IDC forecasts $522B semiconductor market in 2021; robust growth in 5G; Samsung #1
Worldwide semiconductor revenue grew to $464 billion in 2020, an increase of 10.8% compared to 2019, according to the Semiconductor Applications Forecaster (SAF) from International Data Corporation (IDC). IDC forecasts the semiconductor market will reach $522 billion in 2021, a 12.5% year-over-year growth rate. IDC anticipates continued robust growth in consumer, computing, 5G, and automotive semiconductors.
Supply constraints will continue through 2021. While shortages initially occurred in automotive semiconductors, the impact is being felt across the board in semiconductors manufactured at older technology nodes. Much like a traffic jam and the ripple effect, a disruption on the semiconductor supply chain operating close to capacity will impact across the supply chain. The industry will continue to struggle to rebalance across different industry segments, while investment in capacity now will improve the industry’s resiliency in a few years. Looking forward to 2021, IDC sees continued strong growth in semiconductor sales worldwide as adoption of cloud technologies and demand for data and services remain unchanged. Global fiscal and monetary policy remain accommodative and will provide a tailwind for continued capital investments in long term infrastructure.
The market for semiconductors in Computing systems, such as PCs and servers, outpaced the overall semiconductor market, growing 17.3% year over year to $160 billion in 2020. “Demand for PC processors remains strong, especially in value-oriented segments,” said Shane Rau, research vice president, Computing Semiconductors. “The PC processors market looks strong through the first half and likely the whole year.” IDC forecasts Computing systems revenues will grow 7.7% to $173 billion in 2021.
Growth in Mobile Phone semiconductors was resilient in 2020. “Mobile phone shipments fell by more than ten percent in 2020, but mobile phone semiconductor revenues grew by 9.1% due to a shift to higher priced 5G semiconductors, more memory per phone, sensors, and RF support for more spectrum bands,” said Phil Solis, research director for Connectivity and Smartphone Semiconductors.
“2021 will be an especially important year for semiconductor vendors as 5G phones capture 34% of all mobile phone shipments while semiconductors for 5G phones will capture nearly two thirds of the revenue in the segment.” IDC forecasts mobile phone semiconductor revenues will grow by 23.3% in 2021 to $147 billion.
The Consumer semiconductor market segment rebounded in 2020. Robust sales of game consoles, tablets, wireless headphones and earbuds, smart watches, and OTT streaming media devices fueled segment growth by 7.7% year over year to $60 billion. “Apple, AMD, and Intel showed exceptional growth as consumers upgraded their digital spaces at home,” said Rudy Torrijos, research manager, Consumer Semiconductors. “New gaming consoles from Microsoft and Sony, continued strong sales of wearables from Apple, and the rise in smart home networks managed by Amazon Alexa and Google Assistant will accelerate growth in 2021 to 8.9% year over year.”
“Automotive sales recovered in the second half of 2020, but the supply constraints for the automotive semiconductor market for some products will last through 2021 as fires and fab shutdowns further impacted the automotive semiconductor market and it takes time for chips to move through the automotive ecosystem, specifically in the U.S. and Europe,” said Nina Turner, research manager, Automotive Semiconductors. For 2021, IDC forecasts that automotive semiconductor revenue will grow 13.6%.
“Overall, the semiconductor industry remains on track to deliver another strong year of growth as the super cycle that began at the end of 2019 strengthens this year,” said Mario Morales, program vice president, Semiconductors at IDC. “The markets remain narrowly focused on shortages across specific sectors of the supply chain, but what is more important to emphasize is how critical semiconductors are to every major system category and content growth that remains unabated.”
The IDC Worldwide Semiconductor Applications Forecaster (SAF) database serves as the basis for IDC’s semiconductor supply-side research, including our market forecasts and custom market models. This database contains revenue data collected from over 150 of the top semiconductor companies for 2015-2020 and forecasts for 2021-2025. Revenue for over twenty semiconductor device areas, five geographic regions, seven industry segments, and more than 65 end-device applications are included in the database and pivot tables.
For more information about the SAF, please contact Nina Turner at [email protected]
Separately, IC Insights believes that Samsung will again replace Intel as the leading semiconductor producer beginning in the second quarter of this year.
Intel was the world’s top semiconductor manufacturer from 1993 through 2016. However, after nearly a quarter of a century, the semiconductor industry saw a new number-one supplier beginning in 2017 when the memory market surged and Samsung displaced Intel. This unseating marked a milestone achievement not only for Samsung, but also for all other competing semiconductor producers who had tried for years to supplant Intel as the world’s largest supplier, according to IC Insights.
Samsung held the leading semiconductor supplier spot for six quarters before the memory market collapsed in late 2018 and Intel once again became the leading IC supplier in the fourth quarter of 2018, IC Insights indicated. The memory market plunge was so steep in late 2018 and early 2019 that Samsung went from having 17% more revenue than Intel in third-quarter 2018 to having 18% less sales than Intel just two quarters later. Intel endured its own sales slump in the first quarter of 2019, although it was nowhere near the decline exhibited by the memory producers.
With the DRAM market on the rise and the NAND flash market forecast to gain momentum in the second half of the year, it appears likely that Samsung will once again position itself at the number-one semiconductor supplier for the full year 2021, IC Insights said.
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The 5G “Reopening” in the U.S. this Summer:
“5G could be the ultimate ‘reopening’ theme, as consumers venture out and demand faster cellular broadband coverage and capacity versus last year’s dependence on Wi-Fi,” wrote the financial analysts at BofA Securities in a recent note to investors.
Verizon – which has been building super-fast 5G in football stadiums, airports and other high-traffic venues that remained mostly vacant during 2020 – agreed.
“We’ve been waiting” for this moment, explained Verizon’s Ronan Dunne in comments this week at the Bernstein Strategic Decisions Conference.
He said the company’s new offer of free 5G phones was contingent on three events: a rise in traffic on Verizon’s mobile network, a return by shoppers to Verizon’s retail stores, and the availability of phones that can support the highband and midband flavors of 5G.
It’s now the “perfect timing” for this kind of a promotion, Dunne said.
The financial analysts at Cowen described Verizon’s new promotion as “aggressive,” though they said it’s not necessarily an indication that Verizon is falling behind the competition.
“In our conversation with Verizon, the company noted the offer comes from a position of strength, rather than one of desperation,” the Cowen analysts wrote. “Verizon believes it can enjoy the higher volumes without notable sacrifice to margins.”
“We’re doing better than some people might tell you,” Dunne agreed.
Of course, executives from AT&T offer a similar stance.
“We’re ready for the competitive responses,” AT&T’s Jeff McElfresh said at the same Bernstein-hosted event.
He said AT&T continues to enjoy success with its own free phone promotions, and that the operator is prepared to continue chasing “accretive, profitable growth.”
“We intend to be the nation’s premier broadband connectivity provider. Period,” he said. “We are not on our heels. We are back on our toes.”
The comments and the new promotions from Verizon, AT&T, T-Mobile and Comcast generally indicate the operators are preparing to fight for the shoppers who are keen to re-enter retail stores after a year of being stuck at home. And that they’re going to do so with some of the most aggressive promotions the wireless industry has seen in years.
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