According to Bloomberg, if estimates hold, 2022 could be the first year in decades that the semiconductor industry has recorded a third consecutive year of sales growth. Sales skyrocketed as chips spread to every aspect of users’ lives, becoming essential components of products from cars and smart devices to clothing.
The continued growth expected this year will mark a turning point for the chip market, which is locked in a vicious cycle of its own: skyrocketing demand, increasing chip output filling warehouses and supply chains creating out of surplus, then sales collapsed. This situation has been repeated, so much so that investors take it for granted.
|But chipmakers are pursuing a path of sustainable growth|
However, major chipmakers such as Intel Corp and Micron Technology think this time is different. And they may be right. Today, chips are used in many products, instead of being concentrated in computers and mobile devices as in the past, so the risk of overproduction is lower.
Global chip shortages and supply chain difficulties put semiconductor companies at risk of problems sooner. Most industry executives have warned shortages won’t ease until the second half of the year, with some products further delayed due to ingredient shortages until 2023.
The chip industry may never get out of its “roller coaster” nature, but the current boom in demand may only last until 2025. The chip industry is now less dependent on computers and smartphones to sell, but it’s still the industry’s biggest growth driver.
If there are years of growth ahead, the chip industry will need to expand capacity. Factories cost billions of dollars and take years to go into production. But on the plus side, tight supply will make it easier for the chip industry to avoid another crash.