Semiconductors’ revenue potential in face of global economic instability
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
- Sustainable Growth and Tech Trends
- Competitive Differentiation
Publication | Update: Oct 2022
According to the most recent Gartner forecast, the global semiconductor revenue has slowed to 7.4 percent in 2022, down from 26.3 percent in 2021. This is a decrease from the previous quarter's prediction of 13.6 percent growth in 2022. This market is entering a period of decline with 2023 estimations following a similar pattern and dropping by -2.5 percent. The demand for semiconductor-powered products is enormous, with end applications ranging from smart electric vehicles and mobile devices to communication infrastructure and IoT devices.
Table 1. Semiconductor Revenue Forecast, Worldwide, 2021-2023 (Millions of U.S. Dollars). Goasduff, L. (2022, July). Gartner Forecasts Worldwide Semiconductor Revenue Growth to Slow to 7% in 2022. Gartner. Retrieved from: https://www.gartner.com/en/newsroom/press-releases/2022-07-27-gartner-forecasts-worldwide-semiconductor-revenue-growth-to-slow-to-7-percent-in-2022
The largest companies, with annual revenue of USD 1 billion or more, are the most optimistic about corporate revenue growth, with 100 percent expecting revenue to increase in the coming year. However, smaller (less than USD 100 million in revenue) and medium-sized (between USD 100 million and USD 999 million) businesses anticipate revenue growth of more than 20 percent.
If companies are segregated by end market, the likelihood of a significant disruption in industries where semiconductors are indispensable can be reduced when the next product availability gap occurs. The semiconductor content (by value) of today's non-traditional powertrain concepts - hybrid and fully electric vehicles - is twice that of internal combustion engine vehicles (ICE). The fully autonomous vehicles of the future, equipped with LiDAR sensors, image recognition systems and 5G communications, are expected to contain eight to ten times as many semiconductors as non-autonomous vehicles.
According to a recent KPMG survey, the biggest concerns are Taiwan's prominence in the global semiconductor supply chain, nationalization of chip technology and intellectual property, and tariffs and renegotiated trade agreements. These concerns are understandable given that governments in the United States, Europe and China are stepping up efforts to increase domestic production. Faced with the threat of sanctions against Chinese suppliers, the US industry has been looking for alternative partners to strengthen the resilience of the supply chain. Malaysia, a major supplier of components for global production, recently signed a cooperation agreement with the US Department of Commerce to increase cooperation in manufacturing.
However, some of the disagreement over the duration of the chip shortage may stem from the need and urgency of different end markets. While demand for PCs fades as initial demand for work-from-anywhere solutions is satisfied, other segments such as infrastructure and automotive remain challenging. 
Figure 1: Semiconductor Market Size, 2020 to 2030 (USD Billion). Precedence Research. (2021). Semiconductor Market. Retrieved from: https://www.precedenceresearch.com/semiconductor-market
The challenges of the past decade have highlighted the undeniable importance of semiconductors to virtually every aspect of life, business productivity and national security. The economic resilience of many industries would be impossible to achieve without remote connectivity, powerful portable computing solutions and a robust communications infrastructure supported by semiconductors.
Finally, when it comes to shaping strategy, semiconductor executives have talent risk as a priority. It is the most pressing issue the industry will face in the coming years, and it is also a key strategic priority. Another critical issue in the industry is the ever-changing and challenging geopolitical environment.
 Goasduff, L. (2022, July). Gartner Forecasts Worldwide Semiconductor Revenue Growth to Slow to 7% in 2022. Gartner. Retrieved from: https://www.gartner.com/en/newsroom/press-releases/2022-07-27-gartner-forecasts-worldwide-semiconductor-revenue-growth-to-slow-to-7-percent-in-2022
 KPMG LLP. (2022). Global Semiconductor Industry Outlook 2022. https://assets.kpmg/content/dam/kpmg/co/sac/pdf/2022/04/global-semiconductor-industry-outlook-2022.pdf
 Kharpal, A. (2021, April). How Asia came to dominate chipmaking and what the U.S. wants to do about it. Retrieved from: https://www.cnbc.com/2021/04/12/us-semiconductor-policy-looks-to-cut-out-china-secure-supply-chain.html
 Clark, L., (2019). The innovation and talent imperatives for semiconductors. KPMG LLP. Retrieved from: https://advisory.kpmg.us/articles/2020/innovation-talent-imperatives-for-semiconductors.html
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The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
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