After a weak 2019, the semiconductor industry should return to growth next year. According to a new study carried out by the accounting and consultancy company PricewaterhouseCoopers (PwC), this is down to the increasing number of AI applications, particularly in the automotive industry.
This year, the global chip industry has been suffering from a cyclical fall in revenue. But things should start to get much better from 2020. This is the prediction in the study entitled “Opportunities for the global semiconductor market,” which was carried out by PricewaterhouseCoopers (PwC). In 2022, the global market for electronic components will be worth $575 billion. If the record turnover of €481 billion in 2018 is used as a basis, this equates to an average annual growth (CAGR) of 4.6 percent.
The PwC study predicts that up until 2022 the highest average growth will be in the Asia-Pacific region (4.8 percent on average (CAGR)). The figure for the U.S. market is 4.3 percent. For Europe, it is just 3.5 percent.
Large increases in demand are expected not only in the automotive sector but also in industrial production, the healthcare sector and the security sector. And in all segments, there is a link between the chip boom and the increasing prevalence of AI solutions.
Europe – the automotive center
In Europe, the automotive industry is becoming the main sales market – ahead of data processing. After all, electric and hybrid vehicles require around twice as many semiconductors as conventional vehicles.
Global sales of chips to provide AI support for alternative drivetrains, infotainment, ADAS driver assistance systems, vehicle safety and other automotive applications alone will reach almost $68 billion by 2022 – even though the development of AI is still in its early days and its immense potential in autonomous vehicles is yet to be fully exploited.
Germany, as an automotive center, can benefit from this development. As the PwC study points out, sales of semiconductors for automotive applications are growing the fastest, with a CAGR of 11.9 percent. And the European semiconductor sector is in a strong position when it comes to chips for alternative drive systems and power semiconductors. With semiconductors for AI solutions in autonomous vehicles for example, there is however a lot of catching up to do. The same applies to AI chips for the consumer electronics market. The market potential here is even greater than that of the automotive sector.
“Beacons” for the European chip industry
The analysts at PwC are therefore calling on politicians to do even more to encourage the development of AI in general and the European semiconductor sector more specifically. They also regard globally significant “beacon companies” as extremely important for the European economy. Europe needs to quickly put in place an ecosystem of application developers for artificial intelligence, AI chip manufacturers and all other sector players – one that is based on collaboration and involves Asian and U.S. market players too.
Given the ever greater trading rivalries, European companies should once again take greater control over the hardware in the vehicles, machines, communications applications and consumer electronics products that they produce. The discussion regarding Huawei in the context of the development of 5G mobile communications networks shows how important it is to rely on domestic players when it comes to sensitive technological developments.
PwC study “Opportunities for the global semiconductor market”.