Gartner forecasts chip sales growth to slow down in 2022, fall next year

IT research firm Gartner said on Wednesday it expects global semiconductor sales growth to slow down in 2022 and fall 2.5% next year, hurt by weak sales of mobile phones and personal computers.

Rising inflation, and higher energy and fuel costs are putting pressure on consumer disposable income, affecting spending on electronic products such as PCs and smartphones, the research firm said.

It forecast global semiconductor revenue to grow 7.4% in 2022 to $639.2 billion, down from its previous view of 13.6% growth, and compared with growth of 26.3% last year.

For next year, Gartner expects chip revenue to contract to $623.1 billion.

“It could easily be a lot worse than that, but it will probably bottom out next year and then start to recover in 2024,” Richard Gordon, vice president at Gartner, said in an interview.

Higher demand for smartphones and PCs during the pandemic overwhelmed chip factories, leading to shortages in other industries, increasing prices and delaying production.

However, mobile phone shipments in 2022 are now expected to fall to 1.46 billion units from 1.57 billion.

When millions of cell phones are taken out of the market, the market flips into an oversupply and chip pricing tends to fall dramatically, Gordon said.

Against the backdrop of chip shortage, the European Union and the United States have also announced big subsidy plans to attract chipmakers such as Intel (INTC.O) to build factories on their shores to reduce dependency on Asian suppliers.

While TSMC (2330.TW), the world’s largest contract chipmaker, and chip-gear maker ASML (ASML.AS) have reported strong results, chipmaker Micron (MU.O) had warned of a down cycle.

Some global manufactures, including Hyundai Motor Co (005380.KS), Nokia (NOKIA.HE) and ABB (ABBN.S), said they are seeing an easing of the shortage.

Supply constraints are still there in some sectors, such as in 5G equipment, but that the market should be in better shape in the first half of next year, Gordon said.