It’s happened before, and it will probably happen again. Semiconductor revenue across the world is projected to grow 7.4% in 2022, down from 2021 growth of 26.3%.
The downbeat analysis comes courtesy of the latest forecast from Gartner, and the figure is down from the previous quarter’s forecast of 13.6% growth in 2022.
“Although chip shortages are abating, the global semiconductor market is entering a period of weakness, which will persist through 2023 when semiconductor revenue is projected to decline 2.5%,” explains Richard Gordon, Practice VP at Gartner.
He adds: “Rising inflation, taxes and interest rates, together with higher energy and fuel costs, are putting pressure on consumer disposable income. This is affecting spending on electronic products such as PCs and smartphones.”
Overall, Gartner says 2022 global semiconductor revenue has been reduced from the previous quarter’s forecast by $36.7 billion (£30.2 billion) to $639.2 billion (£527.2 billion), as economic conditions are expected to worsen through the year.
In contrast, and in data released last month, the Worldwide Semiconductor Technology and Supply Chain Intelligence service from IDC said global semiconductor revenue is expected to reach $661 billion (£545.2 billion) in 2022, a 13.7% year-over-year growth rate following strong 2021 results where revenues reached $582 billion (£480 billion).
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While IDC may have different stats from Gartner, the latter goes on to say that PC shipments are set to decline by 13.1% in 2022 after recording growth in 2020 and 2021. Semiconductor revenue from PCs is estimated to record a decline of 5.4% in 2022. Semiconductor revenue from smartphones is on pace to slow to 3.1% growth in 2022, compared to 24.5% growth in 2021.
From an enterprise perspective, Gartner points out that inventories are recovering rapidly, lead times are beginning to shorten, and prices are starting to weaken.
Gordon doesn’t want to leave matters with an unhappy ending and notes: “The semiconductor market is entering an industry down cycle, which is not new, and has happened many times before.”
He explains: “While the consumer space will slow down, semiconductor revenue from the data centre market will remain resilient for longer (20% growth in 2022) due to continued cloud infrastructure investment.
“In addition, the automotive electronics segment will continue to record double-digit growth over the next three years as semiconductor content per vehicle will increase due to the transition to electric and autonomous vehicles. The semiconductor content per vehicle is projected to increase from $712 [£587] in 2022 to $931 [£768] in 2025.”
As Gordon mentioned above, such down cycles have happened before.
Data from Statista shows that semiconductor industry revenue worldwide had dips in 2015 and 2019.