The sensor market will grow by 10% in 2022, but will experience a recession in 2023!
Although sensors are not entirely made of semiconductor materials, it is evident that semiconductors are already very important materials for sensors. MEMS technology and various electronic components use semiconductor sensors.
This article mainly predicts the direction of the semiconductor market in 2022, including the O-S-D (optoelectronic sensor discrete device) market, including sensors. It is estimated that the sensor market will grow by more than 10% in 2022. However, from a historical perspective, the global semiconductor market is likely to decline in 2023, and sensors will also find it difficult to survive alone! Please refer to the main text for specific sharing.
How much growth will the global semiconductor market experience in 2022, following a growth rate of over 25% in 2021? WSTS predicts a growth rate of 8.8%; IC Insights predicts 11%; Future Horizons is expected to be around 10%. This year's growth seems certain, but will it continue to maintain its growth momentum in 2023, or will it suddenly experience negative growth and lead to a cyclical recession?
Statistical prediction of WSTS
According to the World Semiconductor Trade Statistics Organization (WSTS), the global semiconductor market grew by 25.6% in 2021, compared to 6.8% in 2020. This is the largest growth in 11 years since a 31.8% growth in 2010, bringing the global semiconductor market size to $553 billion in 2021.
The overall market has not been negatively affected by the epidemic, and the strong demand in the consumer market has driven the growth of semiconductor major categories to generally exceed 10%, with the exception of optoelectronic devices. The category of storage increased the highest, reaching 34.6%; Next is the simulator component, which is 30.9%; Logic devices account for 27.3%. In addition, in terms of market share, memory accounts for 28.6% of the entire semiconductor market; Logic devices account for 27.3%; Microprocessors (CPU/GPU/MCU/MPU) account for 14.3%; Simulator components account for 13.2%; The rest are O-S-D (photoelectric sensor discrete devices).
WSTS predicts that the global semiconductor market will grow by 8.8% in 2022, reaching $601 billion. Although there has been varying degrees of growth in all categories, sensors and logic devices are expected to see the most significant growth, exceeding 10%.
IC Insights statistical prediction
The statistics and predictions of IC Insights are slightly more optimistic than those of WSTS. The economic growth and market demand in 2021 have driven the growth of semiconductor shipments across various categories, resulting in a 25% overall growth and bringing the global semiconductor market size to $614 billion。
Over the past 10 years, the compound annual growth rate (CAGR) of IC shipments has been 7.4%, while O-S-D has been 4.7%. The IC shipment volume in 2021 reached 22%, and the growth of O-S-D also reached 20%. Along with the increase in shipment volume, the shortage of semiconductor manufacturing capacity has led to an increase in average selling price (ASP), thus creating a new historical record.
IC Insights predicts an overall market growth of 11% in 2022, reaching $680.6 billion, of which the IC category is $565.1 billion and the O-S-D category is $115.5 billion. In terms of shipment volume, both IC and O-S-D devices have seen a 10% increase, with a total shipment of approximately 1.3 trillion semiconductor devices.
Future Horizons statistical prediction
Malcolm Penn, founder and CEO of Future Horizons, a UK based company with 50 years of experience in semiconductor industry analysis, shared his analysis and predictions on the global semiconductor market in 2022 at the recent IFS 2022 conference. According to the statistical analysis of Future Horizons, it is optimistically predicted that there will be a 14% growth in 2022, with a market size of $630.7 billion; The pessimistic forecast is only 4%, reaching $575.4 billion.
The compromise or closest actual forecast is a 10% growth, with a scale of $608.9 billion. He warned that the semiconductor market has overheated and is likely to suddenly experience a recession. As for when the recession will occur, will it be in the fourth quarter of 2022 or in 2023? It is indeed difficult to predict accurately, but a recession will happen sooner or later.
Why is it said that the recession in 2023 is difficult to avoid?
Malcolm Penn explained at his company's 2022 Global Semiconductor Market Analysis Conference that since the first cyclical recession in 1961, the global semiconductor market has experienced 16 recessions. When will the 17th one occur?
Before every recession, there is a phenomenon of rapid growth. It is not uncommon to see a growth of 26% in 2021, and a growth of up to 32% in 2010. The problem now is that there has been no shortage in the global semiconductor market since the Internet foam in 2000. Since the chip shortage occurred in the second half of 2020, there have been no signs of improvement throughout 2021, and it is uncertain whether it can be alleviated in the second half of this year.
In addition, the growth rate of the average selling price (ASP) of semiconductor devices tends to be zero in the long run, and the shortage phenomenon leads to an increase in ASP, which makes it difficult for semiconductor analysis institutions and industry professionals to see the future development trend. In addition, the uncertainty factors of China US trade frictions and the technological Cold War have led many people to hold the idea that this time is different from before.
