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The global integrated circuit market size was USD 437.71 billion in 2020 and is projected to grow from USD 489.31 billion in 2021 to USD 1,136.98 billion in 2028, at a CAGR of 12.8% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a lower growth of 9.2% in 2020 as compared to the average year-on-year growth during 2016-2019. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
The trends for 5G connectivity, advanced driver assistance system (ADAS) in automotive vehicles, cloud computing, and IoT-based devices are anticipated to drive the market growth. Additionally, the development of novel technologies and high-end cellphones and compact electronic devices are expected to fuel the market growth.
Substantial Effects of International Trade and Difficulties in Procurement of Raw Materials to Obstruct Market Growth
The COVID-19 pandemic has affected numerous prominent economies across the globe creating a severe cash crunch and reducing cash liquidity. Thus, most of the investors and manufacturers operating with a pessimistic approach slowed the growth pace of the market. Additionally, sanctions on cross-border trade of non-essential goods hampered import export of ICs from manufacturers of Asia Pacific to other regions, reducing sales in different regions.
The breakdown of the value chain and supply chain of semiconductor during the initial period of the pandemic had severely derailed the development prospects of the market. Furthermore, long-term restriction imposed on the operations of the manufacturing facilities and unplanned and hassled shutdown of numerous manufacturing clusters increased a massive supply demand gap reducing the extensive possible development prospects of the market.
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Substantial Demand for ICs in Automotive Sector and IoT-based Devices to Provide Noteworthy Growth of Market
The extensive research and development operations, such as advanced driver assistance systems undertaken by numerous major players of automotive vehicles, augment the demand for the products. Additionally, increasing opportunities for IoT-based devices have amplified the requirements of analog ICs, digital IC, and microcontroller sensors in automated equipment and IoT devices. For instance, continuous efforts to introduce developed and advanced automotive infotainment installations, such as modern entertainment and information setup or precise GPS tracking and navigations, will propel the demand and subsequent sales of automotive microcontrollers (MCU). Furthermore, electric vehicles have registered heavy increment in their sales due to high volatility in fuel prices and also subsidies offered by numerous governments to boost EV sales. The manufacturing of electric vehicles is an eminent factor, which is anticipated to provide new growth horizons for the market.
Automotive infotainment systems are expected to account for 10% of market share whereas other parts of the automotive vehicle are estimated to represent 90% of the microcontroller sales. The other parts, which constituted 90% of the sales are advanced driver assistance systems, power windows, engine controls, battery management systems, electric steering, power brakes, and others. The trend for interconnected and autonomous vehicles, coupled with advanced and easy driving controls using smart sensors and integrated circuit equipped devices, will exhibit commendable performance of the market across various parts of the globe.
High Growth in Use of Smartphone and Steadfast Development of Mechatronics in Industrial Sectors to Promote Healthy Growth
Now a day, to increase the product’s presence across the global market and foster its appeal within the customers, many IC manufacturers are trying to address the custom requirements of the consumers. The manufacturers are engaged in development of custom made integrated circuits capable of providing all the major basic electronic components in a single chip. According to recent statistics published by the Semiconductor Industry Association (SIA), the global sales of semiconductors recorded a thumping growth of about 24% in October 2021 to reach to decent sales of almost USD 49 billion as compared to the sales in the same month in the preceding year. The massive growth helped the industry to accumulate an additional USD 400 million providing an optimistic performance to the market over the forecast period.
Additionally, the setup of next-generation telecommunication networks, such as 5G cellular services, demands a holistic change in the infrastructure setup. The soaring application of quantum computing and artificial intelligence is the pivotal factor estimated to boost the market growth over the course of time.
Low Chances of Repair or Re-fabrication and Inability to Operate at Low Temperature Coefficient to Deter Market Sales
The integrated circuit operates as a compiled set of electronic unit installed on a semiconductor material such as silicon. Thus, it acts as a compact unit comprising different electronic components, which reduce size and intricate component assembly in any electronic device. Thus, if one component in the IC chip fails, the complete IC chip is required to be replaced and it is impossible to repair or modify the circuit, thereby increasing the maintenance cost of the devices. Furthermore, the integrated circuit has a potential inability to achieve low temperature coefficient, which makes it inappropriate to operate in harsh environment and freezing temperatures. The ICs are also less pliant and cannot operate effectively if they are not properly installed or rashly handled. These circuits are also susceptible to failure if exposed to excessive heat, which also makes them vulnerable for operation in high temperature environments.
Analog IC as well as digital IC cannot achieve high voltage operation with low operational noise. These circuits are capable of handling limited amount of power. Thus, when the operations in high powered events are required, the IC units require extension to operate properly and effectively.
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Logic and Memory Segments to Collectively Dominate Global Market
By product type, the market is classified into logic, memory, micro, and analog. The increasing use of logic gates in the device has elevated the sales of logic segment across numerous regions. The use of memory ICs to store, refresh, and retrieve data at a faster rate has enhanced the application of memory at a substantial pace. The memory IC has a high density level and is capable to store higher amount of data.
Furthermore, dynamic random access memory ICs are modern memory ICs and capable of deleting and refreshing data at the same time. Its simple assembly and less intricate design make it more apt for installation in diverse electronic units.
