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Despite the recent spates of chip shortages and supply chain issues, a new report from Deloitte predicts that semiconductor companies will hit historic revenue highs this year. The industry is expected to earn over $600 billion globally, an all-time high even as growth is expected to slow from 25% to 10%. Other reports echo Deloitte’s predictions, expecting a market that reached a size of 553 billion USD in 2021 to continue to grow through 2022.
While the industry is still dwarfed in size by farming, oil, and gas—for which revenue numbers in the trillions—it is unique in that production is concentrated to a handful of manufacturers in just a few countries. These manufacturers now scramble with shortages to meet growing demand driven by increasing electronic content in vehicles and networking of more and more devices both in everyday life and in factories, as well as continued production for use in computers, phones, and data centers. This trend is a large reason for the continued growth, as the semiconductor industry reaches the level of an essential need for global life.
Still, shortages and supply chain issues will remain an issue through at least the first half of 2022, meaning longer lead times and component scarcities will continue into 2023. And this is not the only shortage the industry faces—there is a talent shortage that also has no quick solution. This shortage is made even more severe by the addition of more manufacturing facilities outside Taiwan, China, and South Korea, as it will take time for the workforce to meet the high demand for the software skills required to program and integrate the chips.
Manufacturers are responding to these and other changes to the industry as demand continues to grow. To remain competitive, companies attempt to be the first to launch new products, rapidly scale production, and push for innovation and efficiency—in essence, these companies have reinvented business and operating models in response to modern pressures. Namely, digital transformation within the industry continues to grow and accelerate, with companies modifying their transformation process as they go in response to pressures such as the marketplace changes in 2021, as well as the pressure to adapt to changing workplace and organizational cultures.
Deloitte’s full industry outlook seeks to identify these strategic issues and more, as well as opportunities that will equip US semiconductor companies with both information and foresight as they start into a promising but challenging future. Overall, strong growth is predicted in 2022, even as manufacturers take steps to bolster supply networks, mitigate challenges, and grow global talent networks for a robust future.
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