Till the month of September, the global semiconductor sales witnessed a marginal slowdown. According to Semiconductor Industry Association (SIA) September 2022 semiconductor sales were 0.5% down compared to August 2022 and 3.0% less than September 2021.
On the other hand, in the third quarter of 2022, worldwide sales of semiconductors totalled $141 billion – a decrease of 3.0% compared to the third quarter of 2021 and 6.3% less than the second quarter of 2022.
“Following strong growth through the first half of 2022, global semiconductor sales have slowed in recent months, decreasing in September on a year-to-year basis for the first time since January 2020 amid a range of macroeconomic headwinds,” said John Neuffer, SIA president and CEO. “The long-term market outlook remains strong, however, as semiconductors continue to become a larger and more important part of our digital economy.”
Also regionally, month-to-month sales increased in the Americas (4.8%), Japan (0.5%), and Europe (0.1%), but decreased in the Asia Pacific/All Other (-2.9%), and China (-3.0%). Year-to-year sales increased in Europe (12.4%), the Americas (11.5%), and Japan (5.6%), but decreased in Asia Pacific/All Other (-7.7%) and China (-14.4%).
Slowdown in Semiconductor Momentum but SiC Shines
The 2022 has been a fumbling and revving up year for the semiconductor industry from a two year long pandemic year.
Hence as the industry is quite jovial about newer sectors aspirations sticking on with semiconductor demand this may be daunting for the industry at the same time.
Gartner recently predicted that global semiconductor revenue is projected to decline by 3.6% in 2023. Though many significant reasons seem to be adhering to this report in which everyone agrees there is an imbalance, when and how fast it ends is the topic of debate. The closure of the supply-demand imbalance keeps getting pushed out farther and farther as the shortage persists and the demand side of the equation remains strong.
SiC has been experiencing significant growth owing to its wide use in power discrete components and devices, such as MOSFETs, junction field effect transistors (JFETs), and Schottky barrier diodes (SBDs). Compared with other compound semiconductors, SiC has a wider bandgap and can operate at higher temperatures and voltages (up to 1,200 V). Therefore, SiC is expected to be used in high-power applications. SiC is used in electric vehicles, wireless charging, and power supplies.
Talent crunch
Due to the complexity of the division of labor in the global semiconductor supply chains, there are simply not enough engineers to fill the job vacancies in the semiconductor industry worldwide, at least in the short term. It is already the case in Taiwan, which is already having the largest supply of semiconductor engineers to produce 60% of the chips in the world. While countries and companies have committed capital and resources in ringfencing chip supplies and increasing domestic production, talent shortages are difficult to resolve any time soon and can hamper the effectiveness of the investments. The talent shortage will be even more severe in countries that are building their semiconductor industry ecosystem back up or from scratch. Without sufficient talents, the gigantic investments to build domestic chips will remain a pipe dream.
In 2022, the market is on pace to grow 4% and total $618 billion.
“The short-term outlook for semiconductor revenue has worsened,” said Richard Gordon, Practice Vice President at Gartner. “Rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023.”
Global semiconductor revenue is forecast to total $596 billion in 2023, down from the previous forecast of $623 billion (see Table 1).
Table 1. Semiconductor Revenue Forecast, Worldwide, 2021-2023 (Billions of U.S. Dollars)
| 2021 | 2022 | 2023 | |
| Revenue | 595 | 618 | 596 |
| Growth (%) | 26.3 | 4.0 | -3.6 |
Currently, the semiconductor market is polarized between consumer-driven markets and enterprise-driven markets. Weakness in the consumer-driven markets is being driven largely by the decline in disposable income caused by rising inflation and interest rates, but also by the reprioritization of consumer discretionary spending to other areas such as travel, leisure and entertainment, which are having a negative knock-on effect on technology purchases.
On the other hand, the enterprise-driven markets, such as enterprise networking, enterprise compute, industrial, medical and commercial transportation, have, so far, been relatively resilient despite looming macro-economic slowdown and geopolitical concerns.
“The relative strength in the enterprise-driven markets comes from strategic investments by corporations that are looking to strengthen their infrastructure to continue supporting their work-from-home workforce, business expansion plans and ongoing digitalization strategies,” said Gordon.
Memory Revenue to Decline 16% in 2023
For the remainder of 2022, the memory market is witnessing faltering demand, swollen inventories and customers pressing for considerably lower prices. As a result, the memory market will remain flat in 2022 and is forecast to decline 16.2% in revenue in 2023.
The worsening economic outlook is negatively impacting smartphone, PC and consumer electronics products which is positioning the DRAM market for oversupply for the remainder of 2022 and the first three quarters of 2023. Gartner analysts foresee DRAM revenue to decrease 2.6% to reach $90.5 billion in 2022 and will further decline 18% in 2023, to a total $74.2 billion.
The NAND fab outage which occurred in the first quarter of 2022 increased prices and masked the rapidly deteriorating demand environment, resulting in excess inventory in the third quarter of 2022 which is expected to carry into the first half of 2023. NAND revenue is projected to increase 4.4% to $68.8 billion in 2022, but it is on pace to decline 13.7% in 2023 to $59.4 billion.
Unique Product Launches
AMD, Intel, and Nvidia all have plans to launch new CPU and GPU products in 2023. Apple will launch a new laptop with 3nm chips made by TSMC in 2023, too. It is also rumoured that Apple will launch its AR/VR device in 2023. The sales of new and innovative end products will drive the growth of chips. The current high inventory of various components and finished products will be digested in the first half of 2023, according to DIGITIMES Research.
Regionalization and Localization
Besides the government incentives for increasing domestic chip production, the longer-than-expected Russia-Ukraine war has pushed semiconductor companies to seek alternative sources for materials such as neon and foster domestic suppliers. Companies have been trained by the challenges over the two tough years and have developed stronger resilience in supply chain management. Meanwhile, climate policies such as net-zero carbon emission requirements are driving companies to cut carbon footprints. End-device customers may start to demand chips produced near their main markets or assembly sites, thus increasing regionalization instead of globalization. Apple reportedly has placed an order for 3nm chips produced in America and also TSMC’s confirmation of planning to produce 3nm chips in Arizona has provided evidence for this trend.
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