Semiconductors are essential to the economy of almost every country in the world. However, the industry faces significant challenges.
Even with fabs operating at full capacity, companies have struggled to keep pace with demand, pushing delivery times to six months or more. Additionally, the impact of the pandemic, the shortage of talent and the increasing complexity of design mean that an industry that is expected to skyrocket is under increasing pressure.
Amid rising demand, semiconductor markets have exploded, with sales rising more than 20% to around $600 billion in 2021. However, global chip shortages have caused manufacturing slowdowns in countries around the world. sectors ranging from automotive to agriculture, and have led to debates about the reliability of an industry. which is vital to the global economy.
In the United States, the federal government has responded with a series of laws, including the CHIPS for America Act, which authorizes $52 billion in funding for the expansion of the domestic semiconductor industry. The new rules aim to protect industries from supply shortages and reduce their reliance on manufacturing plants in Asia. Companies such as Intel, Samsung, Texas Instruments and GlobalFoundries are planning to add more capacity in the United States, and Europe is also seeing significant investment.
The recent ramp-up in production capacity reflects the consensus that, despite the current environment, the long-term outlook for the semiconductor industry remains positive. From home kitchens to the most advanced manufacturing plants, semiconductors are embedded in modern economies. Combine that with the increase in working from home, and it’s not hard to predict the direction of the industry’s journey.
We estimate growth of 6% to 8% per year through 2030, amid rising demand for digital services, growth in artificial intelligence and machine learning (AI/ML) and massive migration to electric mobility. On this trajectory, we foresee a trillion-dollar industry by the end of the decade.