Quarterly Trends Report

Q4 2021: semiconductors in the limelight

  • Public Equity
  • TMT
  • North America

Semiconductors are small but critical components in thousands of electronic products we’ve come to rely on and knowledge of their existence let alone their value to modern society has never been greater.

The technological leaps we’ve seen during COVID-19 have boosted demand for them, including the rollout and expansion of 5G, the mounting need for data and bandwidth, the Internet of Things, and cloud computing. “Add to that Industry 4.0, which is the connected smart factory next level of integration, and you can really understand what’s driving demand,” a former SVP at GlobalFoundries said in a Forum Interview. 

Global semiconductor growth is expected to soar from 7% in 2020 to 26% in 2021, the biggest step-up since a 32% increase in 2010, according to World Semiconductor Trade Statistics.7 However, it’s no secret that the industry has been struggling to maintain consistent supply due to COVID-19’s impact on supply chains. That’s why the foundry market is growing at a faster rate than the overall industry. 

Competition is intensifying and government funding is playing a pivotal role in the industry’s development plus the expansion plans of many players. Representing a global manufacturing share of 12% today compared with 37% in 1990, the US is working hard to rebuild capacity. The Chips for America Act, worth over USD 50bn but not yet enacted, aims to position the US at the centre of industry growth as other countries, particularly China, also invest ambitiously in incentives. As our expert noted, even though China has struggled to develop leading-edge manufacturing capabilities, where it goes next is “a little bit of a wildcard that could disrupt the overall world market”. Congress is also considering rolling out the Fabs Act to establish a semiconductor investment tax credit.8 

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