The semiconductor shortage is expected to last until early 2023, Deloitte says in a new report released Wednesday. By the end of 2022, customers will have to wait another 10 to 20 weeks to obtain various types of chips, the consultancy predicts.
Although the shortage will continue, it will be less severe, says Deloitte in its 2022 Technology, Media and Telecommunications (TMT) Predictions report. The shortage is also driving new investment in the sector as demand continues to grow. Deloitte predicts that venture capital firms around the world will invest more than $ 6 billion in semiconductor companies by 2022. This is three times more than annual semiconductor venture capital investments between 2000 and 2016.
The current shortage will not affect the industry uniformly, Deloitte notes. Chips made with the most advanced techniques (3, 5 and 7 nanometers) will remain in short supply, are in high demand and are the most difficult to manufacture. Deloitte predicts the shortage will last for 24 months before subsiding, a period similar to the chip shortage of 2008-2009.
The prospect attracts venture capitalists
Despite the challenges, global semiconductor sales have increased and will continue to grow. They rose 20% in 2021 and are expected to grow another 9% to reach $ 574 billion in 2022, according to the Semiconductor Industry Association. Demand for chips, both for devices and data centers, peaked in 2020 and 2021, especially due to the pandemic. In 2022, demand is expected to remain well above long-term trends.
As a result, venture capitalists will invest heavily in semiconductor companies in 2022, according to Deloitte. The planned investment of $ 6 billion in the industry may seem like a drop in the bucket: venture capitalists are expected to invest more than $ 300 billion in 2022. However, this is a significant amount when compared to investments. in semiconductors in the last 20 years. This year is still abnormal, as venture capital firms have invested a “remarkable” amount of $ 8 billion, according to Deloitte.
In addition to strong demand for new chips, Deloitte says investments are driven by demand for new chip architectures, increased public investment, increased factory capacity, and relatively high technology ratings.
China and RISC-V, big winners
Most of the venture capital investment will go to companies without factories that could benefit from growing global manufacturing capacity. According to Deloitte, no fewer than 29 new factories have started or will start to be built in 2021 and 2022, in China and Taiwan, America, Europe, the Middle East and Africa, Japan and Korea. As a result, global production capacity is expected to increase by 36% between 2020 and the end of 2022.
Although investments in the industry are happening everywhere, current trends suggest that much of the money from venture capital will go to China. Investments in Chinese semiconductor companies tripled between 2019 and 2020, Deloitte notes. In the first half of 2021 alone, venture capital funds invested $ 3.85 billion in Chinese chip companies.
As investments in the industry increase, Deloitte also predicts that RISC-V architectures will gain popularity. The firm expects the RISC-V market to double between 2021 and 2022, and then double again in 2023. RISC-V is an open source instruction set for chip design that offers several benefits compared to chip architectures. proprietary instruction sets (ISAs). For example, savings in license fees are an advantage for startups; the absence of sanctions on the RISC-V benefits some companies, especially those based in China. Additionally, RISC-V designs are easier to modify than traditional ISAs and are compatible with a wide variety of applications.
According to Deloitte, RISC-V revenue is expected to reach nearly $ 800 million in 2023, down from less than $ 400 million in 2021. It is expected to approach $ 1 billion by 2024.
GlobalFoundries also anticipates shortages
In its first conference call with analysts as a public company, GlobalFoundries told Wall Street late Tuesday that it would continue to face challenges in meeting the demands of wafer companies to produce chips in 2022.
“We are still facing a shortage of what we can offer to our major customers in 2022 and we are looking at how we could produce more, how to balance and allocate the right things,” says CEO Thomas Caulfield. “So we don’t see anything in 2022 that could suggest that the emotion you described is changing,” he adds, in response to a question from a stock analyst who asked if strong demand for fleas could decline in the future.
GlobalFoundries, formerly the chip arm of Advanced Micro Devices, was sold in 2009 to Abu Dhabi’s sovereign wealth fund, Mubadala. It went public on October 28 as part of an initial public offering led by Morgan Stanley, Citigroup, BankofAmerica, and JP Morgan Chase, which raised $ 1.5 billion for GlobalFoundries and $ 1 billion for Mubadala. Mubadala still owns 89% of the shares.
GlobalFoundries makes chips for AMD and many other major chip designers around the world, including Qualcomm, NXP Semiconductors, Qorvo, Skyworks Solutions, and even Samsung Electronics, which has its own chip factories.
The company has gone public at a time when a global chip crisis is unfolding that has rocked companies like Apple and Amazon along with a resurgence in demand for chips in all kinds of products.
Run after request
CFO David Reeder told analysts during the conference call that the company faces “pretty strong demand” while “capacity is limited.” “We work diligently every day to install new tools and expand factories so that we can produce more for our customers. “
CEO Thomas Caulfield adds that the company plans to increase its wafer production capacity by 12% year-over-year during the quarter. One of its factories, located in Dresden, Germany, will increase its capacity by 16%.
For the third quarter ending in September, GlobalFoundries tonight announced revenue that rose 56% to $ 1.7 billion, for a net profit, excluding costs, of 7 cents a share.
Analysts were forecasting sales of $ 1.7 billion and break-even earnings.
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