Global Semiconductor Industry Outlook for 2022
Semiconductors have established their place as an essential global high-tech commodity, with China remaining the largest individual market for semiconductors recording $192.5 billion in sales in 2021.
Top semiconductor manufacturers, including Taiwan Semiconductor Manufacturing Co (TSMC), Samsung Electronics Co, and Intel Corp, have announced investments for new factories worth billions of dollars to shape the industry.
This is expected to be a significant boost in the fight against global chip shortages. Our 2022 semiconductor industry outlook examines the industry trend and critical actions to take.
According to SIA (Semiconductor Industry Association), global chip sales hit a record in 2021 at $555.9 billion, a whopping 26.2% increase from the previous year. It forecasts the global semiconductor chip industry to reach around US$600 billion in 2022 as chipmakers continue to build factories to meet increasing demand.
In 2021, 1.15 trillion semiconductors were sold, with wireless communications, automotive, and Internet of Things topping the Semiconductor Company list.
Depending on the functionality, a chip can cost as low as a dollar. Across multiple industries, the scarcity of chips can prevent the sales of various products, costing the industry tens of thousands of dollars.
Due to chip shortages, over $500 billion in revenue was lost globally, with the auto industry taking the biggest blow – losing up to $210 billion in 2021 alone. If this informs us of anything, semiconductors are becoming more and more important across multiple sectors.
It All Began with Digital Transformation
It all began during the pandemic when the digitalization trend skyrocketed. As the use of gadgets, electronics, gaming consoles, smartphones, appliances, etc. increased, the demand for semiconductors increased. You should know that chips are not just used in the auto industry; virtually every device close to you now has one form of chip or the other.
Semiconductors constitute a significant component of any device. As digital transformation evolved, the demand for semiconductors continued to accelerate. Around 3/5 chip companies embrace this change by building facilities and aggressive plant construction.
Yet, the imbalance between demand and supply means that chip companies will have no choice but to find ways to increase their production capacity. The imbalance between demand and supply should reduce in 2022 because of the increased manufacturing capacity.
Shortages and supply chain issues may arise, but they will experience drastic improvement by the first half of 2022.
Identify Defects in Semiconductors
The global semiconductor industry is committing to localization. Countries like the United States, China, Israel, and Singapore have subscribed to building more local chip FABS (Fabrication Plants) to further allow chip companies to access a broader and deeper talent pool.
They want to be heavily involved in every manufacturing process, including chip design, automated vision inspection, packaging, testing, (Original Equipment Manufacturer) OEM assembly, etc. As companies seek solutions from local sources, what are their short- and long-term goals?
There are millions of talented workers in these countries, but the majority of them might still lack the specific skill set and training to carry out the task. Hence, chip manufacturers must train talented workers with the right skills and educate them on how to grow a hybrid work model.
Already, COVID-19 has made virtually all sectors adapt to a work-life balance initiative, productive workforce, and employee benefit programs. Implementing these will create a conducive environment for talents to learn, grow, and become more productive.
Seeking Solutions from Local Sources
One of the major concerns in the semiconductor manufacturing industry is identifying defects. Automated Optical Inspection is an essential tool in electronics test strategy to provide operational efficiencies in any chip-making facility.
Automated Optical Inspection (AOI) aims to improve the detection and recognition of manufacturing defects. By doing so, AOI machines ensure that product quality is increased, efficiency is elevated, and production costs are reduced to the barest minimum.
If semiconductor companies are to overcome this obstacle, they would first need to reinvent their business and operating models. Certainly, the use of high-tech AOI machines and AOI solutions in the production line cannot be ignored.
Chipmakers should go back to the drawing board and address whatever shortcomings they might have experienced over the last two years – from competition to supply chains.
Having deciphered what went wrong, a clear strategy on how to meet up with digitalization trends should be forged. In 2022, it’s wise to focus on efficiency and innovation, changing operating models, increasing scale production, and adopting new talent capabilities.
This will help chipmakers become more resilient to future business disruptions. In summary, the top strategic priorities for the semiconductor industry are:
- Talent development and retention
- Supply chain flexibility
- Automated vision inspection for quality control and identifying defects