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Turning the Page on 2022, The Outlook on Semiconductor Market for 2023

Turning the Page on 2022, The Outlook on Semiconductor Market for 2023

20230217-160315.jpgThroughout 2022, the semiconductor industry went through a period of fluctuating fortunes, witnessing a promising start to the year with record-high sales and a downturn in the later part of the year. According to preliminary results by Gartner, Inc, the global semiconductor revenue increased 1.1% in 2022 to total $601.7 billion, up from $595 billion in 2021. [1] This boom was largely due to the acceleration of the impact of digital on lives and businesses, namely consumer electronics and the demand for electric vehicles (EV).

Gartner has released a global semiconductor revenue forecast in 2023 to total $596 billion in 2023, down from the previous forecast of US$623 billion. World Semiconductor Trade Statistics (WSTS) also forecasted a similar level of market shrinkage. “The global semiconductor market is forecast to shrink 4% in 2023 to US$557 billion, the first annual contraction since 2019.”. [2]

Consumer Electronics Facing Low Demand

Consumer electronics

2022 shipments (units) (E)

Growth rate compared to 2021


1.27   billion



305.3   million



156.8   million


Shipments of global consumer electronics in 2022 (Source: IDC) [3]

Worldwide smartphone shipments declined 18.3% year over year to 300.3 million units in the fourth quarter of 2022 (4Q22), according to preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker. The drop marks the largest-ever decline in a single quarter and contributed to a steep 11.3% decline for the year.

Slowing demand for consumer electronics, such as smartphones, PCs, and tablets, will contribute to a decline in the semiconductor market in 2023. This is largely due to a drop in disposable income, inflation, rising interest rates, and a shift in spending priorities to areas such as travel, leisure, and entertainment.

Talent crunch

Semiconductors used in PCs, smartphones, and cryptocurrency mining are all beginning to fall as a result of weak consumer demand, falling stock markets and slowing economies. However, demand for semiconductors in the automotive industry, factory equipment, and appliances remains high.

Due to the complexities of the division of labour in global semiconductor supply chains, there are simply not enough engineers to fill job vacancies in the semiconductor industry globally, at least in the short term. It is already the case in Taiwan, which has the largest supply of semiconductor engineers, producing 60% of the world's chips. [4] While countries and companies have committed capital and resources to increase domestic production, talent shortages are unlikely to be resolved anytime soon, and the effectiveness of the investments may suffer as a result. The talent shortage will be even more severe in countries that are rebuilding or starting their semiconductor industry ecosystem from scratch. The massive investments would be futile if there was insufficient talent pool.

Automotive Chips Powering Semiconductor Growth in 2023

From Detroit to Shanghai, automakers and government policymakers have embraced the promise of EVs to provide cleaner, safer transportation. European countries and California have set a deadline for ending combustion passenger vehicle sales by 2035. [5] As a result, automotive semiconductors will become the main driving force behind semiconductor growth in 2023.

Let us look at some numbers in 2022. According to Business Insider, 7.8 million electric vehicles were sold worldwide in 2022, an increase of 68% over 2021. This marks the first time that electric vehicles have achieved 10% of the global automotive market. This market is expected to grow from USD 42 billion in 2021 to USD 125 billion in 2030.[6]

A CAGR of 24% is forecast for automotive chips with advanced processes in the next ten years, as advanced functions such as self-driving, ADAS, and real-time road monitoring depend on solid computing power.

It is not all good news, though. There will continue to be shortages and disruptions in some legacy nodes throughout the year, particularly those in the automotive industry. According to leaders of major automakers including General Motors, Ford, and Toyota, the automotive sector might not recover until 2024 or later.

Quality Assurance is Still Big in 2023

As the transition to electric vehicles accelerates next year, leading auto groups and chip manufacturers have warned about the impending semiconductor shortages. The CEO of US-based chipmaker Onsemi, Hassane El-Khoury, said that silicon carbide chips (SiC), advanced power semiconductors widely used in electric cars, have already sold out until the end of 2023. [8]

An ongoing shortage of chips is going to provide a perfect terrain for unscrupulous companies hoping to cash in on the unfilled market demand. Though this can be tackled by turning to third-party testing facilities to ensure the authenticity of components, the process usually requires investments of both money and time. Hence, partnering trusted distributors with a stringent quality control system in place is crucial to avoid losses in time and profit.

The semiconductor industry will face many challenges in 2023 with a forecasted market shrinkage. The silver lining amidst these all would be the EV market's massive growth, the impact of the chip shortage that comes with growth will however ripple through global supply chains for years to come. It is imperative that manufacturers address the current impacts while incorporating chip shortages into their long-term plans. For success in 2023, automakers are likely to adopt a hybrid approach to supply management and procurement. They will work with EMS companies and develop and nurture relationships directly with independent distributors.


[1] Gartner says worldwide semiconductor revenue grew on percent in 2022:

[2] Global semiconductor revenue to shrink by 4 in 2023:,to%20total%20US%24596%20billion.

[3] Semiconductor trends 2023:

[4] Taiwan multinationals eye new markets amid supply chain fracturing and talent shortage: ttps://

[5] Electrc vehicles confront leap mass market:

[6] Electric vehicles accounted global auto sales could quadruple 2030:

[7] Semiconductor trends 2023

[8] Carmakers to suffer chip shortages until at least end of 2023:

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