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Historically, the driving force behind the higher average annual growth rate of the semiconductor industry as compared to the electronic systems market is the increasing value or content of semiconductors used in electronic systems. With global unit shipments of cellphones, automobiles, and PCs showing maturity and slowing over the past 10 years, the disparity between the 3% 2008-2018 CAGR registered in the electronic systems market and the 7% 2008-2018 CAGR displayed by the semiconductor market is directly due to the increased content/value of semiconductors in electronic systems.
While the trend of increasing semiconductor content has been evident for the past 30 years, the big jump in the average semiconductor content in electronic systems in 2017 and 2018 was primarily due to the huge surge in DRAM and NAND flash ASPs and average electronic system sales growth last year. The memory IC ASP jump experienced over the past two years (56% in 2017 and 29% in 2018) is expected to reverse itself this year (-33%) and bring the semiconductor content percentage down with it. However, beginning in 2020, the semiconductor content percentage figure is expected to once again resume its climb and eventually reach a new high of 31.8% in 2023.
The trend of increasingly higher semiconductor value in electronic systems has a limit. Extrapolating an annual increase in the percent semiconductor figure indefinitely would, at some point in the future, result in the semiconductor content of an electronic system reaching 100%. Whatever the ultimate ceiling is, once it is reached, the average annual growth for the semiconductor industry will closely track that of the electronic systems market (i.e., about 4%-5% per year).
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