Standard PCs Application to Retain its Substantial Share in Market Over Forecast Period
By application, the global market is classified into standard PCs, cellphones/tablets, automotive, Internet of Things (IoT), servers, TVs/set top box, gaming consoles, and others. Standard PCs segment is estimated to exhibit lion’s share in the global market followed by cellphones and tablets. Spurring manufacturing and sales of laptops, high end personal computers, and advanced smartphones are collectively reinforcing the momentous sales of the market. However, in terms of market growth, IoT and automotive segments are projected to substantiate their developments during the slated course of time. Automotive ICs, often referred as the microcontrollers, have emerged as a vital component in the vehicle system since the inception of concepts such as autonomous driving, advanced driver assistance systems, and connected vehicle ecosystem. Furthermore, heavy focus on automation in the parking system, vehicle navigation, and vehicle health checkups are cementing the requirement and installation of integrated circuits in the global market.
North America Integrated Circuit Market Size, 2020 (USD Billion)
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Region wise, the market is classified into North America, Europe, South America, the Middle East & Africa, and Asia Pacific. North America is expected to grow and account for a dominating integrated circuit market share across the globe. The effective performance of the global leaders and promising performance of the application sectors in the regional market are ensuring noteworthy share of the region outpacing all the other regions. Established automotive manufacturing in Detroit is generating considerable demand for automotive microcontrollers. Expansion of automotive manufacturing clusters in Canada is collectively driving the developments across North America.
India to Exhibit Promising Growth with Exhaustive Push by Government Chip Design Related Activities
In terms of development prospects, India is anticipated to retain its dominant presence throughout the forecast period. The presence of highly-abled wafer fabrication facilities, such as Semiconductor Laboratory (SCL), Gallium Arsenide Enabling Technology Center (GAETEC), and Society for Integrated Circuit Technology and Applied Research (SITAR), are fulfilling the strategic requirements for chip design and development across the country. The increased sales of IoT integrated home maintenance equipment, proliferation of personal computers in manufacturing sectors, and different industries contribute to a significant growth in the market.
The increasing demand for electric automotive vehicles or connected vehicles in conventional automobiles imbibed with smart connectivity, smart tires, electric steering, and IoT integrated operation is propelling the integrated circuit market growth across Europe. Additionally, extensive integration of smart desktops and laptops, tablets, and smartphones is another high performing market segment. The manufacturing of advanced, complex, efficient, and custom designed ICs by the active market vendors is augmenting sales of these circuits across end-use applications.
In South America, the high amount of supply demand imbalance and the uncertain demand for the products limit the market development opportunities. Heavy hindrance to the supply chain and inability to engage in the direct customer reach also curb market growth in the region. South America provides limited customer base due to minimal manufacturing bases and clusters of automotive vehicles and electrical devices in the aforementioned region.
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Asia Pacific is expected to grow with an optimistic market growth rate during the forecast period. Japan and China cater as the regional markets for many major players and highly developing market vendors. Focus of these players on research and development operations and development of enhanced and effective market products also aid reasonable market growth. Furthermore, the initiatives taken by federal government of India to bolster indigenous production of chips and other semiconductor devices can prove as a decisive factor in the development of the market. There are high development opportunities in India and holistic market landscape in far eastern countries, such as South Korea and Japan, to reinforce market development prospects in Asia Pacific.
Key Companies Focus on Collaborations and Joint Ventures across Various Regions
Key manufacturers in this market are focusing on the development of better and advanced products and are operating extensively to achieve technological superiority. Moreover, major players operating in the market are making investments for establishment of manufacturing facilities in diverse regions across the globe. The companies are trying to meet massive increment in the demand for ICs in the market. The strong presence of market players in the opportunistic regions, such as Asia Pacific and North America, is expected to aid the aim of manufacturers to establish themselves as prominent global manufacturers.
Additionally, market players are currently in talks for possible strategic mergers and acquisitions of smaller entities. The mergers and acquisition of the entities operating in the regions with higher growth prospects are more sought after by global and established market players. These mergers and acquisitions are helping the companies to reduce the intensity of fierce competitive landscape and also increase the presence of the companies in foreign regions.
An Infographic Representation of Integrated Circuit Market
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The global integrated circuit market report provides an in-depth analysis of the industry dynamics and competitive landscape. The report also provides market estimation and forecast based on product type, applications, and regions. It provides various key insights, including recent industry developments in the market, such as mergers & acquisitions, macro and microeconomic factors, SWOT analysis, and company profiles.
Value (USD Billion)
By Product Type, Application, and Region
By Product Type
Fortune Business Insights says that the global market size was USD 437.71 billion in 2020 and is projected to reach USD 1,136.98 billion by 2028.
In 2020, the North America market value stood at USD 192.38 billion.
Registering a CAGR of 12.8%, the market will exhibit substantial growth during the forecast period (2021-2028).
By application, the standard PCs segment is expected to lead this market during the forecast period.
Heavy growth in use of smartphone and related devices and steadfast development of mechatronics in industrial sectors are the key factors driving the market.
Intel Corporation, Qualcomm Technologies, Inc., Toshiba Electronic Devices & Storage Corporation, and Texas Instruments are the major players in the global market.
North America dominated the market in terms of share in 2020.
Low chances of repair or re-fabrication and inability to operate at low temperature coefficient to deter the market sales, and thus hinder the adoption of the product.
Logic segment is expected to drive the adoption of the product during the forecast period.
Substantial demand for ICs in automotive sector and IoT based devices is identified as the current market trend.
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