Is there a chip shortage? Gartner says that 2021 saw a new high in semiconductor revenues

Despite the fact that demand is still outpacing supply, or possibly because of it. Industry revenue reached $500 billion in 2021.

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The chip shortage is still a problem, but Gartner states that this has not stopped the semiconductor industry. In 2021, the rate of growth will be 25.1%First time that revenues surpass $500 billion

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According to the latest projections, the chip shortage won’t be significantly reduced until the second half of 2023. However, some industries will see an increase in production later this year. Gartner states that the reason for record profits is because of the inability to build new fabs and increase production.

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Andrew Norwood, Gartner research VP, said that “Post”-COVID economic recovery in 2021 led to shortages in supply chains, which hit the automotive industry especially hard. Norwood explained that semiconductors’ selling prices rose due to strong demand and increased raw material prices. This contributed to 2021’s revenue growth.

Average selling prices have risen in other industries as well, such as the automotive industry. Gartner stated that 5G smartphone manufacturing was a key driver. Unit production will double to reach 555 millions units by 2021.

Interesting enough, it seems that US sanctions on Chinese chip manufacturer Huawei led to growth for vendors like Qualcomm or MediaTek. Both saw revenue growth exceeding 50% between 2020-2021. Norwood explained that HiSilicon, Huawei’s chip subsidiary, saw its revenue fall from $8.2billion in 2020 down to about $1billion in 2021. It’s a great hit.

Gartner also reported that Samsung had regained the top spot of the semiconductor industry (based upon revenue) from Intel, with a 31.6% revenue increase between 2020 and 2021. Intel however, saw only 0.5% growth during the same period. Gartner didn’t explicitly state that Samsung’s increase in smartphone production was responsible for the jump, but Samsung announced it. More than 50% increase in profitsIt can be attributed largely to the increased sales of chip- and device products.

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SK Hynix and Micron Technology round out the top 10, accounting for more than half the total revenue of the semiconductor market, Gartner stated. 

As previously mentioned, the COVID-19-related supply chain disruptions that caused the shortage of chips are responsible for the problem. Although other industries have seen recovery, the problems in the semiconductor sector are more related to the way it operated before the pandemic, Deloitte stated. 

Although profits may be higher, this won’t stop the need for widespread and important transformation in the semiconductor industry. As companies shift their strategies from rebuilding to recovery, chip makers are now pursuing localized production. It won’t happen overnight, but it is possible. 

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