2022 Semiconductor Sales to Grow 11% After Surging 25% in 2021

[Daniel Nenni]

Above average increases are expected in all major product categories, which will lift the global market to record-high revenues in 2022 despite growth rates easing from last year’s economic rebound, says report.

Total semiconductor sales in 2022 are forecast to grow 11% and reach a record-high $680.6 billion after worldwide revenues climbed 25% in the 2021 economic rebound from the 2020 outbreak of the Covid-19 virus crisis, according to the January Semiconductor Industry Flash Report that IC Insights will release next week as part of its 2022 McClean Report service. The Semiconductor Industry Flash Report shows the total semiconductor market growing at a low double-digit rate in 2022 (Figure 1). Sales growth is expected to slow, but remain above average, in all major semiconductor product categories.

Figure 1

Worldwide integrated circuit revenues are expected to rise 11% in 2022 to an all-time high of $565.1 billion and the rest of the semiconductor market—consisting of optoelectronics, sensors/actuators, and discretes (collectively, O-S-D devices)—is also projected to grow 11% this year to a record-high $115.5 billion, based on IC Insights’ forecast in the January Semiconductor Industry Flash Report, included with The McClean Report service.

In the 2021 economic turnaround, unit shipments of many widely used semiconductor products could not keep up with increasing demand from system and equipment manufacturers—including carmakers—that struggled to keep up with recoveries in their own markets. Unit purchases of ICs climbed 22% while shipments of O-S-D devices increased 20%, according to The McClean Report service’s January Semiconductor Industry Flash Report. Those were amazing gains considering that over the past 10 years, IC shipments have increased by a compound average growth rate (CAGR) of 7.4% and O-S-D units have increased by a CAGR of 4.7%. The new McClean Report 2022 forecasts that more than 1.3 trillion semiconductor devices—about 432.0 billion ICs and 889.3 billion O-S-D devices—are expected to ship in 2022, an increase of 10% for both segments.

IC Insights has updated its comprehensive forecast and analysis of the worldwide semiconductor industry for its 25th edition of The McClean Report. This month, The McClean Report service releases its first January Semiconductor Industry Flash Report, which will be followed throughout 2022 by major quarterly updates providing refreshed five-year forecasts for all IC and O-S-D product categories (sales, unit shipments and average selling prices), assessments of GDP and the global economic conditions impacting chip markets, and analysis of industry capital spending. Quarterly updates in February, May, August, and November will also provide quarterly sales rankings of top semiconductor suppliers as well as dive into major industry trends, such as IC wafer foundry expansion, R&D spending, mergers and acquisitions, regional market growth, and analysis of IC revenue by end-use categories.

Report Details: The 2022 McClean Report
The 2022 edition of The McClean Report—A Complete Analysis and Forecast of the Semiconductor Industry, will be released in January 2022. A subscription to The McClean Report service includes the January Semiconductor Industry Flash Report, which provides clients with IC Insights’ initial overview and forecast of the semiconductor industry for this year through 2026. In addition to the January Semiconductor Industry Flash Report, Quarterly Updates to the report will be released in February, May, August, and November of this year. An individual user license to the 2022 edition of The McClean Report is available for $5,390 and a multi-user worldwide corporate license is available for $8,590. The Internet access password and the information accessible to download will be available through November 2022.

https://www.icinsights.com/services/mcclean-report/pricing-order-forms/

 

[jms_embedded]

I wonder how much of that is due to price increases, and how much is due to increased volume / new products (e.g. increase in # of wafers manufactured).

 

[Daniel Nenni]

I wonder how much of that is due to price increases, and how much is due to increased volume / new products (e.g. increase in # of wafers manufactured).

Judging from TSMC's big numbers it's increased supply. Remember, TSMC uses wafer agreements so pricing can only be increased for new agreements or additional wafers above and beyond existing agreements. Demand should subside this year and capacity will increase so the chip squeeze should ease. When TSMC reports listen for customer inventory comments. My guess is that they will be "seasonally high". Customers have been stocking up for sure.

And there is definitely hording and price gouging in the supply chain. That should ease as well.

It will be interesting to see what the car companies report. They have a different business model than TSMC. TSMC builds capacity based on customer orders. Car companies build cars based on forecasts in a very competitive market. Those cars that are supposedly waiting for chips may or may not sell. I had read that car sales in North America will be down 15% in 2021 (85M versus 100M cars?). How much of that is due to supply chain constraints and how much due to people not driving due to COVID and not needing new cars?

My driving has decreased dramatically. We usually keep cars for 10 years / 100,000 miles. I can see us going to 15 years without a problem.

Personally I see next year's semiconductor revenue being a 10-15% increase but it really is hard to predict with COVID hanging over us.

 

[Arthur Hanson]

Dan, do you feel the new chips will drive demand in data centers, automation and autonomous driving giving us a long runway upwards for demand?

 

[Daniel Nenni]

Dan, do you feel the new chips will drive demand in data centers, automation and autonomous driving giving us a long runway upwards for demand?

Definitely. Car companies and other consumer electronic companies will become big data companies like Google, Apple, Amazon, etc... with huge amounts of data in the cloud to be sifted through. From what I have read recently the world generates 2.5 quintillion bytes of data everyday and only a fraction of it is monetized. The gold rush is coming to a datacenter near you, absolutely.

 

[jms_embedded]

And there is definitely hording and price gouging in the supply chain. That should ease as well.

Any anecdotes you can share? The only tangible thing I found with some searching is a report in early August 2021 about China cracking down on hoarding / price gouging. (Reuters and WSJ)

My driving has decreased dramatically. We usually keep cars for 10 years / 100,000 miles. I can see us going to 15 years without a problem.

