The microchip industry is booming. How big could it be by 2030?

What’s driving demand for chips ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ 

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A surging semiconductor sector In the news • Supply chain choke points. To counter the global chip shortage, chipmakers have sought to increase production. But a lack of chips is choking off the supply chain itself. For example, the CEO of one large supplier of chip-making equipment has said that his company can’t find enough chips to make its tools, resulting in long lead times. The biggest chip shortages aren’t in cutting-edge semiconductors but in the less sophisticated ones—those used in industrial equipment and cars. [Reuters] • New rules of car buying. People looking to buy a new car should expect to pay premium prices or be prepared to wait until next year. In 2021, carmakers produced about two million fewer cars than they did in 2019. Since their supply of chips is limited, auto manufacturers can’t build enough cars to satisfy consumer demand. In addition to making fewer cars, many automakers are assembling cars without advanced features like automatic parking or climate-control functions for rear seats. [MarketWatch] Semiconductor markets have boomed, with sales growing by more than 20% to about $600 billion in 2021, and the industry’s aggregate annual growth could average from 6 to 8% a year up to 2030. On McKinsey.com • Clamoring for chips. Ongoing semiconductor shortages have highlighted how tiny silicon wafers are critical to the production of everything from cars to computers. The chip industry is booming, following a wave of technological advancements, consumer demand for innovative products, and the rapid digitization of businesses. By 2030, McKinsey estimates that the global semiconductor market could reach $1 trillion. • What’s ‘driving’ demand. Which semiconductor segment will grow fastest? Chips for the automotive industry are likely to see the most rapid growth over the next decade, according to McKinsey analysis. Autonomous driving, e-mobility, and other advanced applications could contribute to a tripling of demand for chips used in cars. This segment could make up as much as 20% of industry growth from now until 2030. Read the full article for an analysis of future semiconductor markets and to learn which three industries will drive growth over the next decade. — Edited by Belinda Yu    See the future of semiconductors Was this forwarded to you? Sign up here. Or send us feedback — we’d love to hear from you. Follow our thinking This email contains information about McKinsey’s research, insights, services, or events. By opening our emails or clicking on links, you agree to our use of cookies and web tracking technology. For more information on how we use and protect your information, please review our privacy policy. You received this email because you subscribed to the On Point newsletter. Manage subscriptions | Unsubscribe Copyright © 2022 | McKinsey & Company, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007