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Semiconductor sales expected to reach $600 billion as shortage eases

After the huge dip that the semiconductor industry saw in 2020 and 2021, countries are making it a priority to localise the essential commodity and start production within the country instead of having to import it. It is estimated that the global semiconductor industry revenues by the end of 2022 will be almost 50 percent higher than they were at the end of 2019.

In its 2022 industry outlook report, Deloitte is suggesting that the industry can grow by 10 percent over $600 billion by the end of this year. To put things in perspective, in the last two years, the chip shortage has resulted in a revenue loss of $500 billion globally with $210 billion worth of loss faced by the auto industry alone. The rising demand has made chips even more important for usage in everything from cars to appliances to smartphones, computers and more.

As the availability of the chip improves, Indian car companies like Maruti Suzuki and Mahindra are gearing up to go into production. At the annual general meeting, the CEO of Tata Motors, N Chandrasekaran also said that the semiconductor situation is improving.

The Deloitte report also mentions that the shortages and supply chain issues are here to stay for the first half of the year, hopefully easing by the later half, but with longer lead times for some components stretching into 2023.

In a conversation with CNBC-TV18, CEO and President of India Electronics and Semiconductor Association (IESA), K Krishna Moorthy confirmed that all the data that they have is pointing towards the improvement of the semiconductor situation. The logic devices that are typically over 16 nm, used in the planar technology, are back to their typical lead times of four to eight weeks from 40 to 50 weeks same time last year but there are still pain points.

The lead times can vary from consumer electronics to industrial electronics to high-reliability products like auto, defence, etc. and can go as far as 20 weeks, which is still half of what we were seeing last year.

“Manufacturing units of semiconductor wafers are able to get back to their full capacity. And I think, running extra time without any breaks and things like that or adding more manpower is how they are able to generate the capacity,” Krishna Moorthy added. Capital expenditures from the three largest players will likely exceed $200 billion from 2021 to 2023. Governments have committed hundreds of billions of dollars more.

In December 2021, as a part of the Atmanirbhar Bharat mission, the Ministry of Electronics and Information Technology approved the India Semiconductor Mission, a comprehensive program for the development of a sustainable semiconductor and display ecosystem in the country with an outlay of Rs 76,000 crore to position India as the global hub for Electronics System Design and Manufacturing.

According to the Ministry’s website, “The programme will usher in a new era in electronics manufacturing by providing a globally competitive incentive package to companies in semiconductors and display manufacturing as well as design. This shall pave the way for India’s technological leadership in these areas of strategic importance and economic self-reliance.”

Krishna Moorthy also mentioned that government representatives say that some action can be expected on the ground by the last quarter of this year. CNBC-TV18

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