5G, automotive to drive semiconductor revenue through 2022

A new Gartner report foresees sharp growth in semiconductor revenue during the year, slackening during 2023 as supply and demand start to balance out.

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Worldwide semiconductor revenue is set to increase by 13.6% this year as demand continues to exceed supply, according to a Gartner Research report.

That growth will likely level off in 2023, however, with just a 3.6% increase predicted for that year, noted the report, which was released Tuesday. It's a function of overall supply and demand coming into near-balance in the future, according to Gartner.

The chip shortage that has created widespread supply constraints in the recent past is beginning to ease, although some sectors — most notably the automotive industry – will still see demand outstripping supply for the foreseeable future.

Alan Priestley, the report's author and a research vice president at Gartner, said that automotive semiconductor demand will grow despite flaccid overall vehicle production.

"Although unit production of automotive vehicles will grow below expectation at 12.5% in 2022, semiconductor device [prices] are expected to remain high due to continued tight supply driving the automotive semiconductor market to double-digit growth (19%) in 2022," he said, in the announcement of the report. "Automotive [high-performance computing], [electrical and hybrid-electric vehicles] and advanced driver assistance systems will lead the growth in automotive electronics sectors through the forecast period."

The eventual move toward a more balanced overall supply/demand picture will be aided by slowdowns in endpoint sales (particularly PCs, servers and smartphones), according to the report.

5G deployments to spur demand

5G deployments are also expected to spur semiconductor revenue for the current year, as 5G smartphone production rises by 45.3%, surpasses 4G/LTE and accounts for 55% of the 808 million units set to be produced this year, according to the report. The consequent boost in supply will keep overall price points for 5G phones lower and help 5G penetration increase in the coming year.

Technologically, memory will remain the biggest part of the semiconductor market during 2022, and should account for a little less than a third of the total market during the forecast period, Gartner said. Supply is set to increase sharply over the course of the year, going from a current undersupply situation to oversupply by the end of the year, at least in the NAND sector. The report said that average sales prices for memory chips will actually increase, however, meaning that total DRAM revenue will increase by nearly 23% and NAND revenue will grow by more than 38%.

"The semiconductor average selling price (ASP) hike from the chip shortage continues to be a key driver for growth in the global semiconductor market in 2022, but overall semiconductor component supply constraints are expected to gradually ease through 2022 and prices will stabilize with the improving inventory situation," Priestley said.

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