The semiconductor industry has made headlines in recent years. It was about supply chains during the pandemic, chip shortages around the world, and Europe’s dependence. Pava Partners has compiled the most important analyses of the market in its latest SEMICON REPORT. Philipp Schlüter, Partner at Pava Partners, summarizes the key findings.

Mr. Schlüter, it gives the impression that the semiconductor market is a very special sector. What makes the market special?

Philipp Schlüter: The semiconductor market is an excellent example of a globally networked industry. We were particularly keen to provide a landscape of this market with the key players in our latest Semicon Report. The market consists of a large number of companies, starting with material manufacturers, chemical processing, production in fabs, or even software and chip design.

In the report, you forecast market growth of 7 percent annually through 2030. What are the most important factors for the growth of the semiconductor industry?

Schlüter: Global demand for semiconductors is unbroken and will continue to increase. Industries such as the computer industry, wireless communications and the automotive sector have an enormous appetite for ever more and ever more sophisticated chips. The 5G communication standard, for example, requires special chips, as does every IoT device. We expect the market to reach $1 trillion by 2030.

In 2022, global investment in semiconductor manufacturing was 190 billion euros and there is more than about 270 billion euros in the pipeline. These investments are necessary to increase production capacities, develop new technologies and optimize the efficiency of existing production facilities.

Does that mean rosy times are ahead for semiconductor companies?

Schlüter: The semiconductor sector has outperformed other indices, especially during the revival of the global economy in 2021. This is due to the increasing demand for semiconductors in various industries and the continuous development of new technologies. However, semiconductor companies faced corrections in 2022 due to trade conflicts, the macroeconomic downturn, and supply chain issues. Despite these challenges, we expect the semiconductor market to continue its growth in the future. Another interesting trend is that while the number of VC transactions in Europe decreased in 2022 compared to 2021, the volume of deals increased at the same time. This shows that VCs are not spilling the beans, but chipping in to drive the market forward in Europe.

Philipp Schlüter, Partner, Sector Expert Semicon, TMT, Industrials & Robotics