When short-term wafer fab constraints are addressed and the pandemic has passed its peak, wireless IoT chip sales are likely to remain robust.
The International Monetary Fund (IMF) estimates that the global economy shrunk by 4.4 percent in 2020 due to the Covid-19 pandemic. According to the organization, the decline was the worst since the Great Depression of the 1930s.
Yet despite the overall drop, silicon has managed to buck the trend. A February 2021 report from Semiconductor Industry Association (SIA) indicates that global chip sales ramped up during 2020. Based on World Semiconductor Trade Statistics (WSTS) data, the SIA report shows sales were $439 billion for the year, an increase of 6.5 percent compared to the 2019 total of $412.3 billion.
Wireless surges forward
As vaccines roll out in the first quarter of 2021 and the global economy starts its slow recovery, the chip industry continues to leap ahead. The latest figures from SIA show sales totaled $123.1 billion during the first quarter of 2021, increasing 3.6 percent over the previous quarter and 17.8 percent more than the corresponding period in 2020.
Key findings from Global semiconductor industry outlook, a joint report by consultant, KPMG International, and trade body, the Global Semiconductor Alliance (GSA), suggest wireless communications (including 5G) and the IoT are the most valuable application areas driving semiconductor revenue.
5G has boomed on the back of consumers demanding greater high-speed wireless bandwidth so they can operate remotely. The roll-out of 5G infrastructure—which started before Covid-19 but has since accelerated—also brings increased support for new wireless IoT use cases based on powerful wireless sensors and software.
Demand outstrips supply
But while the numbers look rosy, there are some headwinds in the form of manufacturing constraints at the wafer fabs. The extreme demand spike caused by consumers and industries ramping up demand just as the pandemic is getting under control has used up fab capacity. As a result, chips are likely to be in short supply for the foreseeable future.
At Nordic Semiconductor, we recognized in the company’s Q1 2021 financial report that wafer supplies could limit capacity this year.
Taiwan Semiconductor Manufacturing Co. (TSMC), a supplier of components to Nordic and many other fabless chip vendors, is investing heavily. According to The Wall Street Journal, the chip maker plans a capital raise up to $28 billion during 2021, at least a 47 percent year-over-year increase. It plans to invest up to $100 billion in new capacity over the next three years.
Nordic thrives in the ‘new normal’
Nordic technology has enabled numerous solutions in direct response to the pandemic, among them:
- Wirelessly connected, contactless, and remote health devices such as CWD Innovations’ SmartTemp+ and Warmie’s wireless temperature sensor.
- Bluetooth LE proximity-monitoring wearable solutions like the Coolpad Bubble for contact tracing and social distancing applications.
- Ellume’s Covid-19 Home Test, which enables consumers to check for infection at home quickly.
As the producers of the critical components of in-demand technology products, many semiconductor companies are not only surviving the uncertainty brought by the pandemic, but they’re also thriving in the ‘new normal’ that the world is now entering.
The result of a long-term strategy