Semiconductor industry has long been considered as one of the largest contributors in the global technological developments, and it is expected to continue its steady growth in the near future, mainly driven by several top semiconductor industry trends including 5G communication, Artificial Intelligence (AI), autonomous cars, Internet of Things (Iot) and the dominance of China.
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Global Semiconductor Industry Overview 2019
Semiconductors are nowadays widely adopted in various of industries, especially consumer electronics, communications, automotive, defence and aerospace. With the continuous technology advancement and rising demand in the end-user industries, the global semiconductor sales is projected to witness a more promising future.
According the latest industrial statistics from World Semiconductor Trade Statistics (WSTS), the global semiconductor market size reached an all-time high of US$468.8 billion in 2018, up by 13.7% from previous year. Although, the year 2019 is forecasted to be down 3.0% to US$454.5 billion. Modest growth is expected to return in 2020.
Technavio’s recent semiconductor industry analysis also reports that the global semiconductor industry market size will grow by USD 241.39 billion from 2019 to 2023, registering a CAGR of 9% during the forecast period. The rising adoption of smartphones and semiconductor integrated circuit in automobiles are some of the primary factors driving the semiconductor industry growth. The increase in industrial automation in smart cities is another one of the top semiconductor industry trends that will gain traction in the compound semiconductor market in the coming years.
Geographically, Asia Pacific is currently dominating the global semiconductor market, with China, South Korea, Japan, and Vietnam being some of the world’s largest semiconductor manufacturers and consumers. Led by these countries, the semiconductor manufacturing market in East Asia will increase more than USD 133 billion in market size by 2021, accelerating at a CAGR of over 8% during the forecast period.
Some of the top semiconductor companies in the world include Intel Corporation, Micron Technology, Inc., Qualcomm Technologies, Inc., SAMSUNG ELECTRONICS CO., LTD., and SK HYNIX INC.
Top 5 Semiconductor Industry Trends Shaping the Future of Semiconductor Industry
China Increases Its Semiconductor Industry Market Share
China has dominated the global semiconductor industry in production and consumption over the past decades, its leading position is expected to continue over the near future, mainly driven by the fast-growing industrial automation, consumer electronics, IT & communication and automotive industries. According to the recent report from Deloitte, China’s semiconductor industry revenue is projected to grow by 25% to approximately US$110 billion in 2019, from an estimated US$85 billion in 2018.
As the global semiconductor market continues to be more competitive in terms of innovations, product development, and supply chain opportunities, the Chinese companies in semiconductor industry are moving their core businesses from low-cost production areas to focusing on investing and developing technology-based high-value product lines and has seen sales increased in recent years
Many Chinese semiconductor companies are already in lead of designing specialized semiconductors for AI applications and new chip architectures for the booming smartphone industry around the world. This transformation is likely to further increase China’s competitiveness and reinforce its leadership in the global semiconductor industry in the foreseeable future.
5G Communication
As we are entering the new world of 5G technology, the global semiconductor industry is expected to experience a huge impact. According the latest market report from Technavio, the global 5G equipment market size will grow by USD 16.28 billion from 2019 to 2023, registering a significant CAGR of 71% during the forecast period.
Since 5G standard will be able to transmit over 10 times the data rates achievable using the advanced forms of 4G, semiconductors will have to meet the new requirement in order to manage the data generated in a 5G ecosystem. Therefore, the 5G semiconductor manufacturers are expected to improve the product capabilities in servers, storage, and mobile devices.
Artificial Intelligence (AI)
The mass adoption of AI technology will be another one of the top semiconductor industry trends in 2019. Technavio’s market research report forecasts that the global artificial intelligence (AI) market size will grow at an impressive CAGR of above 50% till 2021.
The rising demand for AI chips and AI-based applications across different industries will set to bring more growth opportunities for semiconductor chip companies in the market. By adopting AI technology, semiconductor companies will also be able to improve operations by speeding up the production process, reducing production costs, and increasing product performance.
Autonomous Cars
The next major impact for the semiconductor industry will be the fast development of autonomous vehicles on the road. The global autonomous vehicles market will see nearly 6 million units’ incremental growth from 2018 to 2022. Google plans to launch its autonomous car sharing service; Nvidia is to launch autonomous vehicle platforms for Tesla and Toyota.
As the demand for electronic components used in autonomous cars for safety, infotainment, navigation and fuel efficiency continues to increase, the demand for automotive semiconductors to support increased connectivity, battery performance in EVs, enhanced sensors, and other technologies are also expected to see a huge jump over the near future
Internet of Things (IoT)
The expansion of Internet of Things (Iot) is one of the top drivers for the global semiconductor industry. With more and more advanced IoT products launched in the market – ranging from industrial automation systems to connected devices, which are all powered by semiconductors – IoT is set to offer more diversified opportunities to semiconductor companies.
The industrial application of IoT around the world is also projected to boost the demand of semiconductor chips in a much larger scale. Technavio predicts that the global industrial IoT (IIoT) chipsets market will grow steadily over the next few years at a CAGR of more than 30% by 2021. The demand from manufacturing industries for enhanced factory networks is another major growth factor for the growth of semiconductor industry in 2019.
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