The majority of semiconductor integrated circuit sales come from this market

It would be fair to say that semiconductors are one of the underrated parts of modern technology. They are, in my opinion, the unsung heroes.

From the smartphone or computer you’re reading to the seemingly endless cars on the road to the millions of video game consoles, semiconductors are in virtually every new electronic device. You can think of them as the brain or backbone of those electronics.

Although semiconductors are ubiquitous, one market accounts for the largest share of their sales: smartphones.

Image source: Statista.

So why are smartphones pioneers?

Smartphones and other communication devices account for the majority of semiconductor sales due to their volume. It is now rare to see anyone using a mobile phone other than a smartphone, and all of these devices contain semiconductors. In 2023 alone, more than a billion smartphones were shipped worldwide, and about 70% of the world’s population used a smartphone.

This smartphone addiction is a gift and a curse for semiconductor companies. On the one hand, the smartphone market will continue to be vast and serve billions of people. On the other hand, it is known to be cyclical. Take the past two years, for example, when smartphone sales have declined worldwide. This has had a painful impact on the revenues of many semiconductor companies.

Some of the world’s largest semiconductor companies, such as Taiwanese semiconductor company, Intel (INTC -8.85%)AND Qualcommsaw its revenue decline from mid-2022 to mid-2023, mainly due to a slowdown in smartphone sales.

In the near future, AI-related demand should help ease some of the pressure on smartphones for semiconductor sales. But the long-term impact remains to be seen, and smartphones will continue to be a core part of semiconductor companies’ business.