Daily Management Review

Microchip manufacturers hit record highs, expect annual sales to rise


Microchip manufacturers have reported record annual sales amid global shortages and sharply increased demand for semiconductors. However, industry executives expect this figure to double further in less than a decade.

Industry-wide annual sales will exceed $500 billion for the first time in 2021. According to some calculations, this figure was just above global sales in the smartphone industry. The pandemic has accelerated the global process of digitalisation: consumers are increasingly using online cinema and streaming video game services, and corporations, in turn, are adopting all kinds of digital tools, all of which require microchips.

Global microchip sales in 2021 grew 25% year-on-year to a record $583.5 billion, according to analyst firm Gartner Inc. Factories, which have switched to 24-hour operations, are not keeping up with demand. The prolonged deficit this year is expected to boost semiconductor industry revenues by 9%, Gartner points out, which would be above the average historical growth rate.

Forecasts of explosive growth in the semiconductor industry reflect expectations of higher sales and prices, industry officials said. PC, smartphone, data centre and car makers will continue to aggressively buy semiconductors. At the same time microchips will be needed for new product categories. The chip shortage has created a closer connection between buyers and sellers, reducing the risk of demand spikes, industry officials said.

Much of the sales growth will come from more expensive and technologically advanced chips for applications such as machine learning and high-performance computing, notes Peter Hanbury, a partner at Bain & Co. specialising in the semiconductor industry.

source: dowjones.com