In 2022, sensor (ASP) ushered in the largest increase in 20 years

According to the latest report from IC Insights, in the 60-year history of the integrated circuit industry, it is known for its cyclical behavior. Looking back to the mid-1970s, the integrated circuit market has not experienced more than three consecutive quarters of decline. Following a 9% decline in the IC market in 3Q22, assuming a decline in the IC market in 4Q22 and 1Q23, the market will mark a historic period from 3Q22 to 1Q23 IC market declines for 7th quarter since (Figure 1)

Figure 1: Three consecutive quarters of IC market decline cycles

From the fourth quarter of 2018 to the second quarter of 2019, the IC market has not experienced a third-quarter decline. In addition, the three-quarter decline in 2001 was the largest on record, with three double-digit declines resulting in a 33% full-year decline—the worst annual decline in IC market history.

Given that the IC industry has never experienced four consecutive quarters of IC market decline, expectations are high that the IC market will resume growth from the second quarter of 2023. While geopolitical issues have been an unpredictable "variable" in IC market growth in the near term, the second quarter of 2023 is currently expected to show a modest 3% growth. However, even with IC sales rebounding from 2Q23, the overall IC market is expected to decline by 6% next year.

From the fourth quarter of 2018 to the second quarter of 2019, the IC market has not experienced a third-quarter decline. In addition, the three-quarter decline in 2001 was the largest on record, with three double-digit declines resulting in a 33% full-year decline—the worst annual decline in IC market history.

Given that the IC industry has never experienced four consecutive quarters of IC market decline, expectations are high that the IC market will resume growth from the second quarter of 2023. While geopolitical issues have been an unpredictable "variable" in IC market growth in the near term, the second quarter of 2023 is currently expected to show a modest 3% growth. However, even with IC sales rebounding from 2Q23, the overall IC market is expected to decline by 6% next year.

However, IC Insights said semiconductor sensor sales are expected to continue to record double-digit percentage growth in 2022, driven by the popularity of "smart" embedded controls and higher selling prices due to tight market supply. However, weak global economic conditions and high inflation have slowed demand for sensor units in consumer electronics, PCs and mainstream smartphones since early summer.

Sensor unit shipments are expected to grow by just 1% in 2022, but will reach a record 30.8 billion units, compared to 30.4 billion in 2021. IC Insights forecasts that total sensor sales in the fourth quarter of 2022 will increase by 13% year-on-year, from $12.7 billion last year to $14.4 billion, a record high (Figure 2)

Tight supply and shortages of sensors for automotive systems, industrial equipment, and other embedded control applications have significantly boosted the average selling price (ASP) of these semiconductors. IC Insights expects total sensor ASPs in 2022 to be 11% higher than in 2021, the largest one-year percentage price increase in more than 20 years. Sales of two major sensor categories are expected to grow by double-digit percentages this year: +15% for acceleration/yaw sensors; +20% for magnetic field sensors (including electronic compass chips often found in navigation applications). Meanwhile, sales of pressure-sensing devices, including microphone chips, are expected to grow just 5% in 2022 due to restrictions on car production and a drop in smartphone shipments this year.

Pressure sensor sales are expected to rise to $4.8 billion this year, with shipments rising just 0.4% to 8.5 billion units. Revenue in the acceleration/yaw category, which includes inertial sensing for accelerometer and gyroscope designs, is expected to reach $5.5 billion in 2022, with unit shipments growing just under 0.5% to $7.1 billion this year. The IC Insights report also shows that magnetic field sensor sales will reach $3.30 in 2022, with shipments rising 1% to $12.7 billion.

Nearly three-quarters of annual semiconductor sensor sales are generated by products using microelectromechanical systems (MEMS) technology. MEMS-based devices currently account for 54% of total global sensor unit shipments. Sales of sensors containing MEMS technology are expected to grow 5% this year to a record $10.8 billion, while shipments of these devices are expected to grow 7% to an all-time annual peak of $16.7 billion in 2022.