Global semiconductor investment is up 34% this year. This is the strongest increase the chip market has experienced since 2017, when total market revenue rose 41%. In total, parties will invest some $152 billion in chips by 2021.
This is according to figures compiled by IC Insights for the 25th edition of The McClean Report, to be released in January 2022. The report includes historical data on CAPEX in different segments of the IC market, as well as future prospects.
Global chip shortage
That demand for chips is high is no surprise. Globally, there is currently a severe chip shortage. The automotive sector, among others, is greatly affected by this. Several car manufacturers were already forced to temporarily shut down (part of) their production due to the shortage.
Looking at total sales in absolute terms, global sales are the highest ever. 2021 at $152 billion breaks the record set in 2020 of $113 billion, reports IC Insights. Investments are distributed across the different segments that make up the market as follows:
- MPU/MCU chips - $23.5 billion, 15% of the total and up 42%;
- Logic chips - $12.4 billion, 8% of the total and up 40%;
- Foundries - $53 billion, 35% of the total and up 42%;
- DRAM/SRAM chips - $24 billion, 16% of the total and up 34%;
- Flash/non-volatile memory - $27.9 billion, 18% of the total and up 13%
- Analogue/Other - $11.2 billion, 7% of the total and up 41%.
Lots of investment in foundries
IC Insights points out that foundries will account for 35% of all chip investment in 2021. Foundries are semiconductor factories. Since 2014, foundries have accounted for the highest investments of all segments of the market, with two exceptions: 2017 and 2018. In these years, investments in DRAM and flash memory led the way. IC Insights calls investments in foundries of great importance and necessary. This as demand for chips produced with advanced technologies continues to rise.
The world's largest chip manufacturer is Taiwan Semiconductor Manifacturing Company (TSMC). The Taiwanese company accounts for 57% of the $53 billion invested in foundries this year. Samsung is also investing heavily. IC Insights states that Samsung has been able to match TSMC's technology roadmap. The South Korean company remains committed to taking leading chip suppliers away from its Taiwanese rival.
SMIC on US blacklist
IC Insights also points out that chip manufacturer SMIC has been selected by the Chinese government to supply a larger share of chips for the Chinese market. However, SMIC has been blacklisted in the US, complicating the realisation of these plans. IC Insights expects SMIC's CAPEX to fall 25% this year to $4.3 billion. This makes the company account for about 8% of investments in foundries worldwide.
IC Insights expects all segments of chip market to record strong double-digit growth in 2021. Investments in foundries and the MPU/MCU chips segment are both expected to grow by 42%, recording the highest growth. The analogue/other (41%) and logic chips (40%) segments will follow.
European investments
In view of the chip shortage, the European Commission wants to bring more chip production to European soil. Among other things, subsidies should contribute to this. Several parties are in talks about building European chip factories, including Intel, TSMC and Samsung.
More information is available in the 2022 edition of 'The McClean Report - A Complete Analysis and Forecast of the Semiconductor Industry'. The report will be published in January 2022.
Author: Wouter Hoeffnagel
