The shift to digital workplaces has created explosive demand for new electronic devices and badly dented semiconductor supply chains, but analysts doubt these shocks set the industry back.

Even with the current supply shortages, figures from International Data Corporation (IDC) suggest the semiconductor industry is on track to reach US$522 billion in 2021, a year-on-year increase of 12.5%.

The strong growth is being supported by demand for consumer computing, 5G and automotive semiconductors as demand for data and cloud computing services continues to grow.

“Overall, the semiconductor industry remains on track to deliver another strong year of growth as the supercycle that began at the end of 2019 strengthens this year,” IDC program vice president for semiconductors Mario Morales said.

Separate modelling predicts the industry will continue to grow at a compound annual rate of 7.7%, to hit $778 billion by 2026.,

Supply faces demanding conditions

Although the current shortage is unlikely to derail the semiconductor industry’s growth, it is directly affecting some consumers seeking to purchase goods reliant on the computer chips.

Apple has cautioned iPhone sales could stumble due to supply constraints, and many video game players are being forced to wait for the latest PlayStation as Sony cannot manufacture enough to meet demand.

Unfortunately there’s no quick fix – the shortage is the result of numerous individual challenges compounding on one another over time, starting with the rise of 5G prior to the pandemic.

This was worsened when the US moved to ban the sale of semiconductors to Chinese technology company Huawei, forcing the company to source the components from other countries, absorbing these smaller manufacturers’ spare capacity.

A deadly cold-snap in Texas in February this year forced the closure of some of the US state’s semiconductor foundries too, while a fire at a Japanese factory took even more capacity offline in March.

Bringing new capacity online is also immensely difficult as semiconductor foundries are extremely expensive to build and require heavily trained personnel to operate.

But with new capacity expected to open up in 2022, the shortage is tipped to end next year.

Sources:

• Business Standard: Despite shortage, global semiconductor market to hit $522B in 2021
• Globe News Wire: The global semiconductor market is expected to reach $778 billion by 2026 with a CAGR of 7.7% from 2021 to 2026
• BBC News: Why is there a chip shortage?
• BBC News: US cold snap: Why is Texas seeing Arctic temperatures?
• BBC News: Factory blaze adds to computer chip supply crisis
• The Verge: WHY THE GLOBAL CHIP SHORTAGE IS MAKING IT SO HARD TO BUY A PS5