The global semiconductor market could stabilise by 2022 before reaching overcapacity in 2023 as larger-scale chip-making plants become operational towards the end of the year, according to the latest report by the IDC.
Semiconductor. Credit: sdecoret / Shutterstock
The semiconductor shortage has affected both the technology and automotive sectors and has been driven by supply chain shortfalls associated with the coronavirus pandemic and increased demand for consumer electronics. Credit: sdecoret / Shutterstock
The analytics firm predicts a 17.3% market share increase for 2021, up from 10% in 2020 with demand continuing to be driven by an increased desire for consumer electronics and pushes towards automotive electrification.
Read more: VNC chief warns semiconductor shortage may outlast Covid
Many analysts foresee the shortages lasting into 2023, with several key automakers and tech giants investing in domestic production to deal with supply chain disruptions that have resulted from the coronavirus pandemic.
Despite the rise of the Delta Covid variant and a continued rise in cases, IDC reports semiconductor consumption habits remain healthy.
The company reports that dedicated foundries have been allocated for the rest of the year, with capacity utilisation at nearly 100%.
“The semiconductor content story is intact and not only does it benefit the semiconductor companies, but the unit volume growth in many of the markets that they serve will also continue to drive very good growth for the semiconductor market,” said Mario Morales, the group's Vice President for Enabling Technologies and Semiconductors at IDC.
2021 semiconductor market overview IDC. Credit: IDC
Credit: IDC
The chip shortage has caused many manufacturers to operate at a reduced capacity owing to a lack of supply, with particular ramifications for the automotive sector.
Various legislators, such as the Biden administration and the European Union, have pledged to tackle the shortage as a matter of urgency, with initiatives being set up to increase domestic chip production.
Tech giant Intel recently pledged €80 billion in funding for EU chip production, which could see chip gigafactories in several EU countries in a bid to stimulate growth.
Read more: Intel to invest €80 billion into EU chip production
Samsung is also attempting to find a home for its mammoth $17 billion battery gigafactory, which could mark a potential second chip plant in the state of Texas.
IDC reports that dedicated foundry capacity has been allocated for the rest of the year, and front-end manufacturing remains tight, but key players will be getting the production capacity they need through partnerships and mergers.
It also states that integrated circuit shortages would wane by the end of 2021 owing to accelerated production.
The report also provides information on potential growth areas for semiconductors going into the future.
5G semiconductor revenue is expected to rise by 128% during Q4 2021, while total mobile phone semiconductors are expected to grow by 28.5%.
Game consoles, smart homes, and wearables will grow 34%, 20%, 21% respectively, while the automotive sector, which has seen steady increases in the adoption of electrification throughout the year, could see as much as a 22% revenue increase.
IDC also expected semiconductor wafer prices to continue to increase throughout 2021 owing to rising material costs and as chip production services mature.
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Despite this, the firm expects the global semiconductor market to reach around $600 billion by 2025.
The market could see as much as a 5.3% compound annual growth rate (CAGR) - a significant boost over the averaged annual growth rate of 3.4%.
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