Released August 03, 2023 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--One firm conclusion was reached in a webinar presented earlier this week by Industrial Info: The global semiconductor and automotive sectors are going strong. David Pickering, Industrial Info's vice president of research for the Industrial Manufacturing Industry, and his team of industry experts discussed spending activity for the two sectors, which although booming, is not without a few headwinds.
Semiconductors
Industrial Info is tracking about $205 billion in planned semiconductor projects in 2023, including $71 billion worth in North America and $97 billion worth in Asia. While not all of these projects will come to pass as planned, the numbers show the strength of the industry.
Different things are driving activity in the semiconductor sector. During the onset of the COVID-19 pandemic, much of the world turned online for its work, education and socializing, driving the need for more data centers and increasing the demand for semiconductors. As artificial intelligence (AI) becomes more prominent, data centers using AI will require higher-level chips. Revamps of existing data centers with new semiconductors to better accommodate AI technology could be a massive driver in demand for chips in the coming years.
Also during the pandemic, supply-chain issues emerged as factories closed or reduced their output. The need for reshoring semiconductor manufacturing closer to home became apparent, particularly in North America. In the U.S., the CHIPS Act, passed last year, creates large incentives for semiconductor manufacturing, which is helping to drive billions of dollars' worth of activity. Reshoring, or moving manufacturing to the end-product demand centers, has rapidly gained ground in the U.S., where 23 of the largest semiconductor projects account for $332 billion in active spending.
Other trends in the sector include a movement toward environmental, social and governance (ESG) initiatives. As chip sizes shrink, energy requirements increase dramatically. To help ease emissions from power use, companies are looking at ways to reduce power consumption or use renewable energy when possible. In addition, alternative chemicals to reduce environmental impact and gas-abatement technologies are being studied.
Automotive
While the automotive sector has relied on semiconductors for years, the increasing rollout of electric vehicles (EVs), which use more chips than standard vehicles, has made the two sectors even more intertwined.
The advent of EVs is helping drive spending in the automotive sector as automakers establish grassroot plants, revamp existing ones and maintain a furious pace to keep up with the demand for key components, particularly batteries. On a 12-month rolling basis, there are more than $175 billion worth of active automotive projects in the works. There is particularly strong spending in the Asian and North American markets, which account for more than $60 billion worth of automotive projects planned for 2023.
In 2022, 10 million EVs were sold throughout the world. This is expected to increase to 14 million units this year. However, headwinds to the EV revolution exist. The sector is racing to keep up with battery supplies; in North America alone, there is $105 billion worth of active EV battery projects, concentrated mostly in the Great Lakes and Southeast market regions. In addition, the processing of battery metals is environmentally problematic.
Consumer enthusiasm for EVs remains uncertain. Cost-parity between EVs and vehicles with internal combustion engines is probably still a long way off. Consumers remain concerned about the driving range of EVs and a lack of charging infrastructure in many areas. As these concerns are mitigated, demand for both EVs and their associated semiconductors will increase.
Conclusion
Throughout the world, both the automotive and semiconductor sectors are going strong, and activity is unlikely to decrease in the near term. In North America, end-demand for both semiconductors and automobiles remains healthy, and time will tell if supply can keep pace with increasing consumer demand.
If you missed the webinar or would like to listen to it again, the presentation will soon be available in IIR's On-Demand Webinar Library.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
Semiconductors
Industrial Info is tracking about $205 billion in planned semiconductor projects in 2023, including $71 billion worth in North America and $97 billion worth in Asia. While not all of these projects will come to pass as planned, the numbers show the strength of the industry.
Different things are driving activity in the semiconductor sector. During the onset of the COVID-19 pandemic, much of the world turned online for its work, education and socializing, driving the need for more data centers and increasing the demand for semiconductors. As artificial intelligence (AI) becomes more prominent, data centers using AI will require higher-level chips. Revamps of existing data centers with new semiconductors to better accommodate AI technology could be a massive driver in demand for chips in the coming years.
Also during the pandemic, supply-chain issues emerged as factories closed or reduced their output. The need for reshoring semiconductor manufacturing closer to home became apparent, particularly in North America. In the U.S., the CHIPS Act, passed last year, creates large incentives for semiconductor manufacturing, which is helping to drive billions of dollars' worth of activity. Reshoring, or moving manufacturing to the end-product demand centers, has rapidly gained ground in the U.S., where 23 of the largest semiconductor projects account for $332 billion in active spending.
Other trends in the sector include a movement toward environmental, social and governance (ESG) initiatives. As chip sizes shrink, energy requirements increase dramatically. To help ease emissions from power use, companies are looking at ways to reduce power consumption or use renewable energy when possible. In addition, alternative chemicals to reduce environmental impact and gas-abatement technologies are being studied.
Automotive
While the automotive sector has relied on semiconductors for years, the increasing rollout of electric vehicles (EVs), which use more chips than standard vehicles, has made the two sectors even more intertwined.
The advent of EVs is helping drive spending in the automotive sector as automakers establish grassroot plants, revamp existing ones and maintain a furious pace to keep up with the demand for key components, particularly batteries. On a 12-month rolling basis, there are more than $175 billion worth of active automotive projects in the works. There is particularly strong spending in the Asian and North American markets, which account for more than $60 billion worth of automotive projects planned for 2023.
In 2022, 10 million EVs were sold throughout the world. This is expected to increase to 14 million units this year. However, headwinds to the EV revolution exist. The sector is racing to keep up with battery supplies; in North America alone, there is $105 billion worth of active EV battery projects, concentrated mostly in the Great Lakes and Southeast market regions. In addition, the processing of battery metals is environmentally problematic.
Consumer enthusiasm for EVs remains uncertain. Cost-parity between EVs and vehicles with internal combustion engines is probably still a long way off. Consumers remain concerned about the driving range of EVs and a lack of charging infrastructure in many areas. As these concerns are mitigated, demand for both EVs and their associated semiconductors will increase.
Conclusion
Throughout the world, both the automotive and semiconductor sectors are going strong, and activity is unlikely to decrease in the near term. In North America, end-demand for both semiconductors and automobiles remains healthy, and time will tell if supply can keep pace with increasing consumer demand.
If you missed the webinar or would like to listen to it again, the presentation will soon be available in IIR's On-Demand Webinar Library.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
