The Chips Are Down But Not Out
When the pandemic started in 2020 and chip shortages became acute, the world woke up to the importance of semiconductors. Then, the economy shriveled and bounced back and once again started to diminish in the ensuing years, leading to where we are today.
The change in fortunes was summed up last November by research firm Gartner, which projected that global semiconductor revenue will decline 3.6 percent in 2023.
“The short-term outlook for semiconductor revenue has worsened,” said Richard Gordon, practice vice president at Gartner, in a statement. “Rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023.”
[Related: As Intel’s Revenue Plunge Continues, CEO Says Comeback Plan On Track ]
This puts the semiconductor industry in a precarious position, where investments in next-generation chip design and manufacturing remains critical while demand for many chips have plummeted far below the highs that were seen a couple years ago.
As a result, semiconductor companies must find a delicate balance between building for the future and reacting to the swaying markets. There are still plenty of willing buyers out there. There’s just fewer of them. But that isn’t stopping applications across PCs, servers, smartphones and other devices from demanding greater performance and efficiency from silicon.
Then there’s the new geopolitical reality of countries like the United States, China, India, Germany, and others putting a premium on building up domestic chip design and manufacturing capabilities. The U.S., for instance, plans to spend $52 billion on subsidies for new chip-making plants while China is expected to spend triple as much for its own industry as trade tensions mount between the two world powers.
“Semiconductors may contribute to only a small percentage of global GDP, but they power trillions of dollars of goods and processes,” consulting firm Deloitte wrote last year.
CRN breaks down 10 semiconductor companies that are driving the market with new innovations — or are on the verge of doing so — while navigating a tough economic environment.
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Dylan Martin is a senior editor at CRN covering the semiconductor, PC, mobile device, and IoT beats. He has distinguished his coverage of the semiconductor industry thanks to insightful interviews with CEOs and top executives; scoops and exclusives about product, strategy and personnel changes; and analyses that dig into the why behind the news. He can be reached at [email protected].
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