The semiconductor market continues to experience uneven shortages and tight supply as COVID-19 continues to impact the global economy for its third year. The overarching theme for semiconductors in 2021 is the shortage of mature process technologies. According to IDC, the tight semiconductor supply will continue into the first half of 2022 as the industry builds up inventories to normal levels. A surge in new COVID-19 diagnoses has slowed manufacturing, but the real worry is labor shortages.

The automotive market continues to suffer as chips move upstream, constraining auto manufacturing and pushing OEMs to use their semiconductor supplies for higher-value vehicles, which boosts the average selling price of vehicles in 2021.

"Automotive semiconductors will continue to be a limiting constraint on the automotive market in the first half of 2022, and supply will gradually ramp up in the second half of the year, absent any unpredictable shutdowns or semiconductor manufacturing issues," said Nina Turner, research manager with IDC's semiconductor research team. Improvement. Combined with the time it takes to build vehicles, that means the auto market will start to improve in late 2022 and 2023 if there are no other supply chain shocks.”

One of the key supply constraints in the semiconductor market is in mature process technology. While the automotive semiconductor market relies heavily on these older process technologies, many other semiconductors are manufactured based on these mature 40 and above nanometer process technologies, such as LCD drivers, power management ICs, power supplies, automotive ICs and microcontrollers.

According to IDC's "Semiconductor Manufacturing and Foundry Market Assessment" and the upcoming "Semiconductor Manufacturing and Foundry Services Market and Technology Assessment" research, IDC estimates that 67% of semiconductors in 2021 will be manufactured using mature process technologies. Taking advantage of heavily depreciated assets, these semiconductors are sold at lower average selling prices (ASPs) compared to advanced processes at 16nm or below.

According to IDC, although advanced process only accounts for 15% of semiconductor wafer production, revenue from advanced process semiconductors accounts for 44% of total revenue. This is also the reason why capital expenditures in the foundry market are concentrated on advanced processes and investment in mature process technologies is limited. Another key finding outlined in the new report is the continued growth of Fabless revenue and the continued growth of foundry capacity in the Asia Pacific region.

"IDC forecasts that the fabless market will grow from 41% in 2020 to 49% in 2025, underscoring the sustainable growth of the foundry market," said Rudy Torrijos, research manager for IDC's semiconductor research team. Manufacturing capacity will continue to grow. By 2025, South Korea and China's wafer manufacturing market share will increase from 16% and 12% to 19% and 15%, respectively. Although the capacity of these countries has grown, the share of revenue in these countries will increase. On the one hand, Taiwan continues to maintain its stable position, accounting for 68% of the foundry market in 2025, slightly higher than 67% in 2020, mainly due to the investment and success of TSMC and other Taiwanese foundry service providers. According to the forecast, from 2020 From 2025 to 2025, the five-year compound annual growth rate (CAGR) of the entire foundry market is expected to reach 12%.”

While new fabs and investment announcements are a welcome sign for semiconductor manufacturing capacity over the next five years, this new capacity won't come online in 2022. Companies are slowly increasing the capacity they can add, but capacity increases will be incremental this year, accelerating in 2023 and beyond.

Mario Morales, president of IDC's Semiconductor Research Group, said: "The shortages that began early last year have driven average selling prices for most semiconductor suppliers this year, with the exception of memory. Demand remains strong in most systems markets, but inventory levels and The slowdown in economic activity in the second half of the year may be the cause of the eventual easing of restrictions. OSATs and material shortages are new challenges for the semiconductor supply chain, which will require investment over the next few years, especially as ongoing trends in packaging systems accelerate. "