Chipmakers have become clear winners of the pandemic period, and their growth dynamics are likely to remain high this year as well. Chip sales rose 26 percent to $ 553 billion last year and could grow another nine percent this year. For the first time, sales would exceed $ 600 billion, according to analysts from the world’s leading insurance company, Euler Hermes.

Chipmakers become clear winners of the pandemic period

   

“The current semiconductor cycle has been in full swing since 2019 when the industry recovered from its worst recession,”.

The months-long shortage of chips during the pandemic has negatively affected many industries, from car manufacturers to game console manufacturers. In addition, chipmakers failed to keep pace with unprecedented demand as global economic activity recovered from the crisis caused by the covid-19 pandemic. Large chip manufacturers, such as TSMC, have already announced plans to increase capacity, but new product usually takes years.

According to analysts Euler Hermes, three main factors have contributed to sales growth. First of all, it is an unusually strong demand for consumer electronics such as personal computers and smartphones. Then the increase in prices due to lower supply than demand and the improvement of the range of chips offered, as new generations of semiconductors have emerged.

However, according to analysts, these three main reasons for market growth should begin to lose importance as the new year approaches as demand growth normalizes, and new production capacity starts.

Four risks to growth

However, analysts also identified four risks that could threaten the sector’s growth. The first is that sales of hardware, i.e., computers and televisions, after strong growth in 2020 and 2021, will hit the return to normal on the demand side much more than expected.

Demand for chips may also be threatened by prolonged freezing of activity in the manufacturing industry due to supply chain disruptions due to the pandemic.

The third threat is the stalemate between China and the United States in their struggle for dominance in the high-tech sector. At present, restrictions prevent some Chinese companies from acquiring important semiconductor technologies and equipment from the United States.

The latest threat is the increasing incidence of unusual climatic events, which is currently a major problem for the semiconductor sector, whose profitability depends on optimal capacity utilization.

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