Will it really be different this time? Malcolm Penn doesn't think so. He boldly predicted that the 17th semiconductor recession is inevitable, and if it does not occur in 2022, it will inevitably occur in 2023!
Whether it is the metaverse, 5G, AI, new energy vehicles, or IoT, the demand factors for these emerging applications are already reflected in the ever-changing semiconductor market, and it is unlikely to lead to a sudden rise or fall in the semiconductor market. The COVID-19, which is still raging around the world, and the restrictions on the export of advanced semiconductor technology from the United States to China may be special external factors, but they are not enough to overturn the long-term cyclical development law of the semiconductor industry.
The dynamic balance between supply and demand is the most basic operating law of competitive markets. In the past 60 years, the world and society have undergone tremendous changes, but the operating law of the semiconductor industry has never changed, and this time is no exception. We can confirm this assertion from the changes in capital expenditure (CapEx) for wafer manufacturing.
TSMC can be said to be the leader in the current semiconductor industry. The company declared in 2015 that we will no longer blindly expand wafer production capacity without clear demand. TSMC CEO Wei Zhejia recently revealed that its revenue in 2022 will increase by 25% compared to 2021, and the company's capital investment is as high as $44 billion. No matter how high the capital expenditure is, TSMC is tailored to specific customer needs. For example, TSMC is building two 3-nm wafer factories in Taiwan, one for Apple and the other for Intel.
Due to strong market demand and adjustments in manufacturer inventory, the current shipment volume of semiconductors has experienced inflation. Semiconductor companies may be overly optimistic about future market demand, leading to distorted market demand. This means that the expected demand for the entire industry will exceed the actual demand. On the other hand, the proportion of capital expenditure on wafer manufacturing relative to total semiconductor sales has also shown a significant upward trend. Once the supply reaches a level equivalent to demand, the entire market will experience a sharp decline.
It can be seen that the decline of the semiconductor market is inevitable, and it is only a matter of time. A recession may suddenly occur, and the downward trend will be very obvious.
Can the Chinese factor reverse the trend of recession?
Perhaps some people may say that Chinese semiconductors are in a period of rapid growth and it is unlikely to experience a sudden decline. Some even believe that the demand in the Chinese market is large enough to reverse the trend of global semiconductor recession. The author believes that this possibility is unlikely. Although Chinese manufacturers and the Chinese market have significant influence in heavyweight application markets such as smartphones, new energy vehicles, and IoT devices, the amount of semiconductors included in these applications cannot be controlled by China. Taking the most scarce MCU chip as an example, there are nearly 100 Chinese IC design manufacturers producing MCUs, but all of them together account for less than 10% of the global MCU market, with a lower proportion in the most scarce automotive MCU segment market. It should be noted that automotive MCUs account for 40% of the overall MCU market.
AP is the most valuable chip in mobile phones, and without Huawei HiSilicon's Kirin chip, Chinese brand phones can only rely on Qualcomm and MediaTek. Therefore, the positive impact of Chinese factors on the mobile semiconductor market is also limited.
Speaking of new energy vehicles, the Chinese market is expected to sell over 5 million units this year, which is the largest in the global market. However, the semiconductor content among them is not so high, as most of them are still low-end models with affordable prices.
The shipment volume of emerging IoT devices will be relatively large, but the market is relatively fragmented, and the overall proportion of semiconductor demand is still not high.
Finally, memory accounts for almost one-third of the global semiconductor market, while China's memory production still accounts for a relatively small proportion, which is not enough to affect the overall market trend.
The global semiconductor market is expected to exceed $600 billion this year, which seems certain to be achievable. However, market growth may suddenly stagnate or even experience negative growth. In the current booming market, this may sound a bit alarmist, but how the invisible hand swings is not something we can control based on our subjective desires.
Taking advantage of the current optimistic market sentiment, those who can be listed on the Science and Technology Innovation Board should go public as soon as possible, those who can raise more funds should raise more money, and those who can ship should ship as much as possible. In this way, when a recession suddenly arrives, one can be well prepared. Taking a step back, even if there is no recession, actively listing, financing, and shipping is not a bad thing.
At present, many sensors belong to the semiconductor range, and due to the decline of semiconductors, it is difficult for sensors to survive alone!
Qingdao Xinnovis Microsystem Technology Co., Ltd.
Qingdao Xinnovis Microsystem Technology Co., Ltd. is a high-tech enterprise specializing in industrial intelligent sensor chip design, module development, and high-end metering instrument R&D, manufacturing and sales. The company is located in Qingdao International Innovation Park, Laoshan District, Qingdao, adjacent to Shandong University (Qingdao Campus), Ocean University of China, Beihang Institute of Microelectronics, Lanhua Institute of Chinese Academy of Sciences (Qingdao), Qingdao University and other famous universities.
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