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The global semiconductor market size was USD 527.88 billion in 2021 and is projected to grow from USD 573.44 billion in 2022 to USD 1,380.79 billion in 2029, exhibiting a CAGR of 12.2% during the forecast period. Based on our analysis, the global semiconductor market exhibited a rise of 6.8% in 2020 compared to 2019. The global COVID-19 pandemic has been unprecedented and staggering, with semiconductors experiencing a positive demand across all regions compared to pre-pandemic levels.
The growth of this market is attributed to the increasing consumption of consumer electronics devices across the globe. Additionally, the emergence of artificial intelligence (AI), the Internet of Things (IoT), and machine learning (ML) technologies is providing new opportunities for market development. These technologies aid memory chips in processing large amounts of data in less time. Moreover, the increasing demand for faster and advanced memory chips in industrial applications will drive market growth over the forecast timeline.
An Infographic Representation of Semiconductor Market
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High Uncertainty across Several Sectors amid COVID-19 to Impede Growth
Since the onset of COVID-19 in early 2020, the industry has faced several challenges to maintain stable growth. The entire technology industry is recovering from the U.S.- China trade war and 2019’s down cycle. The International Data Corporation (IDC) estimated a revenue contraction of approximately 6% in 2020 (with 54% of probability) for the global semiconductor industry over the forecast period.
The sudden outbreak of COVID-19 in Wuhan, China, which is also known as the “motor city,” has severely impacted automotive production in Asia, as it is the home to auto plants of General Motors, Honda, Nissan, Peugeot Group (PSA), Renault, and Toyota. The United Nations Conference on Trade and Development (UNCTAD) has estimated a 2% reduction in the export of automotive parts from China to other automotive manufacturers in the European Union (EU). Similarly, the U.S., South Korea, Japan, and many more could lead to automotive export reduction worth USD 7 billion from these economies to the rest of the world.
However, the rising need to work from home has drastically surged networking & communication, and data processing applications worldwide will lead to the moderate growth of the market for semiconductors in the long term.
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Escalating Implementation of IoT, AI, and Wireless Communications to Augment Growth
Advancements in AI, IoT, and wirelessly connected devices are creating a huge demand across the globe. For instance, Micron Technology, Inc. offers high capacity memory and multi-chip packages powered with AI training that are utilized in embedded or cloud in edge devices and mobile. A majority of these new inventions are equipped with a single system on a chip (SoC) to offer high levels of integration. Additionally, SoC also allows the devices to operate with high power efficiency and enhanced security, as it integrates processors, memory, RF transceivers, sensors, power management, and connectivity in a single unit.
Rising Consumption of Consumer Electronics Goods to Aid Growth
Rising household disposable income levels, rapidly growing population, and increasing urbanization create massive demand for regular and advanced consumer electronics devices. Integrated Circuit (ICs) chips are present in several electronic devices, including smartphones, washing machines, TVs, and refrigerators for efficient and appropriate functioning. Several leading consumer electronics brands, including Samsung, Apple, and Huawei are making large investments in introducing new devices to cater to the increasing consumer demand for advanced devices, supporting the market growth.
Increasing Demand for Integrated Circuits in Developing Economies to Boost Market Growth
China is expected to witness strong demand for mobile chips due to established manufacturing and assembling plants of several well-known smartphone manufacturers such as Apple and OnePlus. Moreover, Taiwan’s industry depicts significant growth, reflected by the number of Taiwanese personal computer manufacturers and their increasing investments in the research and development sector. The country is also renowned for manufacturing advanced technology-driven and compact integrated circuits, thus creating lucrative growth prospects for the market.
Tariff Disruption and Shift in Global Trade to Hamper Growth
The industry is enormously dependent on the U.S. as it has been a prominent country holding a dominant share in the market. With changes in the country’s leadership, the U.S. has started to impose trade restrictions with China from 2018, and if the restrictions continue, the country is expected to suffer ~16% decrease in its market share. Therefore, the increasing tension with China is expected to diminish the dominance of the U.S. semiconductor market, and the focus is anticipated to shift to Asia Pacific in the coming years.
Furthermore, tariffs are applied to practically all the industrial goods and materials, which are customary for the chips. These tariffs impact the import and export of components, directly affecting the manufacturing cost of the chips.
Memory Devices Segment to Depict Highest CAGR due to Wider Range of Applications
Based on component, the semiconductor market can be divided into memory devices, logic devices, analog IC, MPU, discrete power devices, MCU, sensors, and others.
Memory devices are expected to drive overall market growth due to ongoing technological advancements such as virtual reality and cloud computing and their integration in end-user devices. The high average selling price for NAND flash chips and DRAM would generate revenue.
Similarly, logic devices used for special purpose application-specific signal processors (ASSP) and application-specific integrated circuits (ASIC) are projected to display the highest growth rate over the forecast period.
The microprocessors (MPU) and microcontroller (MCU) segments would depict stagnant growth owing to frail shipments and investments for notebook PCs, computers, and standard desktops. In the current market scenario, the increasing popularity of IoT-based electronics is stoking the demand for powerful processors and controllers. Hybrid MPU and MCU offer real-time embedded processing and control for the topmost IoT-based applications, thus leading to substantial market growth.
The analog IC segment is anticipated to portray progressive growth with limited demand from the networking and communication industry. Few emerging trends for the growing demand for analog integrated circuits include signal conversion, automotive-specific analog applications, and power management. They are enabling the rising demand for discrete power devices.
