Chip market warning of overcapacity in 2023

September 24, 2021 // By Peter Clarke
Chip market forecast: 17% growth followed by overcapacity
The semiconductor market is likely to see overcapacity in 2023 after growth of 17.3 percent in 2021 says International Data Corp.

The strong growth in 2021 is partly driven by rising chip prices and follows a similarly strong year in 2020 where the market increased in size 10.8 percent, IDC said.

IDC said the supply and demand will come into balance by the middle of 2022 with the potential for overcapacity in 2023 as larger capacity expansions begin to come online towards the end of 2022.

Pure-play foundries are sold out to the end of 2021 but front-end capacity is starting to meet demand but shortages are being triggered by materials shortages and back-end manufacturing capacity.

According to IDC, 5G semiconductor revenues will increase by 128 percent in 2021, with total mobile phone semiconductors expected to grow by 28.5 percent. Game consoles, smart home, and wearables will grow 34, 20 and 21 percent respectively.

Automotive semiconductor revenues will also increase by 22.8 percent despite supply falling short of demand. Notebook computer semiconductor revenues will grow by 11.8 percent, while x86 server semiconductor revenues will increase by 24.6 percent.

Overall, IDC predicts thar semiconductor market will exceed $600 billion in 2025 – representing a CAGR of 5.3 percent through the forecast period.

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