Chip industry hits $500 bn-mark for the first time amid global supply crunch

While chip shortage has impacted the production lines across multiple industries throughout the world, industry players have posted robust fiscal results. The global semiconductor industry went up by 25.1% in 2021 to clock $583.5 billion, thus crossing the $500-billion threshold for the first time, a Gartner report claimed. 

Samsung Electronics topped the list with 31.6% growth at $75,950 million followed by Intel with a 13% market share. Samsung has regained the first spot after losing it to Intel in 2018. Intel, at 12.5% market share, has registered a 0.5% growth at $73,100 million. SK Hynix was the third in the pecking order followed by Micron Technology and Qualcomm.  

“As the global economy bounced back in 2021, shortages appeared throughout the semiconductor supply chain, particularly in the automotive industry,” said Andrew Norwood, research vice president at Gartner. 

“The resulting combination of strong demand as well as logistics and raw material price increases drove semiconductors’ average selling price (ASP) higher, contributing to overall revenue growth in 2021.” 

Norwood attributed the growth to the smartphone market that witnessed a unit production of 555 million in 2021 more than double as compared to 250 million in 2020. 

The US sanctions imposed on Huawei resulted in other Chinese smartphone OEMs gaining share and fueling growth for 5G chipset vendors such as Qualcomm, MediaTek and Skyworks, he said.

However, the semiconductor shortage among manufacturers triggered by the sudden switch to remote work is likely to ease by the second half of this year as the earlier investors will be active by that period, the US commerce department said. 

Memory was again the best-performing device category in the period, primarily due to increased server deployments by hyper-scale cloud providers to cater to remote working, learning and entertainment needs, as well as a surge in end-market demand for PCs and ultramobiles that include tablets, notebooks and convertibles, Garner claimed. 

The revenue of this segment increased $42.1 billion over 2020, which amounted to 33.8% of overall semiconductor revenue growth in 2021. 

Within this, Dynamic Random-Access Memory (dynamic RAM or DRAM) had the best performance with revenue growth of 40.4%, increasing revenue to $92.5 billion. Strong demand from servers and PCs created a DRAM undersupply that drove double-digit ASPs through most of the year, the report claimed.