Chip gross sales to develop practically 10% in 2022 in a riskier surroundings: report

Staff in clear room fits stroll on Tuesday, 16.

Adam Glanzman | Bloomberg | Getty Photos

Chipmakers have been clear winners within the pandemic period, and the momentum within the semiconductor house will stay sturdy via 2022, in line with a report launched Monday by business credit score insurer Euler Hermes.

“The present semiconductor cycle has been in full swing for the reason that business overcame its worst recession in 2019,” stated analysts from Euler Hermes.

Semiconductor gross sales are anticipated to develop by an extra 9% and exceed $ 600 billion for the primary time in 2022, analysts predict. That provides to the 26% development to $ 553 billion in 2021, they added.

A month-long semiconductor scarcity through the pandemic impacted quite a lot of industries – from vehicles to sport consoles – as chipmakers struggled to maintain up with unprecedented demand as world financial exercise rebounded from the Covid disaster.

Whereas massive chipmakers like TSMC have already introduced plans to extend capability, it often takes years for these services to go surfing. TSMC’s Taiwan-listed shares are up greater than 80% in about two years.

Based on analysts from Euler Hermes, three components have to date pushed gross sales greater. You might be:

1. demand: “Unusually sturdy demand” for shopper electronics equivalent to PCs and smartphones
2. Costs: Worth enhance attributable to tight provide and demand dynamics
3. Improved product combine: Additional enchancment of the product combine for semiconductors via the introduction of higher-priced and new chip generations.

Dangers for the chip business

Looking forward to the brand new 12 months, analysts stated these three market drivers are more likely to ease as demand development normalizes and new manufacturing capability comes on stream at an accelerated fee.

As well as, the analysts recognized 4 dangers for the semiconductor sector:

1. {Hardware} gross sales (for merchandise equivalent to computer systems and televisions) suffered a stronger-than-expected decline as demand normalized after sturdy development in 2020 and 2021;
2. Semiconductor demand is adversely affected by extended manufacturing downtime as provide chain disruptions from the pandemic persist;
3. A “standstill” between China and the US of their wrestle for technological supremacy, with restrictions on Chinese language firms buying important US semiconductor manufacturing expertise and gear;
4. An “rising frequency of unusually opposed climatic occasions” is proving to be a significant problem for the semiconductor business, which relies on optimum capability utilization for its profitability.

Within the chip business, too, a number of components ought to “set the tone for 2022”, says Aurelien Duthoit, business advisor for expertise and commerce at Euler Hermes.

Along with normalizing demand in areas equivalent to computer systems and servers, Duthoit recognized components equivalent to “unpredictable and random occasions” which might be harming massive semiconductor manufacturing websites equivalent to Taiwan and South Korea.

New developments within the US-China “chilly conflict” expertise might additionally stop semiconductor expertise specialists from promoting to Chinese language firms, he added.