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  • Rushmi Rosairo

Digital Friday>>> Semiconductors; Morphing Into a Trillion-dollar Industry

Picture Credit: Riskmethods website

The global semiconductor industry is in for a “decade of growth”, as many are expecting it to expand into a trillion-dollar industry. With people leaning more and more towards the convenience of electronics, semiconductors are used in almost everything in our day-to-day lives. Used in communications and transportation to healthcare and security, semiconductors are basically built into our lives.

With such an important role, semiconductor markets have boomed. Global sales had reached a record of $555.9 billion just last year, growing by more than 20%. But it wasn’t all smooth sailing, supply shortages sparked by the demand hitches brought on by the pandemic led to a jam in the production of everything from planes to calculators. This supply shortage caused a sellout of near all of the 2022 supply of chips before 2022 even began.

Semiconductor manufacturers were struggling. The main reason for the struggle was; since chips are used in electronics and not essential goods, the semiconductor market is very volatile. The semiconductor market is rather like a cycle. When the economy is flourishing, this means the consumers aren’t afraid to purchase non-essential and luxury products, but when the economy is not well off, consumers tend to hold off on purchases that aren’t entirely essential for life. The global chip supply shortage ordeal led to governments and lawmakers around the globe to do their best in order to secure supplies and to invest in order to bring manufacturing closer.

Picture Credit: Grist website

However, growth of the industry is encouraging. At the rate at which its going, experts suggests the industry’s aggregate annual growth could exist at an average 6-8% per year, all the way to 2030. Approximately 70% of growth is consisting of just three industries, with the strongest being automotive. With a tripling demand, this industry could be responsible for around 20% of the semiconductor industry’s development in the future. Analysts estimate state the sales to the auto industry could easily overcome $600 billion in 2022.

The Semiconductor Industry Association (SIA) announced in February 2022, that the sales for 2021 reached the highest annual total ever, at $555.9 billion. The industry shipped a record of 1.15 trillion semiconductor units last year, as chip manufacturers worked to meet the hitch in demand after the supply shortages brought on by the pandemic, which overwhelmed the chip supply capacity in 2020.

The market in U.S.A experienced the largest increase in sales in 2021, with an increase of 27.4%. Europe (27.3%), Asia Pacific/ All other (25.9%) and Japan (19.8) had also experienced increases in sales. Nonetheless, China remains the largest individual market for semiconductors, with Beijing making increase of self-sufficiency in semiconductors a priority. Semiconductor sales totaled $192.5 billion in 2021, even though the increase in sales was 27.1%.

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The future of the semiconductor industry looks bright, even though no one knows for sure where the industry might be headed. According to experts, it all depends on a number of factors including;

  • The price changes of rare earth metals

  • Experimentation with new semiconductor materials and,

  • The accelerated industrial adoption of new technologies

With the progress it is making, the industry is said to end up a $1 trillion industry by the end of the decade.

SIA president and CEO, John Neuffer stated;

“Demand for semiconductor production is projected to rise significantly in the years ahead, as chips become even more heavily embedded in the essential technologies of now and the future.”

April 15th 2022 | 6:30 PM

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