Chip sales are expected to exceed US$600 billion for the first time in 2022

Global trade credit insurance giant Euler Hermes released a report on Monday that chip manufacturers are clearly the winners during the new crown pneumonia pandemic, and this strong momentum in the semiconductor field will continue until 2022.

According to the report, in 2022, global semiconductor sales are expected to rise by another 9%, exceeding US$600 billion for the first time. In 2021, semiconductor sales will increase by 26% to $553 billion.

"Since the industry got rid of the worst recession in 2019, the current semiconductor cycle has been running at full speed." Yuli Ayn analysts said.

Previously, months of semiconductor shortages during the epidemic have affected industries ranging from automobiles to game consoles. This is because, as global economic activity recovers from the new crown pneumonia crisis, it is difficult for chip manufacturers to meet unprecedented demand. Although major chip manufacturers such as TSMC have announced plans to increase production capacity, it usually takes several years for these factories to start production. TSMC’s shares listed in Taiwan have risen by more than 80% in about two years.

Three good things

Yuli Anyi analysts pointed out that so far, three factors have pushed up chip sales:

1. Demand: "Unusual" consumer electronics demand, such as PCs and smartphones;

2. Price: Tight supply and dynamic demand drive prices up;

3. Improvement of product structure: The increase in the price of semiconductor products and the introduction of a new generation of chips have further improved the structure of semiconductor products.

Four major risks

Looking ahead to the new year, analysts believe that with the normalization of demand growth and the accelerated commissioning of new production capacity, the above three market drivers are expected to weaken. In addition, the analysts also pointed out four major risks facing the semiconductor field:

1. Hardware sales decline: After experiencing strong growth in 2020 and 2021, demand in the semiconductor industry has returned to normal, and hardware sales (computers and televisions and other products) have been hit by higher than expected;

2. Demand in the semiconductor industry weakened: As the new crown pandemic continues to disrupt the supply chain, and long-term stagnation of manufacturing activities will hit semiconductor demand;

3. The macro technology situation: China and the U.S. compete for technological dominance, and U.S. restrictions on Chinese companies' access to key U.S. semiconductor manufacturing technologies and equipment remain;

4. Adverse weather events: Facts have proved that the "increasing frequency of unusually adverse weather events" is a major challenge facing the semiconductor industry, which relies on optimal capacity utilization to achieve profitability.

Aurelien Duthoit, a consultant for Yuli Aventry Technology and the retail industry, said that several other factors are expected to "set the tone for the chip industry in 2022." He pointed out that in addition to the normalization of demand in areas such as PCs and servers, factors such as "unpredictable and random events" will affect major semiconductor manufacturing bases in Taiwan and South Korea.

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