The ongoing semiconductor shortage is forecast to last through 2022, with the potential for capacity improvement to take place later in the year.
According to industry research firm IDC, tight semiconductor supply is expected to continue through the first half of 2022 as new COVID-19 surges slowing manufacturing, with particular concern being placed on labour shortages.
While some capacity improvement is predicted to take place in the latter half of the year, the market is anticipated to accelerate from 2023.
"The shortages that began early last year have given way to sustainable average selling price (ASP) increases for most semiconductor suppliers this year, except in memory," said Mario Morales, group vice president, Enabling Technologies and Semiconductors at IDC.
"Demand remains robust across most system markets but inventory levels by the middle of the year and slower economic activity in the second half could be what ultimately eases the constraints.
"OSAT [outsourced semiconductor assembly and test] and material shortages are the new challenge for the semiconductor supply chain, which will require investment over the next couple of years, especially as the ongoing trend toward systems in package accelerates."
One key supply constraint in the market at the moment, IDC claimed, is in mature process nodes, which are still used in LCD drivers, power management ICs [integrated circuit], auto ICs and microcontrollers.
IDC estimates 67 per cent of semiconductors are manufactured at these nodes and are being sold at lower ASPs compared to leading edge process nodes.
However, while leading edge process nodes make up 15 per cent of semiconductor wafer volume, revenue from this semiconductor group consists of 44 per cent of the total, according to IDC.
As a result, this is where the semiconductor market is focusing its capital, rather than the “limited investment” in mature process technology manufacturing.
Another key factor in the market is the continued growth of fabless semiconductor revenues and the continued growth of foundry capacity in the Asia Pacific region, the research firm claimed.
"IDC forecasts fabless semiconductor revenues will grow from 41 per cent of the market in 2020 to 49 per cent in 2025, highlighting the sustainable growth of the foundry market," said Rudy Torrijos, research manager on IDC's Enabling Technologies and Semiconductor team.
"Foundry capacity will continue to grow in Asia Pacific. By 2025, South Korea and China will increase their wafer manufacturing share to 19 per cent and 15 per cent, from 16 per cent and 12 per cent respectively."
Meanwhile, Taiwan is expected to maintain steady revenue share, representing 68 per cent of the foundry market in 2025, up from 67 per cent in 2020. This is mostly attributed to the success of TSMC and other Taiwanese foundry service businesses.