Revenue is expected to reach semiconductor industry to half a trillion dollars in 2022 for the first time in its history.
But the industry has always experienced periods of huge revenue volatility over the past decades, with data showing that it has only been able to sustain revenue growth for more than two years in a row. This is the first time that the industry can break this rule and continue to grow for the third year in a row and beyond.
According to Bloomberg, the biggest booster behind expectations of sustainable growth is the chip industry’s entry into every part of consumers’ daily lives, no longer just limited to computers and phones.
The industry has witnessed a boom in demand recently, with its entry into all the devices and sensors that the consumer depends on, whether in cars, smart devices and even clothes. The high demand during the pandemic led to a sharp shortage of industrial stocks, which only recently began to decline; Customers are picking up potentially reproducible semiconductors from chip makers on production lines.
With the recurring scenario of the industry over and over again, which is an increase in demand, which pushes the factories to work at full capacity, and soon the warehouses and shelves are filled, which leads to a glut; Then sales collapse, so investors think the collapse in demand again is a foregone conclusion.
Chip makers such as Intel and Micron argue that it is different this time. With the increasing use of semiconductors, the risk of a glut has become very remote.
And global chip shortages and supply chain hurdles make semiconductor companies unlikely to face collapse soon.
Most industry executives have warned that the shortage will not abate until the second half of this year, with some products still being delayed due to parts scarcity until 2023, and their forecasts indicated that the current surge in demand could continue into 2025.
Although the chip industry is now less dependent on computers and smartphones for sales, they remain its biggest growth drivers. The highly promoted auto sector is a relatively small market – but it is growing to account for about 10% of the industry’s sales.
And if there are years of growth ahead, the chip industry will need to expand its capacity. This can be a burden, as factories cost billions of dollars and take years to reach production.