The global semiconductor market already gave a serious warning last year when it stagnated at $600 billion, when in 2020 it was expected to grow around 20% per year for the next five years to reach $1 trillion in 2025. Consultancy Gartner now estimates that the global market will fall by 11.2 per cent to $532bn in 2023, after increasing by just 0.2 per cent in 2022, when in 2021 it increased by no less than 26.2 per cent according to WSTS. Gartner’s forecast for 2024 is for the global market to rebound to $631bn, should last April’s forecast of an 18.5% increase next year be confirmed.
Paradoxically, the hope for the global semiconductor market to grow now centres on China regaining its former level of production and continuing to be one of the great engines of the world economy and the major producer of electronic equipment of all kinds. What is clear is that the semiconductor market is now radically different from what it was six months ago, when the US passed the Chips Act, a $52 billion law designed to subsidise US semiconductor production in order to restore the US to the chip industry that was lost more than a decade ago.
This sharp and rapid decline in the global semiconductor market, especially in the last half year, has taken most experts by surprise, including the respected World Semiconductor Trade Statistics (WSTS), which was founded in 1986 and since then monitors industry data based on information provided by the vast majority of the world’s semiconductor manufacturers. In its estimates of the global semiconductor market published last November, WSTS calculated that in 2022 it would grow by 4.4% and that in 2023 it would fall by 4.1%, after growing by 26.1% in dollar terms in 2021, as shown in the table below.
|Fall 2022||Amounts in US$M||Year on Year Growth in %|
|Total World – $M||555,893||580,126||556,568||26.2||4.4||-4.1|
|Total Products – $M||555,893||580,126||556,568||26.2||4.4||-4.1|
Source: WSTS, 29th of November 2022. https://www.wsts.org/76/Recent-News-Release#:~:text=The%20World%20Semiconductor%20Trade%20Statistics,of%204.1%20percent%20in%202023.
The estimates of growth for 2022 and decline for 2023 made by WSTS at the end of November have been completely contradicted by the reality of the market, according to Gartner’s latest forecasts. Gartner’s and WSTS’s global semiconductor market valuation in dollars often varies, because different calculation parameters are used, but until now the annual market development was very similar between the major consultancies.
The blundering estimate by WSTS, in theory one of the best-informed organisations in the semiconductor market, shows the accelerated decline in sales from last summer onwards, much larger than expected by the experts and major chip companies. If we look at the WSTS table and the new estimates of the evolution of turnover, logic circuits will have greater importance and weight in global turnover to the detriment of memories and processors, foreseeably benefiting Europe, which is better positioned. China will also benefit if the share of analogue integrated circuits increases, because it is highly competitive in this market segment.
As a result of the decline in the PC and smartphone market, the major semiconductor processor and memory manufacturers, such as Intel, Samsung, SK Hynix and Micron, have suffered heavy losses in the first quarter of the year; even TSMC is in trouble, as its customers have cut back on orders. In little more than a year, it has gone from being unable to meet the demand for chips to an oversupply that is driving down prices, especially for memory.
Continue reading in the following link – Times of hectic sales are over
Albert Cuesta, specialized journalist