Semiconductor industry stagnation in 2023, is there a turnaround in the future

Gartner pointed out in the report, this year's semiconductor market by the global economic downturn, the consumer electronics market continued to weaken the impact of the demand from individual consumers to enterprises significantly lower. In addition, chip oversupply has led to increased inventories and lower chip prices, making this year's semiconductor market decline accelerated.
Gartner said that the storage chip market this year is in the phase of overcapacity and excess inventory, the total revenue will be a significant decline, down 35.5% to $ 92.3 billion, but is expected to rebound in 2024 to achieve an increase of about 70%. In particular, revenues in the DRAM market are expected to decline by 39.4 per cent to $47.6 billion in 2023. It will grow by 86.8 per cent by 2024 as prices rebound.Revenues in the NAND market are similar to those in the DRAM market, and are expected to decline by 32.9 per cent to $38.9 billion by this year; by 2024, they are expected to grow by 60.7 per cent.
By 2024, global sales are expected to reach $576 billion, which would be the highest total ever for the industry.
According to the Semiconductor Industry Association (SIA), announced on 6 June 2023, global semiconductor industry sales in April 2023 were $40 billion, up 0.3% from $39.8 billion in March 2023, and down 21.6% from the March 2023 total April 2022 totaled $50.9 billion.
"The global semiconductor market remains in a cyclical downturn, exacerbated by sluggish macroeconomic conditions, but monthly sales rose for the second consecutive month in April, which may signal a continued rebound in the months ahead," said John Neuffer, SIA's president and CEO." .
"The latest industry forecast anticipates a double-digit decline in global chip sales in 2023 before rebounding strongly in 2024." -- The newly released WSTS Industry Forecast expects annual global sales to decline 10.3% in 2023 before rebounding and growing 11.9% in 2024.

The PC market is experiencing a sharp decline in demand, shipments hit a new low in more than 10 years, AMD and Intel's two major CPU makers are not so good results.
- Intel: revenue hit a record low since 2010
Not long ago, Intel released the first quarter of fiscal year 2023 financial results show that the first quarter revenue of $ 11.7 billion, compared with $ 18.4 billion in the same period of the previous year, down 36%, creating a record low since 2010, and 2 consecutive quarterly losses; net loss of $ 2.8 billion, it is a year-on-year drop of 134%.
The poor performance of the major business is also from the side of the refraction of the heavy challenges faced by Intel.
Intel PC, notebook, including the client computing business group (CCG), for example, the first quarter revenue reached $5.8 billion, down 38% year-on-year. This is on the one hand, the market demand continues to weaken due to IDC estimates, global PC shipments in the first quarter of 2023 fell nearly 30%; on the other hand, the processor market changes continue to ferment, Apple turned to use their own chips, AMD to catch up, so that the former in the field of a single Intel suffered a shock.
On the other hand, demand for chips in data centres has fallen in recent months, bringing further pressure on Intel's performance. At the same time, Googl, Amazon and other cloud giants have towards their own chip design; NVIDIA CPU accelerated iteration; Arm camp eyeing, layer by layer, under the Intel data centre and AI business (DCAI) first-quarter revenues of $ 3.7 billion, a heavy fall of 39%.
A string of figures to make Intel's financial results quite bleak. As for the future trend of the industry, Intel CEO Kissinger believes that Intel will be heading for a mild rebound.
End market demand will come out of weakness or become a note of confidence in Intel. In the PC field, Intel believes that the inventory adjustment is basically as expected, to the end of the second quarter the market will be in a healthy inventory levels, the PC market is expected to achieve in 2023 about 270 million units sold.
In the server space, Intel expects a modest rebound in the second half of the year while the overall market size declines year-over-year in the first half of 2023.
And with relatively strong demand trends in markets such as industrial, automotive and infrastructure, Intel believes that PSG, IFS and MBLY will continue to see strong growth momentum and will achieve year-over-year growth in 2023
-AMD: First revenue decline in 2019
After Intel posted a record quarterly loss, AMD was also clearly hit by the ongoing downturn in the personal computer (PC) market.
A few days ago, AMD released its Q1 quarterly results as of April 1, in the first quarter of 2023, AMD's revenue was $5.353 billion, down 9% year-on-year; net loss of $139 million, compared with $786 million in the same period of the previous year is a substantial decline of 118%
This is AMD's first revenue decline since 2019, with Ryzen processors becoming the hardest hit, further highlighting the dilemma of a significant decline in PC sales.
Breakdown, including desktop and notebook PC processors and chipsets, AMD's customer business unit quarterly revenue of $739 million, a sharp decline of 65.2%; operating profit is compared to the same period last year's profit of 692 million U.S. dollars, into a loss of 172 million U.S. dollars.
Q2 quarterly revenue forecast, AMD expects revenue of $5.3 billion, up or down $300 million, between $5-5.6 billion, according to the median will decline by 19.1% year-on-year, meaning that the performance of the second quarter will also decline.
But AMD said the worst is soon to be over, similar to previous statements by Intel's CEO. AMD CEO Su Zifeng said: as the PC and server markets strengthen and we add new products, we remain confident in our growth in the second half of the year."
Gartner data shows that global PC shipments fell 30 per cent year-on-year to 55.2 million units in the first quarter of this year. While the weak PC business continues to hit chipmakers, there is an industry view that the PC market may have bottomed out.

