In recent months, industry analysts have offered uninspiring forecasts for the worldwide semiconductor industry. Market watchers expect the global chip shortage that began in 2020 to continue into 2022 and possibly into 2023. That means product availability, lead times, and prices could remain volatile for the next 16 months. The crisis has caused so much disruption that several leading automakers could abandon the decades-old just-in-time component inventory model.
That said, several market observers have recently predicted that the field will enjoy meaningful growth in 2022.
Analysts believe that widespread robust demand for microelectronics will boost all segments of the industry next year. As a result, the World Semiconductor Trade Statistics (WSTS) organization projects the component sector will generate $527 billion in sales in 2022, an increase of 8.8 percent year-over-year. As a result, the flow of microelectronic devices will no longer be constrained by abrupt shifts in demand.
However, other growth-related changes are coming to the electronic components sector that will impact manufacturers.
In mid-August, DigiTimes reported that Taiwan Semiconductor Manufacturing Company (TSMC), United Microelectronics Corporation (UMC), GlobalFoundries, Vanguard International Semiconductor (VIS), and Powerchip Semiconductor are running their 8-inch and 12-inch fabs at full utilization. Those foundry service providers expect their production capacity to remain tight throughout 2022.
In response, those corporations, including those specializing in mature node fabrication, are aggressively expanding their resources. Electronics Weekly notes 19 new microelectronics factories will begin construction before year’s end, and another 10 will break ground in 2023.
The chip industry’s growth trend also extends to the overseas semiconductor assembly and test (OSAT) segment. Greatek Electronics, Lingsen Precision Industries, and Orient Semiconductor Electronics have clear visibility through next year. Those companies’ success is driven by strong interest in wire-bonding for PMICs, automotive-grade MCUs, and consumer electronic parts.
In addition, SEMI asserts integrated circuit manufacturing equipment spending will reach a record high of $100 billion in 2022.
The association anticipates the segment’s growth will be driven by wafer fabrication tool sales, which will hit $86.89 billion, up 6.35 percent from 2021. It expects test equipment purchases will rise 5.93 percent annually to $8.03 billion while assembly and packaging machine revenue will increase by 6.32 percent to $6.39 billion.
SEMI also predicts foundry and logic chip providers will represent 52.9 percent of the market.
That means companies that fabricate their own processors and controllers will invest $45.7 billion to ramp up their output in the near term. The group also estimates NAND manufacturing tool sales will be $18.96 billion in 2022, a 9 percent expansion from 2021. Finally, the organization holds that assembly and packaging equipment revenue will total $8.5 billion, a 6 percent yearly improvement.
What Semiconductor Industry Growth Means for Electronics Manufacturers
On a macro level, the projected growth of the global semiconductor industry is a good thing for OEMs, CMs, and EMS providers.
Leading foundries and chipmakers have signaled their intention of using their spiking revenues to expand their production capacity. By constructing new facilities and manufacturing lines, those providers will correct the global supply-demand balance and prevent future shortages. Although analysts found firms are pouring most of their capital into advanced fabrication equipment, mature node components should also see greater availability.
However, long-term product pricing is more difficult to forecast at this point.
Electronics Weekly noted the 29 fabs being built over the next few years are not geographically concentrated. Corporations intend to construct eight new chip factories in both mainland China and Taiwan. However, the Americas will be home to six new component plants, Europe and the Middle East will host three facilities, and Japan and South Korea are getting two new manufacturing complexes each.
Ultimately, the national semiconductor independence trend could lead to lower parts costs as regional providers compete for global customers.
On the other hand, the changing priorities of large multinational corporations could drive up product prices worldwide. For example, Google is designing its own smartphone processors and outsourcing their fabrication to Samsung. Theoretically, it could see a sizable uptick in handset sales on the strength of its optimized hardware. As a result, it might pre-book space in its foundry partner’s fabs to reinforce its supply chain.
As a knock-on effect, foundries could raise their prices if they secure the business of a large consumer electronics vendor. Consequently, chipmakers competing for the remaining capacity would likely pass along their higher operating costs to their customers.
In either scenario, OEMs, CMs, and EMS providers would do well to include an e-commerce marketplace in their supply chains. Sourcengine lists millions of electronic components from over 3,000 trusted suppliers. It also hosts tools that provide professional buyers with robust real-time market intelligence on a global scale.
Accordingly, Sourcengine customers can find the parts they need at the best possible prices, regardless of wider industry-reshaping developments.