- It will exhibit a CAGR of 4.7 per cent during the forecast period
- One of the biggest challenges facing the semiconductor market growth is the on-going trade war between the United States and China
The global semiconductor market size is projected to reach $726.73 billion by 2027 as per a report by Fortune Business Insights. It will exhibit a CAGR of 4.7 per cent during the forecast period.
As per the report, greater affordability and improving accessibility to mobile phone technology have led to wider smartphone adoption over the past few years. According to the American think tank, Pew Research Center, approximately 2.5 billion people worldwide own at least one smartphone.
Semiconductors are the heart of smartphones and other consumer electronics, embedded into microprocessors and transistors that power all electronic devices. Most of the chips are made from silicon.
On-going trade war between the United States and China
The report added,”One of the biggest challenges facing the semiconductor market growth is the on-going trade war between the United States and China. The Trump administration announced in April 2018 that it will impose tariffs amounting to $50 billion that had a direct bearing on this industry as prices of components and equipment imported from China rose dramatically.”
As per this announcement, chips produced in China will be subjected to 25 per cent tariff, even if the components had been made in the US. This led to a decline in sales in the US. For example, the Semiconductor Industry Association (SIA) reported a 28.8 per cent contraction in their sales, which fell to USD 6.29 billion in August 2019.
Asia Pacific is expected to dominate the semiconductor market share
The report said that Asia Pacific is expected to dominate the semiconductor market share during the forecast period. This is due rise in demand for advanced electronics and components across the region. The region leads also due to expanding chip manufacturing operations in China, which holds a significant share in the global industry.
As per the report, “Heavy investments in R&D are anticipated to propel the market in North America. The SIA estimates that between 1999 and 2019, spending on semiconductors in the US grew by 6.6 per cent annually. In Europe, on the other hand, the market will be primarily driven by the widespread adoption of these materials across the region’s robust automotive industry.”
