Gartner's latest report.
In November, GlobalFoundries — the world’s third-largest semiconductor manufacturer, owned by Abu Dhabi’s Mubadala Investment Company — teamed up with Ford to advance semiconductor manufacturing and technology development in the US.
As per the agreement, GlobalFoundries will create further semiconductor supply for Ford’s current vehicle line-up and joint research and development to address the growing demand for feature-rich chips to support the car industry.
Chip shortage will continue to be a concern for the supply chain of electronics equipment in 2022, the Gartner report said. It will affect major electronic equipment markets differently depending on different semiconductor device types.
The memory chip market will account for the largest share in the semiconductor device market through the forecast period. It is projected to constitute nearly 31.4 per cent of the overall industry this year.
Meanwhile, the semiconductor revenue from smartphones is forecast to rise 15.2 per cent in 2022, as 5G smartphone unit production is expected to increase by 45.3 per cent yearly. The 5G smartphone volume is expected to reach 808 million units, representing 55 per cent of all smartphones produced, this year.
To address the chip shortage, Intel, the world's largest chip maker by revenue, said it will invest $20bn to build a new factory in Ohio. In January, the EU said it is gearing up to put billions of euros in state aid towards semiconductor production sites.
