IDC expects the worldwide semiconductor market to grow by 17.3% in 2021 versus 10.8% in 2020. According to IDC, the industry will see normalization and balance by the middle of 2022, with a potential for overcapacity in 2023 as larger-scale capacity expansions begin to come online towards the end of 2022.
Growth is driven by mobile phones, notebooks, servers, automotive, smart home, gaming, wearables, and Wi-Fi access points, with increased memory pricing. IC shortages are also expected to continue easing through 4Q21 as capacity additions accelerate.
“The semiconductor content story is intact and not only does it benefit the semiconductor companies, but the unit volume growth in many of the markets that they serve will also continue to drive very good growth for the semiconductor market,” says Mario Morales, Group Vice President, Enabling Technologies and Semiconductors at IDC.
Despite the current Covid-19 wave, consumption remains healthy. IDC reports that dedicated foundries have been allocated for the rest of the year, with capacity utilization at nearly 100%. Front-end capacity remains tight but fabless suppliers are getting the production they need from their foundry partner. Front-end manufacturing is starting to meet demand in 3Q, however, larger issues and shortages will remain in back-end manufacturing and materials.
According to IDC, 5G semiconductor revenues will increase by 128%, with total mobile phone semiconductors expected to grow by 28.5%. Game consoles, smart homes, and wearables will grow +34%, 20%, 21% respectively. Automotive semiconductor revenues will also increase by 22.8% as shortages are mitigated by year-end. Notebook semiconductor revenues will grow by 11.8%, while X86 Server semi revenues will increase by 24.6%.
Semiconductor wafer prices increased in 1H21 and IDC expects increases to continue for the rest of 2021 due to material costs and opportunity costs in mature process technologies.
Overall, IDC predicts the semiconductor market to reach $600 billion by 2025 – representing a CAGR of 5.3% through the forecast period. This is higher than the typical 3-4% mature growth seen historically.