Revenue from semiconductor sales hit an astronomical figure of $583.5 billion for the first time in 2021, according to research firm Gartner quoted by the wall street journal. This is 25% more than the previous year. The increase in demand following the pandemic as well as the shortage of components contributed to increasing prices and volumes.
1 trillion dollars by 2030
The trend should continue in the years to come. Needs will continue to grow to power smartphones, data centers, cars and new products that will need chips. Projections call for sales of up to $692.5 billion by 2025, and up to $1 trillion by 2030 in the most optimistic scenarios, according to Gartner. That’s more than fast food today.
Booms and busts, this industry has seen them before. But this current wave is historically high. the wall street journal quotes the general manager of the manufacturer GlobalFounderies Tom Caulfield to illustrate this unprecedented situation: “This industry will have waited 50 years to reach half a billion dollars. It will only take eight to ten more years to reach 1000 billion dollars”.
Investments explode
As a result, investments are exploding to increase production capacities as quickly as possible. Intel wants to build one or more new factories in Ohio, in addition to its projects in Arizona, New Mexico and Europe.
The giant TSMC is building a 12 billion dollar factory in Arizona and another of 7 billion dollars in Japan, not to mention its expansions in China and Taiwan … even in Europe, where it is also considering a new factory. Finally, South Korea’s Samsung is expected to gobble up $17 billion in Texas and unlock more than $205 billion in chipmaking over the next three years.
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Is overcapacity possible in the long term?
In the meantime, the shortage continues. The average wait time for semiconductors would now be 25 weeks, according to Susquehanna Financial Group. The price of silicon wafers should even increase by another 5 to 15%.
But the wall street journal also encountered skeptical observers who fear a backlash. The strategy consulting firm even fears that this industry is thinking too big and that it will go into overcapacity in 2025 when all these factories will have come into operation.
Source: The Wall Street Journal