The sensor market will grow by 10% in 2022, but a downturn is expected in 2023!
Release time：
24 Feb,2022
Summary
Although sensors are not all made of semiconductor materials, semiconductors are clearly a very important material for sensors. MEMS technology and various electronic components all use semiconductor sensors.
This article mainly predicts the trend of the semiconductor market in 2022, including the O-S-D (optoelectronics-sensors-discrete devices) market, which includes sensors. It is estimated that the sensor market will grow by more than 10% in 2022. However, from historical trends, the global semiconductor market is likely to decline in 2023, and sensors will be hard-pressed to remain unaffected! Please see the main text for specific details.
Following growth exceeding 25% in 2021, how much will the global semiconductor market grow in 2022? WSTS predicts an 8.8% growth rate; IC Insights predicts 11%; Future Horizons predicts approximately 10%. This year's growth seems certain, but will the growth momentum continue in 2023, or will there be a sudden negative growth leading to a cyclical downturn?
WSTS Statistical Forecast
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 the 31.8% growth in 2010, bringing the global semiconductor market size to $553 billion in 2021.
The overall market was not negatively affected by the epidemic. Strong demand in the consumer market drove growth of more than 10% across major semiconductor categories, with the exception of optoelectronic devices. The memory category had the highest growth, at 34.6%; followed by analog devices, at 30.9%; and logic devices at 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%; analog devices account for 13.2%; and the rest are O-S-D (optoelectronics-sensors-discrete devices).
WSTS predicts that the global semiconductor market will grow by 8.8% in 2022, reaching $601 billion. Although all categories have varying degrees of growth, sensors and logic devices show the most significant growth, exceeding 10%.
IC Insights Statistical Forecast
IC Insights' statistics and forecasts are slightly more optimistic than WSTS. Economic growth and market demand in 2021 drove shipment growth across various semiconductor categories, resulting in an overall growth of 25%, bringing the global semiconductor market size to $614 billion.
Over the past 10 years, the compound annual growth rate (CAGR) for IC shipments has been 7.4%, while that for O-S-D has been 4.7%. In 2021, IC shipments reached 22%, and O-S-D growth also reached 20%. Along with the increase in shipments, the shortage of semiconductor manufacturing capacity led to an increase in average selling prices (ASP), creating a new historical record.
IC Insights expects overall market growth of 11% in 2022, reaching $680.6 billion, with ICs accounting for $565.1 billion and O-S-D accounting for $115.5 billion. In terms of shipments, both ICs and O-S-D devices are expected to grow by 10%, totaling approximately 1.3 trillion semiconductor devices.
Future Horizons Statistical Forecast
Malcolm Penn, founder and CEO of the UK-based Future Horizons, with 50 years of experience in semiconductor industry analysis, shared his analysis and forecast of the global semiconductor market in 2022 at the recent IFS2022 conference. According to Future Horizons' statistical analysis, the optimistic forecast is a 14% growth, with a market size of $630.7 billion; while the pessimistic forecast is only 4%, reaching $575.4 billion.
The compromise or closest prediction to reality is a 10% growth, reaching $608.9 billion. He warned that the semiconductor market is overheating and is likely to experience a sudden downturn. As for when the downturn will occur, whether in the fourth quarter of 2022 or in 2023? It is indeed difficult to predict accurately, but a downturn is inevitable.
Why is the 2023 downturn considered unavoidable?
Malcolm Penn explained at his company's 2022 Global Semiconductor Market Analysis Conference that since the first cyclical downturn in 1961, the global semiconductor market has experienced 16 downturns. When will the 17th occur?
Every downturn is preceded by rapid growth. The 26% growth in 2021 is not uncommon; the growth in 2010 reached 32%. The current issue is that since the dot-com bubble in 2000, the global semiconductor market has not experienced a shortage. Since the chip shortage began in the second half of 2020, there has been no sign of improvement throughout 2021, and it is uncertain whether the situation will ease in the second half of this year.
In addition, the long-term growth rate of the average selling price (ASP) of semiconductor devices tends towards zero, while the shortage has led to an increase in ASP, making it difficult for semiconductor analysis agencies and industry professionals to see the future development trend. Coupled with the uncertainty of the US-China trade friction and technological cold war, many people hold the view that this time is different.
