Global semiconductor revenue is expected to grow 7.4 percent in 2022, down from 13.6 percent in the previous quarter and well below the 26.3 percent forecast for 2021, according to Gartner's latest forecast.

While the chip shortage is easing, the global semiconductor market is entering a period of weakness that will continue through the end of 2023, when semiconductor revenues are expected to decline by 2.5 percent," said Richard Gordon, vice president of Gartner's research practice. Semiconductor end markets have weakened, especially those affected by consumer spending. Rising inflation, taxes and interest rates combined with higher energy and fuel costs are putting pressure on consumers' disposable incomes, affecting their spending on electronics such as personal computers and smartphones."

As economic conditions are expected to continue to deteriorate throughout this year, total global semiconductor revenues are expected to be $639.2 billion in 2022, a decrease of $36.7 billion from the previous quarter's forecast (see Table 1). Both demand and prices for memory have loosened, especially in consumer-related areas such as personal computers and smartphones, slowing growth even further.

Following growth in 2020 and 2021, PC shipments will decline by 13.1% in 2022. Semiconductor revenue from PCs is estimated to decline by 5.4% in 2022. Semiconductor revenue growth from smartphones will slow to 3.1 percent in 2022, well below the 24.5 percent growth rate in 2021.

From a business perspective, inventories are recovering rapidly, lead times are starting to shorten and prices are weakening.

The semiconductor market is entering a down cycle in the industry, which has happened many times before, so we're not new to this," Gordon said. While there will be a slowdown in the consumer sector, continued investment in cloud infrastructure will keep semiconductor revenues from the data center market resilient over the longer term (20% growth in 2022). In addition, the automotive electronics segment will continue to see double-digit growth over the next three years as the automotive industry transitions to electric and self-driving vehicles, where the semiconductor content per vehicle will increase. Semiconductor content per vehicle is expected to increase from $712 in 2022 to $931 in 2025.