Lingering shortages pushes global semiconductor revenue pass half a trillion dollars in 2021
- Amidst shortages, worldwide semiconductor revenue totaled US$595 billion in 2021, an increase of 26.3% from 2020.
- Samsung Electronics regained the top spot from Intel for the first time since 2018, with revenue increasing 28% in 2021.
- China is once again the largest market for semiconductor equipment with sales expanding 58% to US$29.6 billion, marking the fourth consecutive year of growth.
No doubt, 2021 was a record setting year for the semiconductor industry although there were uncertainty on how long the chip shortages would last. To top it off, the significantly increased demand across all sectors left us questioning the industry’s ability to meet the high demand. Therefore, as firms ramped up fab utilization throughout 2021 to address the increased need, sales and unit sales ended up better than expected.
For context, after some preliminary results recently, Gartner Inc last week announced that the worldwide semiconductor revenue in 2021 totaled US$595 billion, an increase of 26.3% from 2020. On top of that, Samsung Electronics, as mentioned in the initial results, regained the top spot from Intel Corp for the first time since 2018.
Though by less than a percentage point, the South Korean tech giant saw its revenue increasing 28% in 2021 Intel’s revenue declined 0.3%, garnering 12.2% market share compared to 12.3% market share for Samsung. Among the top 10 companies, US’s tech giant AMD and Taiwan’s Mediatek experienced the strongest growth last year, at 68.6% and 60.2% growth, respectively.
Gartner’s research VP Andrew Norwood noted that while “The events behind the current chip shortage continue to impact original equipment manufacturers (OEMs) around the world, the 5G smartphone ramp up and a combination of strong demand and logistics/raw material price increases drove semiconductor average selling prices (ASPs) higher, contributing to significant revenue growth in 2021.”
Chinese fabless semiconductor company HiSilicon unfortunately experienced the most significant shift among the semiconductor vendor ranking in 2021, dropping out of the top 25. “HiSilicon’s revenue declined 81%, from US$8.2 billion in 2020 to US$1.5 billion in 2021,” Norwood said, highlighting that it was a direct result of the US sanctions against the company and its parent company Huawei.
That has in turn, impacted China’s share of the semiconductor market which declined from 6.7% share in 2020 to 6.5% in 2021. In contrast, South Korea had the largest increase in market share in 2021 as strong growth in the memory market propelled South Korea to garner 19.3% of the global semiconductor market.
A month before Gartner released its set of data, SEMI, the industry association representing the global electronics product design and manufacturing supply chain, reported the stellar numbers of the worldwide sales of semiconductor manufacturing equipment in 2021.
Basically the global sales of semiconductor manufacturing equipment surged 44% to an all-time record of US$102.6 billion from US$71.2 billion in 2020. In this, China claimed the largest market for semiconductor equipment for the second time with sales expanding 58% to US$29.6 billion to mark the fourth consecutive year of growth.
Korea, the second-largest equipment market, registered a sales increase of 55% to US$25.0 billion, after showing strong growth in 2020. Then Taiwan logged 45% growth to US$24.9 billion to claim the third position. As for Europe and North America, annual semiconductor equipment spending increased 23% and 17%, respectively. Sales in the rest of the world otherwise jumped 79% in 2021.
For SEMI president and CEO Ajit Manocha, “The 44% increase in manufacturing equipment spending in 2021 highlights the global semiconductor industry’s aggressive push to add capacity. This drive to expand production capabilities extends beyond the current supply imbalance, as the industry continues to ramp up to address a wide range of emerging high-tech applications that will enable a smarter digital world with countless social benefits.”
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Even global sales of wafer processing equipment rose 44% in 2021, while other front-end segment sales grew 22%. Assembly and packaging showed exceptional growth across all regions, resulting in an 87% market increase in 2021, while total test equipment sales rose 30%.
Semiconductor shortages pushed demand for automotive & wireless communications
As with most market experts, even Gartner reckons that 2021 was the year of strong demand for the automotive and industrial markets as opposed to when it was a weak, Covid-disrupted market in 2020. In fact, the automotive market outperformed all other end markets, growing 34.9% in 2021.
As for wireless communications, dominated by smartphones, the industry saw growth of 24.6%. The number of 5G handsets produced reached 556 million in 2021, up from 251 million units in 2020, and enterprises upgraded their Wi-Fi infrastructure for employees heading back to the office.
Then there were memory, driven by DRAM, that accounted for 27.9% of semiconductor sales in 2021. The segment experienced 33.2% revenue growth, increasing US$41.3 billion over the previous year. Gartner said memory continued to benefit from the key demand trend in the last couple of years — the shift to home/hybrid working and learning.
“This trend fueled increased server deployments by hyperscale cloud service providers to satisfy online working and entertainment, as well as a surge in end-market demand for PCs and ultramobiles,” the research firm said.