Will this time really be different? Malcolm Penn doesn't think so. He boldly predicts that the 17th semiconductor downturn is inevitable; if it doesn't happen in 2022, it will certainly happen in 2023!
Regardless of the metaverse, 5G, AI, new energy vehicles, or IoT, the demand factors of these emerging applications have been reflected in the changing landscape of the semiconductor market, and are unlikely to cause a sudden rise or fall in the semiconductor market. The COVID-19 pandemic, which is raging globally and still ongoing, and the US restrictions on exports of advanced semiconductor technology to China may be special external factors, but they are not enough to overturn the long-term cyclical development pattern of the semiconductor industry.
The dynamic balance between supply and demand is the most basic operating law of a competitive market. Over the past 60 years, the world and society have undergone tremendous changes, but the operating laws of the semiconductor industry have remained unchanged, and this time is no exception. We can confirm this assertion from the changes in capital expenditure (CapEx) for wafer fabrication.
TSMC (Taiwan Semiconductor Manufacturing Company) can be considered the leader in the current semiconductor industry. In 2015, the company stated: We no longer blindly expand wafer production capacity without clear demand. TSMC CEO C.C. Wei recently revealed that its 2022 revenue 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, TSMC is doing it based on the confirmed customer demand. For example, TSMC is building two 3-nm wafer fabs in Taiwan; one could be said to be for Apple, and the other for Intel.
Due to strong market demand and adjustments to manufacturer inventories, semiconductor shipments have currently experienced inflation. Semiconductor companies' judgment of future market demand may be overly optimistic, leading to market demand distortion. This means that the expected demand for the entire industry will exceed the actual demand. On the other hand, the ratio of capital expenditure for wafer fabrication to total semiconductor sales has also shown a significant upward trend. Once supply reaches a level comparable to demand, the entire market will plummet.
Therefore, a downturn in the semiconductor market is inevitable; it is only a matter of time. The downturn may occur suddenly, and the downward trend will be very significant.
Can the China factor reverse the downturn?
Some might argue that China's semiconductor industry is experiencing rapid growth and is unlikely to experience a sudden downturn. Some might even believe that the Chinese market demand is large enough to reverse the global semiconductor downturn. I believe this is unlikely. Although Chinese manufacturers and the Chinese market are very influential in major application markets such as smartphones, new energy vehicles, and IoT devices, the semiconductor content in these applications is not something China can control. Taking the most scarce MCU chips as an example, there are nearly 100 Chinese IC design manufacturers making MCUs, but all together they account for less than 10% of the global MCU market, and an even lower percentage in the most scarce automotive MCU segment. It is important to note that automotive MCUs account for 40% of the overall MCU market.
APs are the most valuable chips in smartphones, and without Huawei HiSilicon's Kirin chips, Chinese brand smartphones can only rely on Qualcomm and MediaTek. Therefore, the positive impact of the China factor on the smartphone semiconductor market is also limited.
Furthermore, regarding new energy vehicles, the Chinese market is expected to sell more than 5 million units this year, the largest in the global market, but the semiconductor content is not that high, as most are still low-priced, low-end models.
The shipment volume of emerging IoT devices will be relatively large, but the market is relatively fragmented, and the overall semiconductor demand share remains low.
Finally, memory almost accounts for 1/3 of the global semiconductor market, while China's memory production share is still relatively small, insufficient to affect the overall market trend.
Conclusion
The global semiconductor market is expected to exceed US$600 billion this year, which seems certain to be achieved. However, market growth could suddenly stagnate or even experience negative growth. In the current booming market, this sounds a bit alarmist, but how the 'invisible hand' operates is not something we can control based on our subjective wishes.
While market sentiment is still relatively optimistic, companies that can list on the STAR Market should do so quickly, those that can raise more funds should raise more money, and those that can ship should ship as much as possible. This way, when the downturn suddenly arrives, sufficient preparations can be made. Even if there is no downturn, actively listing, financing, and shipping is not a bad thing.
Currently, many sensors belong to the semiconductor category, Affected by the semiconductor downturn, sensors are unlikely to remain unaffected!
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