Despite the ongoing chip shortage gripping the supply chain, the market for semiconductors is expected to grow by a whopping 17.3% in 2021, according to updated research from International Data Corp. (IDC).
The market grew substantially in 2020 at 10.8%, and demand is expected to skyrocket further. However, IDC warns that a balance should be reached by the middle of 2022 with a potential for an overcapacity in 2023 as larger scale capacity expansions come online toward the end of 2022.
IDC said IC shortages are expected to begin easing in the fourth quarter as capacity additions come online but will remain problematic through the second half of next year.
The overall semiconductor market is forecast to grow at 5% over the next decade due to increased semiconductor content being included in smartphones, notebooks, servers, automotive, smart home, gaming, wearables and wireless connectivity. IDC forecasts the semiconductor market to reach $600 billion by 2025 with a compound annual growth rate (CAGR) of 5.3% during the next five years.
“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,” said Mario Morales, group vice president for enabling technologies and semiconductors at IDC.
Capacity remains tight
While COVID-19 continues to be problematic in the supply chain and lockdowns may still be an issue moving forward, dedicated foundries have been allocated for the rest of the year with utilization at nearly 100%, IDC said.
Front-end capacity remains tight but fabless suppliers are getting production they need from foundry partners. Front-end manufacturing is starting to meet demand in the third quarter but larger issues and shortages will remain in back-end manufacturing and materials, the company said.
Biggest growth areas
5G semiconductor revenues will increase by 128% with total mobile phone semiconductors growing at 28.5%. Game consoles, smart home and wearables will grow at 34%, 20% and 21%, respectively.
The automotive chip market revenues will increase by 22.8% as shortages will continue through the year, IDC forecasts. Notebook revenues will grow by 11.8% with server chip revenues increasing by 24.6%.