“Digital acceleration since COVID-19 has brought about a surge in demand for semiconductors across most sectors including telecoms, which is in the process of rolling out 5G, deploying cloud network functionality, cloud services and by extension, and connecting volumes of IoT devices,” it said. “Telecoms semiconductor demand is beginning to outstrip supply.”
“While shortages are said to be limited to certain categories of semiconductor, it is estimated that the situation will continue in the production chain into 2022 and 2023 until foundry capacity, substrates and component demand softens out,” it added.
Foundries are adjusting their product mixes to ensure profitability by focusing on more reliable and profitable sector customers. Semiconductor components required for smartphones is roughly even across chip categories and the telecom sector is just as vulnerable to shortages in discrete, analog and other optoelectronics semiconductors as the automotive industry.
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Up until now, many sectors including telecoms have been able to avoid from shortages by advance ordering and stockpiling. But STL points to Susquehanna Financial Group’s ongoing trend research on the lead time between ordering a chip and taking delivery illustrates the extent of the supply situation. Susquehanna points in particular to the increasing lead times for power management integrated circuits (PMICs).
Apple expects supply constraints for both the iPhone and iPad in the quarter for September to be greater than the previous quarter due to constraints on silicon with legacy nodes, although it said there was no issue with supply from the latest nodes.
Consumer and industrial IoT remain ongoing growth drivers for semiconductors with low power IoT devices (wearables, hearables, health monitoring) continuing to grow in demand. Smart homes also drive growth in connectivity and sensor categories as demand rises for smart speakers, cameras and presence monitoring applications such as heat and motion detection, smart energy consumption and room occupancy. eSIM penetration is also expected to be heavily driven by the automotive sector, while security is also expected to rise in prominence across all IoT devices.
The shift to 5G brings with it large increases in data and computing power, and with it an increase in base station antenna across multiple locations requiring connectivity, power and sensors. 5G and 4G smartphone penetration will also continue to drive demand for semiconductors well into 2022 as consumers transition to the latest 5G handsets. The PC market also remains strong despite the expectation that demand will ease as people return to work.
Next: TSMC revenue breakdown