Me too... which is fine in California and the Southwest, and southern states, but in colder climates where they have road salt, car cancer (rust) is more a function of age than mileage, and they'll still need to be replaced even though they have less mileage.

I can believe demand is down somewhat relative to normal. Is it down more than supply? We'll see....

 

[tooLongInEDA]

Any anecdotes you can share? The only tangible thing I found with some searching is a report in early August 2021 about China cracking down on hoarding / price gouging. (Reuters and WSJ)


Me too... which is fine in California and the Southwest, and southern states, but in colder climates where they have road salt, car cancer (rust) is more a function of age than mileage, and they'll still need to be replaced even though they have less mileage.

I can believe demand is down somewhat relative to normal. Is it down more than supply? We'll see....

Cars hardly rust at all these days provided the bodywork is undamaged. Here in the UK - a hotspot of car rust - hardly anyone keeps their car in the garage any more - you can leave them outside without worrying about rust. Unless US cars are made from the Russian steel Fiat used in the 70s, you should be fine. Failing electronic systems (ECU, stability control, etc) is the most likely thing to end of life your car now.

 

[Daniel Nenni]

Any anecdotes you can share? The only tangible thing I found with some searching is a report in early August 2021 about China cracking down on hoarding / price gouging. (Reuters and WSJ)


Me too... which is fine in California and the Southwest, and southern states, but in colder climates where they have road salt, car cancer (rust) is more a function of age than mileage, and they'll still need to be replaced even though they have less mileage.

I can believe demand is down somewhat relative to normal. Is it down more than supply? We'll see....

BWG Strategy does weekly calls inside the semiconductor supply chain. Hear it from the horses mouths. You can catch me leading off the foundry calls, absolutely.

BWG Global – Industry Insights | Primary Research

bwgstrategy.com

 

[jms_embedded]

Cars hardly rust at all these days provided the bodywork is undamaged

Having lived in New Hampshire for over 15 years and owned two used cars that made it to 200k miles (one Toyota and one Honda), I can speak from experience that car cancer is a real contributor towards premature failure. When road salt is used, you have to be very vigilant about car washing, and even if you are, there's always some bit of salt that gets to some undercarriage bit or some pinhole in the paint.

Not just my own cars; rust damage is very common in older cars. (don't take my word for it: https://newsroom.aaa.com/2017/02/road-de-icers-cause-3-billion-annually-vehicle-rust-damage/)

And it may not be in the body; I had a Honda Civic that made it to around 200k miles and drove it out to Arizona. What effectively did it in was rust that had started in the air conditioner and caused leaks. I used it one summer in Arizona without A/C and then gave up and traded it in. Not worth it to replace the A/C unit.

What's your average minimum temperature in England? The northern/northeastern USA has many areas that get down to -20 C or -30 C (some below -40 C), and the road salts are used to de-ice the roads even at those low temperatures. Moisture in the ground freezes and causes frost heaves, and the stresses in the pavement along with the frequent snowplowing cause potholes, so cars end up undergoing shock/vibration that helps the salt work its way further into the interior of the car (and wear out the shocks/struts more quickly). It's just a mess, and a definite downside of living there if you own a car. Further west (Michigan/Wisconsin/Minnesota/Dakotas/Montana) it is cold or colder, but snow is less frequent, so the road salt issue may not be as bad as the northeastern USA; I'm not really familiar with the horrors of owning a car there.

 

[tooLongInEDA]

Having lived in New Hampshire for over 15 years and owned two used cars that made it to 200k miles (one Toyota and one Honda), I can speak from experience that car cancer is a real contributor towards premature failure. When road salt is used, you have to be very vigilant about car washing, and even if you are, there's always some bit of salt that gets to some undercarriage bit or some pinhole in the paint.

Not just my own cars; rust damage is very common in older cars. (don't take my word for it: https://newsroom.aaa.com/2017/02/road-de-icers-cause-3-billion-annually-vehicle-rust-damage/)

And it may not be in the body; I had a Honda Civic that made it to around 200k miles and drove it out to Arizona. What effectively did it in was rust that had started in the air conditioner and caused leaks. I used it one summer in Arizona without A/C and then gave up and traded it in. Not worth it to replace the A/C unit.

What's your average minimum temperature in England? The northern/northeastern USA has many areas that get down to -20 C or -30 C (some below -40 C), and the road salts are used to de-ice the roads even at those low temperatures. Moisture in the ground freezes and causes frost heaves, and the stresses in the pavement along with the frequent snowplowing cause potholes, so cars end up undergoing shock/vibration that helps the salt work its way further into the interior of the car (and wear out the shocks/struts more quickly). It's just a mess, and a definite downside of living there if you own a car. Further west (Michigan/Wisconsin/Minnesota/Dakotas/Montana) it is cold or colder, but snow is less frequent, so the road salt issue may not be as bad as the northeastern USA; I'm not really familiar with the horrors of owning a car there.

Perhaps it's the more extreme cold you have then - temp variations are nicely moderated by the Guld Stream (from Gulf of Mexico).. Min winter temp here might be -5C - don't think we would ever get below -10C. But we do have plenty of road salt and grit. But no one really worries about rust too much these days. I found an old Alfa used car review a couple of days ago which mentioned the "crucial isopon [filler]-to-steel ratio". The steel and rustproofing are way better than they used to be.

I'll go out on a limb here and wait for the retribution - my impression is that the build quality of US cars isn't quite the same as European ones. They also cost at least 50% more (not all of which is tax). We might expect/demand they last longer.