Report: Global semiconductor market to expand by 12 percent next year

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A diverse global supply chain is key in times of crisis.

Malcolm Penn, CEO of research firm Future Horizons, recently forecast the global semiconductor market would expand by 12 percent in 2021. The seasoned analyst expects the sector to experience year-over-year growth despite coronavirus related economic contraction.

The chief executive also tempered his optimistic outlook with a projection that anticipates a 12 percent year-over-year market decline.

First, the Good News

Penn explained the industry’s reaction to COVID-19 heavily informs his positive 2021 prediction for the global semiconductor market.

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He noted that the sector’s value historically falls in tandem with declines in the global gross domestic product (GDP). However, the analyst stated the segment stayed strong during the initial onset and subsequent expansion of the health crisis. The founder’s observation follows positive assessments of the chip market performance from IC Insights and the Semiconductor Industry Association.

The electronic components segment resiliency is due in large part to the wave of digitalization that followed the coronavirus outbreak.

The work-from-home transitions, online business and entertainment services adoption, and e-commerce spending all spiked this year as organizations and individuals sought to halt the spread of the pandemic. Web-based businesses purchased large quantities of chipsets and memory modules to reinforce their digital infrastructures enough to handle the massive upswing in usage.

Penn anticipates the digitalization trend will push the integrated circuit (IC) market to $480 billion in value next year. After a slight 0.5 percent dip in the first quarter, the researcher expects the segment’s growth to last through Q3 2020.

Dark Clouds on the Horizon

The semiconductor market expert also contrasted his bright forecast with a much a cloudier outlook.

The Future Horizons founder said the intensification of the U.S.-China trade war might have a $30 billion negative impact on the component field. He also predicted a second round of coronavirus prompted self-quarantine mandates could take a $24 billion bite out of the segment. If both adverse outcomes happen next year, Penn estimates the global IC sector will fall by 12 percent year-over-year.

Unfortunately, the facts on the ground support the researcher’s analysis.

Hostilities between Washington and Beijing have undeniably increased recently, including new disputes regarding semiconductor technology. In addition, coronavirus cases in Europe and the United States have reportedly jumped by double-digits recently.

Ideally, the more optimistic of two scenarios Penn laid out will come to pass. Considering everything that has happened in 2020, the world is due for a year of tranquility and economic expansion.

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