The global economy may be in a tenuous situation right now, but the semiconductor industry is likely to walk away from 2022 with a "healthy" boost in revenues, according to analysts at IDC. But beware oversupply, the analyst firm warns.

Semiconductor companies across the world are expected to grow collective revenues by 13.7 percent year-on-year to $661 billion, IDC said in research published Wednesday. Global semiconductor revenue last year was $582 billion.

"Overall, the semiconductor industry remains on track to deliver another healthy year of growth as the super cycle that began in 2020 continues this year," said Mario Morales, IDC group vice president of semiconductors.

This is despite ongoing chip shortages that have marred several industries, including automotive and, of course, the wonderful world of IT. In fact, these shortages drove up the average selling prices of products for semiconductor companies in 2021, IDC said.

As we noted earlier this year, sustained and high demand for silicon, combined with inadequate production capacity, has given chip manufacturers leverage to raise the prices of wafers, which, in turn, have boosted revenues, according to research firm TrendForce.

"The financial and system markets remain narrowly focused on shortages across specific sectors of the supply chain, but what is more important to emphasize is how critical semiconductors are to every major system category and semiconductor content growth that remains unabated over the next five to seven years," IDC's Morales said. I

DC expects the semiconductor supply chain to somewhat stabilize this year, with demand for front-end manufacturing anticipated to meet supply needs in the third quarter. However, IDC anticipates that continued issues with the back-end materials needed to manufacture chips will cause shortages to extend through early 2023.

"The semiconductor industry had an extremely strong growth year in 2021, but shortages and tight inventory in some semiconductor markets remain. The global nature of the semiconductor industry has been challenged by COVID-19 and continues to be impacted by regional shutdowns, but we reiterate our outlook for a positive growth year for 2022," said Nina Turner, research manager for semiconductors at IDC.

However, IDC warns that chip manufacturers building new capacity could lead to a glut of chips.

"Longer term, the new fabs and investment announcements will add significant capacity and could increase the risk of overcapacity beyond 2023," Turner added.

Gartner thinks the chip industry has passed the classic peak in the semiconductor cycle, and there are growing concerns of a sharp inventory correction coming later this year or early next.

Growth in the semiconductor industry in 2021 was driven mainly by industrial and automotive sectors, which are expected to increase revenue by 30.2 percent and 26.7 percent year-over-year, respectively.

* Intel to get $7.3b for Germany fab site as TSMC dismisses Europe plans

* Taiwan bans exports of chips faster than 25MHz to Russia, Belarus

* Intel plans immersion lab to chill its power-hungry chips

* AMD approaches '30%' x86 CPU market share, thanks to servers 'n' laptops

On the application side, IDC said 5G phones, video game consoles, wireless access points, datacenters and wearables contributed the lion's share of growth in 2021. These applications are expected to continue driving growth for semiconductor companies this year, albeit "more moderately as a whole as consumer-facing markets begin to see a slowdown by the fourth quarter of the year," IDC added.

Thanks to high memory sales, South Korea-based Samsung overtook American chipmaker Intel in 2021 as the top semiconductor company when it comes to revenue, which grew 31.1 percent year-over-year to $75.8 billion for Samsung. The other top three companies last year were SK Hynix in South Korea and Qualcomm and Micron in the United States.

By: DocMemory
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