LAS VEGAS—U.S. consumer technology retail sales growth will slow by 2.8% this year to $505 billion after a better-than-expected gain of 9.6% in 2021, according to a new forecast from the Consumer Technology Association, released at a press event late Monday ahead of this week’s CES tech trade show in Las Vegas. Spending grew 7% in 2020.
The two-year tech sales boom has been propelled by increased reliance on digital technology during the pandemic, with many people working and going to school from home, and companies boosting their reliance on digital commerce.
CTA sees software and services growth in 2022 slowing to 6% from 11.4% in 2021, with hardware growth moderating to 1.8% growth, down from 9% last year.
CTA last year originally had projected 4.3% growth for 2021, then lifted its forecast to 7.5% in a July update, citing “unprecedented consumer demand for tech related to work, school and lifestyle.” The year has seen particularly strong demand for 5G-capable smartphones, personal computers and related peripherals
Steve Koenig, CTA’s vice president for research, noted that the hardware business continues to be affected by elevated shipping costs and semiconductor shortages. He cited data showing that average lead times for semiconductors reached 22 weeks late last year, down under 12 weeks a year earlier.
He said that data from the Semiconductor Industry Association shows the chip industry will boost production in 2022 by 16%, up from 8% growth. But he notes that the real solution will be construction of new chip fabs, a process that is under way at companies like Intel (ticker: INTC), Samsung Electronics (005930.Korea), and Taiwan Semiconductor (TSM), but which will take several years. He also noted that about 75% of all chips are made in East Asia, creating risks for the broader tech industry.
Koenig presented data that showed consumers are “leveling up” the quality of their technology. For instance, a CTA study found that 52% of U.S. households now own 4K ultra HD televisions, up from 36% a year earlier. Notebook and laptop owners increased to 38% from 28%, while smart appliance households increased to 26% of the total from 19%. Internet-enabled to smart TVs can now be found in 71% of U.S. households, up from 65% a year ago. Home videogame console penetration rose to 53%, from 48%.
Koeng’s list of tech trends in 2022 starts with growing adoption of 5G, including industrial internet of things, and expanding spend on cloud infrastructure, digital transformation and remote work. He also sees growing adoption of artificial intelligence and machine learning, for everything from purchase recommendations to crime prevention and running factories.
On the topic of the metaverse, Koenig said it is “closer than you think,” with key building blocks in place, including the cloud, 5G, and haptics feedback. Immersive digital experiences over time will become inextricably linked with our physical reality over the next 10 to 20 years, he said.
Other trends he cited to watch for 2022 include electric vehicles, space technology, sustainable energy and food technology, smart homes and smart cities, and digital health wearables and therapeutics.
CES officially kicks off on Wednesday, running through Friday.
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