Comparatively, the sensors segment is projected to witness moderate growth owing to the changing requirement of hybrid and mixed technologies in the communication and automotive industries.
The others segment consists of Digital Signal Processing (DSP), which is likely to show decent growth due to its low demand.
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Networking & Communications Application Segment to Dominate Market
Based on application, the market can be broken down into networking & communications, data processing, industrial, consumer electronics, automotive, and government.
The networking and communications segment is projected to grow at a significant CAGR with the increasing demand for smartphones and smart devices worldwide. The necessity of working from home is notably rising across developed and developing economies, thus enhancing the demand across this application segment.
The data processing application segment holds a considerable semiconductor market share owing to the strong need and sales of smartphones and other connected devices, accelerating the demand for memory and storage devices.
Consumer electronics, such as gaming consoles, wearable devices, and other electronic devices, play an important role in this market, enabling the usage of electronic gaming across various countries.
The automotive application segment is estimated to witness a moderate growth rate due to the limited penetration rate of hybrid and electric vehicles. However, the market potential may be enhanced with promising autonomous driving advancements.
The industrial application segment is estimated to grow steadily due to inadequate manufacturing of industrial machines.
The government application segment will display stagnant growth owing to limited government investments and projects in communications technologies.
Asia Pacific Semiconductor Market Size, 2021 (USD Billion)
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The market can be categorized into North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America in terms of region.
Asia Pacific holds the largest share and is projected to exhibit the highest growth in the market across the globe. The increasing adoption of high-end technology-based devices, coupled with the minimum electronics prices, is leading to an upswing in the consumption of consumer electronics. Additionally, technological advancements, such as IoT and LTE, support electronics products, thereby allowing the region to dominate the market share.
China is Expected to Hold Highest Shares with Increasing Local Semiconductor Manufacturers
China holds the largest share in the semiconductor market and is projected to witness a moderate CAGR in the upcoming years, owing to the surging presence of local semiconductor component manufacturers. These local market players tend toward offering a wide range of products at discounted rates in bulk quantity. Thus, it would augment the market growth in China over the forecast period.
The North America market is estimated to exhibit dynamic growth driven by increasing investments in R&D activities. According to the Semiconductor Industry Association (SIA), the U.S. industry’s expenditures in R&D increased at a compound annual growth rate of about 6.6 percent from 1999 to 2019. Expenditures in R&D activities by U.S. companies tend to be consistently high, regardless of cycles in annual sales, which reflects the importance of investing in R&D production. In 2019, the R&D investments totaled USD 39.8 billion.
The market in Europe will witness substantial growth backed by the telecom and the automotive industry. Companies across the region are investing in innovating new technologies and increasing their production capacities to cater to the surging demand for advanced devices and components in the semiconductor industry. Moreover, the rising consumption of consumer goods across the U.K., France, and Germany will support the growth of this industry in Europe over the forecast timeline.
The availability of skilled labor forces and rapid innovations in technologies will drive the Middle East & Africa semiconductor industry growth. Increasing demand for advanced industrial electronics and high-end computing technologies is expected to propel the regional market growth over the forecast timeline.
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Furthermore, the Latin America market will witness healthy growth, owing to increasing consumption of smartphones, TVs, and laptops across Brazil and Mexico. Consumers across the region are making investments in purchasing high-end electronic devices, owing to their steadily rising disposable income levels.
Broadcom, Intel, and Qualcomm to Focus on Developing Innovative Products to Strengthen Offering
Broadcom Inc. announced the availability of its 3*3 Wi-Fi 6 chip named BCM6710, specially designed for WLAN applications and set-up boxes. This chipset will be a highly optimized chip integrated with RF power amplifiers that will pave the way for high bandwidth, low-latency applications, including 4K UHD video streaming, augmented reality (AR), and many more. In the current scenario, Broadcom Inc. and Intel hinge on combining best-of-breed technology to deliver comprehensive technology-based products to major business and government customers.
Similarly, in July 2020, Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated, introduced ‘Qualcomm QCS410’ and ‘Qualcomm QCS610’ system-on-chips (SoCs). These chips are designed for premium camera technology, including powerful machine learning and artificial intelligence features.
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The semiconductor market report offers an in-depth analysis and further provides details on the product adoption across several regions. Information on trends, drivers, opportunities, threats, and market restraints can further help stakeholders gain valuable insights. The report offers a detailed competitive landscape by presenting information on key players, along with their strategies, in the market.
Value (USD billion)
By Component, Application, and Region
Fortune Business Insights says that the global market was USD 527.88 billion in 2021.
The market value is projected to reach USD 1,380.39 billion by 2029.
The market will grow at a CAGR of 12.2% during the forecast period.
The Asia Pacific market size is estimated to be USD 289.92 billion in 2021.
The memory devices segment is expected to lead during the forecast period.
The key market drivers are rising consumption of consumer electronics goods and increasing demand for integrated circuits.
Broadcom, Inc., Intel Corporation, and Qualcomm are the top players in this market.
Asia Pacific is expected to hold the highest market share.
The networking & communications segment is expected to lead the market during the forecast period by application.
The key market trend is the increasing implementation of IoT, AI, and wireless communications.
Below is the list of companies that are studied in order to estimate the market size and/or understanding the market ecosystem
This list does not necessarily mean that all the below companies are profiled in the report. The report includes profiles of only the top 10 players based on revenue/market share.
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