Cars, 5G phones boosted global semiconductor sales to $595 bn in 2021: Gartner

The automotive industry largely drove the growth in semiconductor sales, with Gartner saying that a strong period of recovery in car sales around the world through 2021 helped semiconductor revenues from auto original equipment manufacturers (OEMs) grow 34.9% last year.

Memory is the other sector that outpaced the overall industry growth in semiconductor sales, with a 33.2% growth in semiconductor revenues for manufacturers in 2021. It was also the strongest overall contributor to global semiconductor sales, and continued to profit from people working from home, as well as enterprise and information technology (IT) infrastructure providers upgrading or setting up new servers to facilitate remote work.

5G smartphones also contributed to the growth in revenue from semiconductor sales. According to Gartner, over 556 million 5G phones were sold through 2021, up from about 251 million in 2020. This two times increase was a key contributor to semiconductor sales in the wireless network connectivity segment, which grew 24.6% in 2021.

In terms of the distribution among global semiconductor vendors, Samsung Electronics was the highest earner accounting for 12.3% of the overall industry revenue. The company overtook Intel, with 28% revenue growth, thanks to a boost in demand for memory chips. Intel, which had a clear lead in the semiconductor industry in 2020, saw a 0.3% revenue decline through 2020, and ranked second behind Samsung with 12.2% of the revenue share.

SK Hynix, Qualcomm, MediaTek, and AMD were among the highest growing global semiconductor vendors in the top 10 list, with AMD seeing the highest revenue growth of 68.6%.

However, Huawei’s HiSilicon was the highest loser globally, with revenues dropping lmost 81%. Explaining this, Andrew Norwood, research vice-president at Gartner, said, “This was a direct result of US sanctions against the company and its parent, Huawei. This also impacted China’s share of the semiconductor market, as it declined from 6.7% in 2020 to 6.5% in 2021.”

Norwood added that the high demand for memory chips saw South Korea, through Samsung, see 19.3% growth in semiconductor revenues.

In February this year, John Neuffer, chief executive of Semiconductor Industry Association (SIA), said 2021 was the first year since 2018 when more than 1 trillion chips were shipped through the year. However, while he expected strong demand to persist in the global semiconductor industry, he only gave a forecast of 8.8% YoY growth in semiconductor revenues in 2022.

Explaining his conservative forecast for the industry, Neuffer said, “It’s still really trending very strongly towards increased demand. We’re just not going to get this kind of slingshot effect that we had in the pandemic.”

However, he also said that digitalisation of businesses around the world, boosted by the covid-19 pandemic, would continue to ensure that the demand for semiconductor globally remains strong.

Looking for a share in the global semiconductor pie, the Indian government approved a ₹76,000 crore production-linked incentive (PLI) scheme for chip makers in December 2021. In February this year, the Centre said that five companies had submitted applications for setting up display and semiconductor plants in the country, with planned investments of up to ₹1.53 lakh crore.

“The applications have been received for setting up 28nm to 65 nm semiconductor fabs, with capacity of approximately 120,000 wafers per month,” the statement had affirmed.

Among the applicants were India’s Vedanta and China’s Foxconn for a joint venture, ISMC (a partnership between UAE’s NextOrbit Ventures and Israel’s Tower Semiconductor, now owned by Intel), and others. Prior to the announcement of the PLI scheme, the Tatas were also said to be in talks for a $300 million semiconductor testing and assembly unit in the country.