Semiconductor boom might turn to glut in 2023, says IDC

IDC is spotting signs that the current semiconductor market boom could turn to a glut in 2023. “The industry will see normalization and balance by the middle of 2022, with a potential for overcapacity in 2023 as larger-scale capacity expansions begin to come online towards the end of 2022,” the analyst firm writes in a note. IDC expects the chip market to grow by 17.3 percent this year, versus 10.8 percent in 2020.

The report states that dedicated foundries have been allocated for the rest of the year, with capacity utilization at nearly 100 percent. Front-end capacity remains tight but fabless suppliers are getting the production they need from their foundry partner. Front-end manufacturing is starting to meet demand in Q3. However, larger issues and shortages will remain in back-end manufacturing and materials. Shortages in automotive will be mitigated by year-end.

Costs are predicted to rise. Semiconductor wafer prices increased in the first half of this year and IDC expects increases to continue for the rest of 2021 due to material costs and opportunity costs in mature process technologies.