EDACafe Industry Predictions for 2023 – Thalia

By Sowmyan Rajagopalan, CEO, Thalia Design Automation

Sowmyan Rajagopalan

The economic outlook for semiconductor industry in 2023

Since the start of the Covid-19 pandemic in 2020, the global market for semiconductors has not looked very stable. It has made long-term planning tough if not impossible. A forecast fall then turned into a rapid growth, followed by an oversupply problem with excess inventories. In 2021, more than $0.5 trillion units were shipped, which was a record, and represented a significant 26.2% growth in value over 2020.

That growth continued into 2022, with semiconductor industry growing at 7.3%. So what’s coming further down the track?

Due to an oversupply issue and slower demand in consumer electronics, Gartner’s forecast for 2023 is a small decline in the market by 2.5%. Even with that modest decline, we are still looking at a staggering $620 billion semiconductor market this year.

However, the market for automotive electronics continues to evolve to support the rapidly increasing volume of devices in the modern vehicle: from non-critical systems in audio, video, satellite navigation and connectivity devices, to fundamental systems in battery control, and mission critical Advanced Driver Assistance Systems (ADAS) and monitoring systems. Although analysts’ numbers differ, the forecasts for the growth of automotive electronics all show a similar and definite upward trajectory. The automotive industry could be a driving force for the industry – potentially leading the direction of consumer electronics with the largest tier one companies sourcing directly from foundries: changing the power balance and upsetting the decades-old structure of a tiered supply chain in automotive manufacturing.

Meanwhile, a battle of wills is already in place between China and the USA. Companies in the USA are already restricted by law from engaging with China. However, the domestic market in China is not insignificant, and there is a medium to long-term cost of avoiding it. With half a billion middle-income consumers, it’s already the second largest (and expected to soon to be largest) consumer market in the world. Reducing China’s dependency on US electronics may be an unrealistic long-term tactic which may not bode well for the desirability of US semiconductors globally, if it continues and as Chinese domestic production and electronics manufacturing becomes more self-sufficient. More to the point, this is not one-sided, and if neither China nor the USA back down, the impact could seriously affect the semiconductor industry for years to come.

To sum up our 2023 predictions, changes in the high-growth markets, combined with shifting global politics means that the industry must stay nimble – making full use of cost savings especially in high volume devices, by shifting to more profitable process nodes. And political pressures mean shifting or second-sourcing wafer production will be essential to consistent and cost-effective supply to a global market.

A Thalia, we help clients to transition and reuse IPs better, faster, more efficiently and with less risk, helping to better monetize their portfolios and accelerate RoI on their development costs.

Category: EDA Predictions

This entry was posted on Wednesday, February 1st, 2023 at 3:19 pm. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.