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Semiconductor revenue growth to slow down to 7% in 2022

Semiconductor revenue growth to slow down to 7% in 2022

Semiconductor revenue alone from the PC segment is estimated to record a decline of 5.4% in 2022.

Semiconductor revenue growth to slow down to 7% in 2022 (Photo: Reuters) Semiconductor revenue growth to slow down to 7% in 2022 (Photo: Reuters)

Powering almost every electronic on the earth and in space, the worldwide semiconductor revenue growth is expected to slow down to just 7 per cent in 2022. Research firm Gartner is forecasting the global semiconductor revenue to grow just 7.4% in 2022, down from 2021 growth of 26.3%. This is also down from the previous quarter’s forecast of 13.6% growth in 2022.

As the economic conditions are expected to worsen through the year, overall, the 2022 global semiconductor revenue has been reduced from the previous quarter’s forecast by $36.7 billion, to $639.2 billion. Memory demand and pricing have softened, especially in consumer-related areas like PCs and smartphones, which will help lead the slowdown in growth.

“Although chip shortages are abating, the global semiconductor market is entering a period of weakness, which will persist through 2023 when semiconductor revenue is projected to decline 2.5%,” said Richard Gordon, Practice VP at Gartner. “We are already seeing weakness in semiconductor end markets, especially those exposed to consumer spending. Rising inflation, taxes and interest rates, together with higher energy and fuel costs, are putting pressure on consumer disposable income. This is affecting spending on electronic products such as PCs and smartphones.”

For instance, PC shipments have once again started to decline (by 13.1% in 2022) after record growth in 2022 and 2021. Semiconductor revenue alone from the PC segment is estimated to record a decline of 5.4% in 2022. Similarly, semiconductor revenue from smartphones is on pace to slow to 3.1% growth in 2022, compared to 24.5% growth in 2021.

Even from an enterprise perspective, inventories are recovering rapidly, lead times are beginning to shorten, and prices are starting to weaken. “The semiconductor market is entering an industry down cycle, which is not new, and has happened many times before,” added Gordon. While the consumer space will slow down, semiconductor revenue from the data center market will remain resilient for longer (20% growth in 2022) due to continued cloud infrastructure investment. In addition, the automotive electronics segment will continue to record double-digit growth over the next three years as semiconductor content per vehicle will increase due to the transition to electric and autonomous vehicles. The semiconductor content per vehicle is projected to increase from $712 in 2022 to $931 in 2025.

Design: Mohsin Shaikh

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