McKinsey: 3 Key Sectors Fueling Semiconductor Growth
McKinsey recently predicted in an analysis report that if the average price rises by about 2% per year, and the current fluctuations return to the balance of supply and demand, a trillion-dollar industry will be formed in ten years.
Amid megatrends including remote work, the growth of artificial intelligence, and soaring demand for electric vehicles, manufacturers and designers should now assess and ensure they are in the best position to reap the rewards.
Within this trillion-dollar industry, by market segment, roughly 70% of the growth is expected to be driven by three industries: automotive, computing/data storage, and wireless.
The segment with the strongest growth is likely to be automotive, where we could see a three-fold increase in demand driven by applications such as autonomous driving and electric vehicles. Semiconductor components could cost around $4,000 by 2030 for a Society of Automotive Engineers (SAE) Tier 4 vehicle equipped with an electric drivetrain, compared to $500 for a SAE Tier 1 vehicle powered by an internal combustion engine. By 2021, the automotive industry will account for only 8% of semiconductor demand, and by the end of the decade, the automotive industry may account for 13% to 15% of demand. On this basis, the division will be responsible for up to 20% of the industry expansion over the next few years.
The 4% to 6% growth in the computing and data storage market is likely due to demand for servers that support applications such as artificial intelligence and cloud computing, according to the analysis. Meanwhile, in wireless, smartphones are likely to account for the bulk of the expansion, as emerging markets shift from the low-end to the mid-range, supported by the growth of 5G.
The outlook for the semiconductor industry looks bright, despite potential short-term volatility due to a supply-demand mismatch and changes in the global economic and geopolitical outlook. As long-term growth continues, industry leaders will be tasked with strategically focusing on R&D, factories, and procurement, and applying modeling experience to unlock areas of opportunity.
