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A new report by Deloitte predicts that companies will hit historic revenue highs this year, despite chip shortages and supply chain issues. For the first time, the industry is expected to earn over $600 billion globally, despite an anticipated slowing in growth. In 2022, growth is predicted to reach 10%, compared to 25% growth in 2021. 

There are four key trends expected to shape the industry in the year ahead. First, chips are going to be more important than ever, with increased semiconductor content in everything from cars to appliances to factories, in addition to the usual products such as computers, data centers, and smartphones. 

Second, shortages and supply chain issues will be front and center for the first half of 2022, and hopefully ease by the second half. However, there will be longer lead times for some components potentially stretching well into 2023. 

Third, there is a talent shortage in the industry that won’t be resolved quickly. Building more local chip fabrication plants in the U.S., China, Singapore, Israel and other countries will eventually create a larger and deeper talent pool. In the interim, current workers will need to improve and expand their mix of engineering and manufacturing skills.

Finally, digital transformation within the semiconductor industry will continue and accelerate. Nearly three out of five chip companies have already begun their digital transformation journey, but over half of those are modifying their transformation process as they go, in response to various pressures. 

Overall, the industry will experience continued strong growth in 2022, even as it takes steps to address chip shortages, manage lead times with suppliers and end customers, build manufacturing capacity locally or nearshore, hire specialized engineering and design talent, and bolster its supply networks using advanced digital solutions. 

Deloitte’s 2022 semiconductor industry outlook seeks to identify the strategic issues and opportunities for semiconductor companies to consider in the coming year, including their impacts, key actions to take, and critical questions to ask. The goal is to equip US semiconductor (aka semi or chip) companies with the information and foresight they need to position themselves for a robust and resilient future.

Read the full report by Deloitte.

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