ICinsights: Semiconductor market will hit a wall in 2024-EEWORLD

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Industry research firm ICinsights predicts that the semiconductor world's continued strong sales growth may hit a wall in 2024.

IC Insights expects semiconductor revenue to continue to grow in 2022 and 2023, followed by a market correction in the following year.

"According to current projections, 2024 will be the next cyclical downturn for the market, with growth resuming in 2025-2026," Brian Matas, vice president of market research at ICinsights, told The Register.

The semiconductor industry is highly volatile, with up cycles in which demand for chips exceeds supply - as we are seeing now - followed by down cycles that lead to oversupply.

Companies adjust manufacturing to make more of the chips that are in high demand, but this ultimately leaves the market with more semiconductors than it needs. Factories cut production or re-adjust capacity until the excess chip inventory is cleared, resetting the market for another growth cycle.

The chip industry was caught off guard during the pandemic, and chip demand skyrocketed; working from home drove demand for personal devices and upgraded data centers to handle cloud-based communication and collaboration platforms. This coincided with the electrification of vehicles, which drove demand for sensors and cheap chips such as power management integrated circuits.

Cracks are already appearing in the semiconductor landscape, with the 28nm manufacturing node likely to face an oversupply next year as new factories come online.

IC Insights estimates that semiconductor sales will reach a record $680.6 billion in 2022, an 11% increase from 2021. This is a more realistic increase than the 25% increase in 2019 compared to 2020.

IC Insights said the three-year run of growth from 2020 to 2022 would be the first time the industry has posted consecutive double-digit gains since 1993-1995. The winning streak in the 1990s was driven by PC shipments and electronics such as DVD players. The analyst firm expects compound growth to reach 7.1% through 2026, with 2024 being a year of decline.

IC Insights predicts that from 2021 to 2026, the combined CAGR of optical, sensor, and discrete devices (OSD devices) is expected to grow at a healthy rate of 8.0%, and total IC sales are expected to grow at a rate of just under 6.9%. The CAGRs of major semiconductor product categories are expected to range from 12.3% for sensors/actuators to 3.1% for discrete devices.

The sensor/actuator market (estimated at $24.3 billion in 2022) is the smallest major product segment in the semiconductor market, accounting for less than 4% of sales. However, sensor sales to automotive, mobile phones, and portable and wearable systems (e.g., smartwatches and fitness/activity trackers) are expected to increase significantly throughout the forecast period. In addition, more systems are using multiple sensors and sensor fusion software for multi-dimensional measurements to support greater machine intelligence and the ability to recognize motion, understand location, and monitor changes in the surrounding environment.

The logic IC market is expected to post the strongest CAGR among the major IC categories. The logic IC market has performed very well in recent years, with automotive-specific logic and industrial-specific logic devices being strong drivers of overall growth in this field.

“Cloud computing, artificial intelligence, machine learning, robotics, automotive electronics, industrial control and automation will be growth drivers even as mature markets such as smartphones and personal computing platforms develop further,” Matas commented.

In the long run, demand for semiconductors is only going to rise, although managing the ups and downs along the way can make judging demand and investment tricky. While forecasting is an imperfect art, 2023/4 looks like a tough year for the industry.

SIA: Global semiconductor sales and shipments hit record highs in 2021

The Semiconductor Industry Association (SIA) announced today that global semiconductor industry sales totaled $555.9 billion in 2021, a record high, up 26.2% from $440.4 billion in 2020. The industry shipped a record 1.15 trillion semiconductor units in 2021 as chip companies increased production to meet high demand amid a global chip shortage.

Global sales for December 2021 were $50.9 billion, up 28.3% from December 2020 totals and 1.5% above November 2021 totals. Fourth-quarter sales were $152.6 billion, up 28.3% from the previous quarter’s total for the fourth quarter of 2020 and 4.9% above the third-quarter 2021 total.

"In 2021, amid an ongoing global chip shortage, semiconductor companies dramatically increased production to unprecedented levels to respond to continued high demand, resulting in record chip sales and shipments," said John Neuffer, SIA President and CEO. "As chips become more deeply embedded in essential technologies of today and tomorrow, the demand for semiconductor production is expected to grow significantly in the coming years. To ensure that more semiconductor production and innovation are concentrated in the United States over the long term, the U.S. government must quickly fund the CHIPS Act investments in semiconductor research, design and manufacturing as part of competing bipartisan legislation. Doing so will significantly strengthen America's economy, national security, critical infrastructure, supply chain, and technological leadership."

From a regional perspective, the Americas market had the largest sales growth in 2021 (27.4%). China remains the largest individual semiconductor market, with sales totaling $192.5 billion in 2021, up 27.1%. Annual sales also increased in 2021 in Europe (27.3%), Asia Pacific/All Others (25.9%), and Japan (19.8%). Compared with November 2021, sales in December 2021 increased in the Americas (5.2%), China (0.8%), Europe (0.3%), and Asia Pacific/All Others (0.1%), but decreased in Japan (-0.3%).

Several semiconductor product areas stood out in 2021. Analog semiconductors, a type of semiconductor commonly used in automobiles, consumer products, and computers, had the highest annual growth rate at 33.1%, reaching sales of $74 billion in 2021. Logic ($154.8 billion in 2021 sales) and memory ($153.8 billion) were the semiconductor categories with the largest sales. Annual sales of logic products increased 30.8% compared to 2020, while sales of memory products increased 30.9%. Sales of micro ICs, including microprocessors, increased 15.1% to $80.2 billion in 2021. Total sales of all non-memory products increased 24.5% in 2021. Automotive IC sales increased 34.3% year-over-year to an all-time high of $26.4 billion.

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