Outlook for chip market gets brighter upon strong demand for memory

The world’s semiconductor market is projected to attain greater growth than initially forecast this year, mainly led by the memory sector amid rising demand for chips across various industries under the protracted COVID-19 pandemic.

According to a forecast released by the World Semiconductor Trade Statistics on Wednesday, the worldwide semiconductor market is expected to increase by 19.7 percent to $527 billion in 2021 from a year earlier, and continue to grow by 8.8 percent in 2022.

The latest forecast for 2021 has nearly doubled from the institution’s initial forecast of 10.9 percent growth made in March.

The largest growth contributor would be memory chips with a 31.7 percent growth, followed by sensors with 22.4 percent and analog with 21.7 percent, the data showed.

The figures are based on online forecasting by WSTS member companies, as the institution was unable to have a physical forecast meeting due to the COVID-19 situation, it said.

All other major product categories are also expected to show double-digit growth rates, with the exceptions of optoelectronics with 9.8 percent and micro components with 8.1 percent.

By region, the statistics agency mentioned that the Asia-Pacific region is forecast to show the strongest growth rate of 23.5 percent, followed by Europe with 21.1 percent, Japan at 12.7 percent and the Americas with 11.1 percent.

The Asia-Pacific region, including major chip producers like South Korea and Taiwan, are expected to account for 63.5 percent of the aggregate sales of global chipmakers this year, according to statistics.

The world’s biggest memory provider, Samsung Electronics has also provided an upbeat outlook for the memory market throughout the year.

The Korean tech giant said in April through a conference call on its first-quarter earnings that demand for memory chips across product categories would show robust growth for the rest of the year, including the second quarter.

Such strong demand for memory would contribute to improving the chipmaker’s operating profit in the second quarter, in particular.

DRAM chips would continue to grow in demand as the 5G network market keeps expanding across the globe, and demand for large storage mobile devices soars alongside.

Owing to scheduled launches of new central processing units and new servers, demand for both DRAM and NAND Flash chips is also expected to increase.

The trend is expected to continue well into the second half of the year, with DRAM prices continuing to rise, Samsung forecast.

Governments around the world are expected to boost their economies, leading to an overall recovery in the global economy, and data center companies are also likely to increase investment, according to Samsung.

“Memory has become a critical factor in everyday lives of people at home and work around the world,” a Samsung official said.

In 2020, the global chip market grew 6.8 percent to reach $440.3 billion from 2019 due to spikes in demand for chips for a range of electronic devices from smartphones, tablet PCs to home appliances amid social distancing and stay-at-home trends under the pandemic situation.

The growth in chip demand in various industrial sectors also led to a shortage of chips, especially for automobiles.

For 2022, the global semiconductor market is projected to grow by 8.8 percent to $573 billion, driven by the double-digit growth of the memory category.

By Song Su-hyun (song@heraldcorp.com)