We all know that the semiconductor market plays a central role in industry, in particular regarding everyday electronic devices (smartphones, tablets, laptops), and beyond.
In 2021, the global semiconductor industry revenue was equal to 595 billion dollars, an increase on the previous year, when total revenue reached 470.90 US dollars.
The coronavirus pandemic had a large impact on the semiconductor industry, mostly because of interruptions to production in China and Taiwan, countries which dominate chip production, where factories were forced to close since the first wave of COVID-19.
Following production restarts, basically every industrial sector using electronics suffered from local chip shortages, due to the difficulties in managing such a complex supply chain: the industry is based on the foundry model, which consists of semiconductor fabrication plants (foundries) and integrated circuit design operations, each belonging to separate companies or subsidiaries. Some companies, known as integrated device manufacturers, both design and manufacture semiconductors.
Despite this, revenue in the sector has continued to grow. Indeed, in 2022 an additional increase is forecast, with revenue possibly reaching 676 billion dollars.
The semiconductor sector
As previously mentioned, the pandemic caused an interruption to the production of chips and semiconductors, with a consequent global shortage in supplies, so vital to the electronics industry.
Production recovery didn’t instantly manage to bridge the gap; furthermore, in the face of a supply shortage, a substantial increase in demand was recorded, driven by the digital transformation accelerated by the pandemic.
Semiconductors and the automotive industry
One of the sectors in which chip demand has increased considerably over the years is the automobile industry, a trend which will surely continue over coming years.
Even in this instance however, the pandemic has influenced the manufacturing market. During the early months of the pandemic, the automobile industry considerably reduced production, with a consequent decrease in the demand for semiconductors.
In the short term, the lack of demand from vehicle production was compensated for by the increase in demand from the electronics and telecommunications industries. But when the automotive industry returned to normal production levels, the chip industry was unable to satisfy required demand in short term, often forcing vehicle manufacturers to delay production.
The semiconductor Industry production capacity increased by 30% over 2021, and efforts made over the initial months over 2022 pushed further in the same direction, limiting to some extent the difficulties of the automotive sector. Further market stabilisation is forecast before the end of the current year.
Revenues are stimulating the sector
As previously cited, despite production difficulties, the semiconductor sector has recorded significant increases in terms of global revenue and 2022 forecasts confirm this highly positive trend.
5G, the internet of things, consumer electronics, digitalisation, data centres, electric cars, automatic and intelligent pilot systems are the principal driving forces which are stimulating and pushing the growth of semiconductors on a global level.
Obviously, forecasts for growth favour new investments and the increase in production capacity of industries within the sector, which tries to catch up with an increasing world demand to satisfy.
