Is the boom in the semiconductor industry over?
Chip demand has weakened and manufacturers are still ramping up production: Is the boom in the semiconductor industry over?
For a long time, the semiconductor industry has reportedly been oscillating in a cycle of booms and bad recessions. But now, the industry is confident of beating past models and making their period of rapid growth a little longer. In mid-2021, sales in the semiconductor industry surged 26.2% to an all-time high of $555.9 billion. The industry hopes to pour record money into new manufacturing plants, also known as wafer fabs.
TSMC, the world’s largest contract chipmaker, is preparing to spend another $44 billion this year to expand production capacity. Likewise, Intel is planning a multi-year expansion with a total investment of up to $100 billion to build the largest factory the industry has ever seen.
This type of big investment in the past has led to excess capacity, and investment has often come at a time of weak demand. Now the situation is completely different, with multiple analysts saying that apparent chip shortages have filled factories and pushed up chip prices. But some analysts have warned that there could be a surplus of chips as early as 2023.
Some segments have indeed shown signs of softening demand over the past few months: Chromebook sales plummeted after the pandemic-fueled demand for low-cost laptops for online school classes was met.
Demand for internet devices is also slowing as people working from home upgrade their WiFi gear. Likewise, demand for internet devices is slowing as families working from home have upgraded their WiFi gear. Likewise, sales growth of LCD TVs and online gaming devices is also expected to decrease as coronavirus restrictions ease and consumers in Europe and the United States can go out again.
But many industry experts agree that this is just the beginning, not the end, of an extraordinary boom in the global semiconductor market.
The chip industry used to be driven by one or two key devices, like personal computers, and then smartphones. The rise of artificial intelligence now enables chips to be used in nearly everything from cars to factories to home appliances. As a result, today’s electronic devices require additional computing power to store and process the vast amounts of data collected by smart devices and infrastructure.
As a result, there has been a rapid increase in chip usage per device. U.S. chip equipment maker Applied Materials expects a smartphone to contain $275 worth of chips by 2025, compared with $100 in 2015. The chip content per car is expected to increase from $310 to $690 in the future, and the value of chips per data center server will increase from $1,620 to $5,600 over the same period.
In addition to this increased demand for chips, there has also been a structural change in the end market. “In the past 20 years, the main end user has been the consumer. But now, the industry may return to a situation where businesses and governments drive demand. While consumers want low-cost products, businesses And the government is more concerned with quality, which may change the pricing structure.”
As a result, chip executives believe they are not investing enough in the new model compared to the industry’s past model, which saw cyclical declines on average every two to four years. In addition, due to the increasing cost of building advanced fabs, chip companies have encountered another problem. Both TSMC and its competitors Samsung and Intel are aware that a substantial increase in spending does not necessarily lead to production capacity. Greatly improved.
On top of this, global supply chains are weakening as governments from the U.S. and Europe to Japan and China seek to build local capacity to hedge against competitors and disruptions like a pandemic. That means customers are likely to build larger inventories of chips to ensure they have enough chips at their disposal.
Source: Content from Sina Technology
Cheersonic is the leading developer and manufacturer of ultrasonic coating systems for applying precise, thin film coatings to protect, strengthen or smooth surfaces on parts and components for the microelectronics/electronics, alternative energy, medical and industrial markets, including specialized glass applications in construction and automotive.
