Rise and fall of semiconductor demand during the pandemic
The automotive and industrial semiconductor markets were significantly affected because of the pandemic. A decline in vehicle sales during the pandemic and manufacturing plant closures resulted in companies cutting back on their orders for semiconductors. This reduced demand was quickly taken up by consumer electronics suppliers who benefitted from the rise in home working and learning, with increased demand for notebooks and tablets, as well as for entertainment devices such as smart TVs and game consoles. There was also increased demand from hyperscale operators and telecommunications providers who needed to satisfy online working and entertainment needs. When demand for new vehicles did finally return, carmakers were unable to source enough semiconductors, forcing them to restrict production once more.Shortages resulting from increased semiconductor demand
Originally concentrated in the automotive industry, the global chip shortage spread to a range of other sectors including consumer electronics, most notably smartphones, game consoles, and home appliances. As the demand for electronic devices continued to grow, coupled with the broadening range of semiconductor applications, the pressure on chip manufacturers to meet supply commitments had risen. Increased demand, the stockpiling of chips due to geopolitical tensions like those between the U.S. and China, and extreme weather events, fueled the global chip shortage seen in 2021 and 2022.Semiconductor demand in 2023
For automotive and industrial manufacturers, the ongoing semiconductor shortage has shown no signs of stopping – firms who demand more basic or “legacy” chips. Conversely, with the economic situation worsening in 2023, this is expected to result in weaker demand from consumer-driven markets, particularly with fewer technology purchases. In addition, memory chips are expected to observe a further decline, leading to oversupplies. As a whole the global semiconductor industry is expected to fall by 3.6 percent in 2023, down to 596 billion U.S. dollars.
