Despite Shortages, Chip Sales to Top $522 Billion in 2021

(Image credit: Intel)

With the ongoing pandemic and chip shortages still making headlines semiconductor revenue totalled $464 billion in 2020 and will top $522 billion 2021, according to IDC. Despite widespread shortages, sales of chips are going to grow further this year as more devices are getting smarter and more chips are consumed overall. Fuelled by home working and education computing is set to be the main driver of growth as each PC uses dozens of chips many of which are made using an advanced process technology. Meanwhile, shipments of chips for smartphones, consumer electronics, and automotive applications will also be strong. 

Global semiconductor revenue increased by 10.8% last year to $464 billion and will grow another 12.5% this year to $522 million because of growth in consumer, computing, 5G, and automotive semiconductors, a new report from IDC says. Shortages of chips will continue through 2021, but since the industry will adopt more expensive chips for a wide variety of applications, sales of semiconductors are destined to grow once again.  

Semiconductors for PCs and servers outpaced the overall chip market and grew 17.3% year-over-year to $160 billion in 2020. There were several factors that drove sales of PC and server chips to new heights. Demand for PCs grew rather dramatically last year, which caused shortages. Meanwhile, CPUs and GPUs are made using sophisticated fabrication technologies and therefore are rather expensive. Finally, supply constraints allowed manufacturers to further increase prices of their products. IDC predicts that sales of semiconductors for computing will grow 7.7% to $173 billion in 2021. 

"Demand for PC processors remains strong, especially in value-oriented segments," said Shane Rau, research vice president, Computing Semiconductors. "The PC processors market looks strong through the first half and likely the whole year." IDC forecasts computing systems revenues will grow 7.7% to $173 billion in 2021. 

Chips for smartphones have been a major semiconductor revenue driver for about a decade since the market of handsets was growing rapidly. Last year unit shipments of smartphones dropped by 10%, but since new 5G devices use more expensive SoCs and more chips in general, smartphone semiconductor revenue increased 9.1% year-over-year. IDC believes that sales of chips for mobile phones will grow by 23.3% in 2021 to $147 billion. 

"2021 will be an especially important year for semiconductor vendors as 5G phones capture 34% of all mobile phone shipments while semiconductors for 5G phones will capture nearly two thirds of the revenue in the segment," said Phil Solis, research director for Connectivity and Smartphone Semiconductors. 

Chips for consumer electronics totalled $60 billion in 2020, up 7.7% year over year as sales of devices like game consoles, tablets, wireless headsets, smart watches, and set-top-boxes were strong. 

"New gaming consoles from Microsoft and Sony, continued strong sales of wearables from Apple, and the rise in smart home networks managed by Amazon Alexa and Google Assistant will accelerate growth in 2021 to 8.9% year over year," said Rudy Torrijos, research manager, Consumer Semiconductors. 

Shipments of chips for automotive applications recovered in the second half of 2020, but many semiconductors for cars  are in tight supply now, a situation that will persist throughout 2021, according to IDC. Nonetheless, automotive semiconductors revenue is expected to grow 13.6% year-over-year, the analysts note. 

"Overall, the semiconductor industry remains on track to deliver another strong year of growth as the super cycle that began at the end of 2019 strengthens this year," said Mario Morales, program vice president, Semiconductors at IDC.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • InvalidError
    It isn't "despite of chip shortage", it is THANKS to chip shortages that chip manufacturers can run their fabs at close to max capacity and sell everything they can manage to make or get made for fab-less chip designers, often with higher margins.
  • DotNetMaster777
    More smart devices more money

    It is interested what is the price for one of them ???