Chip glut might start in 2023, says IDC, and auto-chip traffic jam could clear this year

Shortages in today's supply chains persist and capacity is all but booked. But the future looks bright

Analyst firm IDC says the global semiconductor industry is showing signs of "potential for overcapacity in 2023 as larger scale capacity expansions begin to come online towards the end of 2022".

A brief note on the industry's prospects states: "dedicated foundries have been allocated for the rest of the year [2021], with capacity utilization at nearly 100 per cent.

"Front-end capacity remains tight but fabless suppliers are getting the production they need from their foundry partner," the note states, adding "Front-end manufacturing is starting to meet demand in 3Q."

But we're not out of the woods, because the firm predicted "larger issues and shortages will remain in back-end manufacturing and materials". The note doesn't say if, or how, material shortages will ease by 2023. But it is bullish on manufacturing capacity catching up to demand in that year.

Costs are also predicted to rise. "Semiconductor wafer prices increased in 1H21 and IDC expects increases to continue for the rest of 2021 due to material costs and opportunity cost in mature process technologies," the note states.

The note also offers some market predictions for 2021, among them:

  • Shortages in automotive silicon will be "mitigated by year end", with 22.8 per cent revenue growth to follow;
  • 24.6 per cent revenue growth for semiconductors used in x86 servers;
  • An unsurprising boom in 5G silicon, with revenue expected to grow by 128 per cent, rather faster than the 28.5 per cent for the overall mobile phone market;
  • Notebook computer semiconductor revenue growth of 11.8 per cent.

"Overall, IDC predicts the semiconductor market to reach $600 billion by 2025 – representing a CAGR of 5.3 per cent through the forecast period," the note concludes. "This is higher than the typical three to four per cent mature growth seen historically." ®

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