Semiconductor Market Forecast For 17% Growth In 2021 As Fabs Run At Max Capacity

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If there’s one thing that companies across various industries are asking for right now, it’s increased chip capacity so that they can ship more products out the door to customers. But, unfortunately, there’s a severe backlog when it comes to fab capacity. That means the current chip supply can’t keep up with demand for hardware like Radeon RX and GeForce RTX GPUs. And even automotive companies like Ford are forced to leave unfinished F-150 pickups sitting unfinished in lots due to a lack of chips (typically produced on older, mature process nodes) to power critical vehicle functions.

The good news is that that IDC projects that the semiconductor marker could grow by just over 17 percent for 2021 as fabs are running at near 100 percent capacity, which is a significant uptick from the 10.8 percent growth during 2020. Moreover, moving into 2022, the market analysis firm believes that fab capacity will normalize, satisfying demand across multiple industries. This guidance seems in keeping with previous comments from NVIDIA CEO Jensen Huang, who claimed that we might not see chip supplies stabilize until the end of 2022.

However, one thing to consider is that all the big global chip fabs are investing billions of dollars into increasing capacity at a rapid pace. For example, TSMC is expanding its capacity at home in Taiwan and abroad in the United States with next-generation chip fabs. In addition, Samsung is increasing capacity in its home market of South Korea and is eying a second manufacturing facility in Texas. Even chip giant Intel has committed resources to boost domestic chip production.

With this additional capacity on the way, IDC warns that the chip industry has the potential for overcapacity in 2023.

“The semiconductor content story is intact and not only does it benefit the semiconductor companies, but the unit volume growth in many of the markets that they serve will also continue to drive very good growth for the semiconductor market,” says Mario Morales, Group VP for Enabling Technologies and Semiconductors at IDC.

As the smartphone industry continues its swift transition to 5G, IDC expects semiconductor revenue from those chipsets to increase 128 percent (the overall smartphone chipset market could see a 28 percent uplift). It’s also expected that companies like TSMC and Samsung could see upwards of 34 percent and 22.8 percent increases for game consoles and the automotive sector, respectively.

Between the increased demand and the added fab capacity that will come online in the near future, IDC expects that overall semiconductor revenue could top $600 billion by the year 2025.

Tags:  Intel, Samsung, TSMC, IDC, Fabs