After the record-breaking sales of semiconductors in 2021, the sales are expected to be 11% higher at $680.6 billion this year

Analyst house IC Insights predicted that chip sales would break another in 2020. Following the billion-dollar sales of semiconductors in 2021, this year is expected to follow suit. In addition to semiconductors, optoelectronics (OSDs) sales, which include sensors, actuators, and other discrete components, are also anticipated to meet the $115 billion benchmark.

This is also eleven percent higher than the previous year. That said, the percentage rate of increase is lesser than 2021 when the sales increased by 25%.

What’s causing the spike?

The drastic increase in semiconductor sales is primarily due to the growing demands for electronics, driven by the global pandemic. Since the reliance on computers and electronics saw a rise, the highly fluctuating semiconductor market capitalized on these increasing needs.

In addition, the need for graphic processing units also saw a rise during the COVID-19 pandemic, as individuals adjusted to the work-from-home structure and required additional modes of entertainment during the lockdown periods.

What’s the impact?

Essentially, the record-breaking sales came at a cost. Now, there’s a significant shortage of GPUs, as crypto minders and scalpers are investing in boards to sell them at a significantly higher price point. However, Nvidia and AMD anticipate the GPU supply shortage to recover during the second half of 2022.

Unfortunately, the experts at Deloitte believe that the shortage of chips will extend to 2023, but its impact will be less. It is also predicted that the demand for the chips will be deduced by AIs, cloud and data centers, healthcare, and automotive applications.

Similarly, economically-priced chips, including power management ICs, integral for electric cars, display drivers, USB-C controllers, are also in a shortage. However, new manufacturers are entering the market to even out the supply.

DRAM suppliers also experienced a shortage in the last year. However, the introduction of new facilities aims to bridge the gap in the second half of this year. However, the unpredictable nature of the pandemic can halter the progress made in the industry.

To deal with the shortage, the government and several trailblazing organizations, including Intel, TSMC, Globalfoundries, and Samsung, are funding semiconductor chip manufacturers. In addition, chipmakers have also invested in multi-year chip supply deals to meet the high demand.