Virtually all modern electronic devices use chips. Simplistic devices like kettles use maybe one or two integrated circuits (ICs), complex devices like PCs or cars use hundreds or thousands. As the world adopts new devices, sales of ICs expectedly set records. IC Insights forecasts that shipments of chips this year will total 427.7 billion units, up 9.2% year-over-year.
427.7 billion is an absolute record in terms of unit chip sales. To put the number into context, it is 2.2 times more than the number of ICs shipped in 2010 (a breakthrough year) and 44 times more than the number of ICs sold in 1980. Yet, when compared to 391.8 billion chips supplied in 2021, that number represents 'only' a 9.2% year-over-year growth. By contrast, shipments of chips grew 22% YoY in 2021, but that was a boom year, according to IC Insights.
The World Semiconductor Trade Statistics (WSTS) defines 33 major chip categories. Only three of these product categories (SRAM, DSP, and Gate Array) are projected to have unit shipment declines. Meanwhile, 30 categories are expected to show positive unit growth, whereas 12 are predicted to demonstrate unit shipments growth rates ahead of the market (e.g., higher than 9.2%), according to IC Insights.
Over the past few months, we have seen numerous reports about growing inventory levels chips consumers, which might be a sign that demand for ICs is slowing down and further increases of sales are under question. But executives from such companies as Analog Devices, Micron Technology, and Broadcom think different, reports Bloomberg. Stockpiling critically important components indicates that demand for products featuring those chips is projected to remain strong, which is why it is vital for business.
"There is a concern by investors that customers have stockpiled inventory," said Mahendra-Raja, chief executive of Analog Devices, in an interview with Bloomberg. "There's a concern by customers that there's no inventory available for them."
To that end, sales of chips will continue to grow in the coming years, but that growth will likely slowdown as IC Insights predicts the IC unit compound annual growth rate (CAGR) through 2026 will be 7%. Eventually, this CAGR for unit growth will be in the range between 7% and 8%, which is slightly lower than the historical 42-year rate of 9.4%.Meanwhile, steady growth of chip sales will remain with us for years.