The study aims to provide a detailed market evaluation that includes market statistics, insightful observations, historical data, industry-verified information, and forecasts based on an acceptable set of methodology and assumptions
FREMONT CA: In 2021, global semiconductor revenues were $558 billion, with over 1.1 trillion units sold. Revenues increased by 25.7 percent, while units increased by 20.2 percent in 2020. The semiconductor market will grow at a slower rate in 2022 than it did in 2021. The dollar's value will rise to $591 billion, while the value of the unit will fall slightly to 1.06 trillion.
5G, auto electrification, including full EVs, cloud applications, server farms, and the spread of artificial intelligence across many end markets are some of the industry trends that will continue to drive growth and consume semiconductors, helping to avoid a significant downcycle for semiconductors. To meet higher compute power requirements, these industries will require higher performance and a more substantial number of semiconductor chips. The semiconductor industry's long-term growth demand from end markets is critical to its success, as all foundries and IDMs have significantly increased their capital expenditures in new fabrication facilities to meet this impending demand for chips.
While the economy in the United States is doing well, there are signs that economies worldwide are slowing. China, the world's second-largest economy, has shown signs of slowing growth and has lowered key interest rates as a result. Costs and interest rates are rising in some areas, which is cause for concern. Geopolitical unrest and the threat of military action in Europe can stifle the economy. Oil prices are rising and are expected to surpass $100 per barrel this year. As it tries to engineer a soft landing to avoid a major recession, the US Federal Reserve plans up to four interest rate hikes in 2022 to curb inflation and slow the economy.
Semiconductor shortages are still a hot topic in the news, especially in the automotive industry. The semiconductor industry was able to increase unit production in 2021 and, in some cases, far outpaced the growth rate of the end markets that demand those devices. Companies tend to place double orders to secure as much product as possible to keep production lines running, just as they have in previous semiconductor cycles when there have been shortages. At this time, the evidence to support just how much double ordering has occurred in the industry is unclear, but we believe it is significant. Excess inventories have been hidden in previous cycles until the situation becomes undeniable.
This double ordering will result in inventory buildup; however, the pandemic may have shown businesses that stockpiling inventory may be an excellent way to hedge against future disruptions. Semico anticipates that the shortages will be resolved mainly by the second half of 2022.