At the same time, the storage chip market is still stagnant. Samsung Electronics chip division is now the largest loss in history, operating profit plummeted 95%; SK Hynix Q1 revenue fell 58.1% year-on-year, and the loss expanded to 3.4 trillion won.
On April 27, Samsung announced the first quarter of 2023 financial results, revenue of 63.75 trillion won, down 18% year-on-year, down 10% from the previous year. In addition operating profit was 640.2 billion won, plunging 95 per cent year-on-year, the lowest level in 14 years. In addition, samsung also changed the past "no production cuts", said it will adjust the production of memory chips.
Samsung said the reason is the global macroeconomic environment, uncertainty, continued inventory adjustment and overall demand decline. Memory chip demand recovery is expected to be limited in the second quarter, due to the consumer market is weak and the main data centre companies more conservative investment in servers. At the same time, Samsung's chip business will focus on high-capacity servers and mobile products, and expects "the market will gradually recover in the second half of the year, and global demand will rebound".
Just one day before the release of Samsung's financial results, another major South Korean storage chip giant SK Hynix released the first quarter of 2023 financial results, the company achieved revenue of 5.09 trillion won, a decrease of 34% from the previous quarter, a year-on-year decline of 58%; net loss of about 2.59 trillion won, the previous quarter's net loss of about 3.72 trillion won, the second quarter in a row, a loss. In the quarter, SK Hynix operating loss reached 3.40 trillion won, setting a record for the company's single-quarter operating loss.
According to SK Hynix CFO Yohyun Kim, the memory chip market is still in a tough state, but seems to be bottoming out. Sales are expected to pick up in the current quarter, and the memory chip market situation is expected to improve from the second half of this year. Hynix said that after a series of production cuts in the storage industry, customer chip inventory levels fell throughout the first quarter, indicating that the production cuts that began last year are beginning to gradually take hold.
Outside of the two major South Korean memory chip makers, U.S. memory chip maker Micron's fiscal 2023 second-quarter report showed its revenue for the quarter was $3.69 billion, a year-on-year decline of up to 53 per cent.
This is Micron's worst quarterly loss in the past two decades, Micron CEO Sanjay Mehrotra said "the industry will face the worst recession in the past 13 years".
Since the second half of 2022, the memory chip market demand has fallen again and again, shipment prices fell sharply. TrendForce previously judged that in the first quarter of 2023, the overall global DRAM product selling price continued to decline 13%-18%; NAND, the first quarter continued to decline 10%-15%. The agency recently updated judgement, the second quarter DRAM prices will continue to decline 10% -15%, still do not see the signal to stop falling; NAND prices also continue to decline 5% -10%, whether the decline will depend on the second half of the demand, as well as the original factory whether there is a larger scale of production cuts.
However, feedback from the end market, as the storage chip prices have almost reached the cost price of many of the original plant, several major storage chip manufacturers have taken their own measures, refused to reduce the price of the chip. According to Taiwan Electronic Times news, Micron has officially issued a notice to the distributor that since May, DRAM and NAND Flash will no longer accept inquiries below the current market; Samsung has also previously notified the distribution agents, will no longer be sold at a price lower than the current price of DRAM chips.
From Samsung, SK Hynix, Micron announced the latest financial results, storage chip years and medium- to long-term market conditions have been preliminary conclusions, that is, under the impetus of the gradual growth in sales, storage chip demand may continue to be in the second quarter of the downturn, and then in the second half of the year began to gradually warm up, or will be out of the doldrums later this year.

In the consumer electronics and storage chips more than the cold wind, the semiconductor industry, another track - automotive chips, but still firm.
A few days ago, Texas Instruments released the first quarter of 2023 financial results, revenue of $4.379 billion, down 11% year-on-year, net profit fell 22% year-on-year. In addition to automotive, all other business revenue declined. This is also Texas Instruments in the past ten quarters, revenue fell the largest quarter.
Texas Instruments vice president and head of investor relations Dave Pahl pointed out at the earnings conference, all end market demand outside the car showed a decline in the ring: the industrial market is roughly flat; consumer electronics continues to show general weakness, down about 30%; communications equipment fell in the mid-double-digit range, enterprise systems fell by about 30%; the only automotive chip to maintain the growth trend, revenue rose by 4% year-on-year .
At the same time, Texas Instruments first-quarter inventory days ring grew 38 days to 195 days, the amount of inventory ring grew 531 million U.S. dollars to 3.3 billion U.S. dollars, further demonstrating a decline in market demand, making the inventory rose sharply.
Texas Instruments said that at least in the short term, market demand remains weak. Second-quarter revenue is expected to be between $4.17 billion and $4.53 billion, down 16.5 per cent from a year ago and worse than the 15 per cent decline analysts had expected.
In contrast, Infineon's fiscal 2023 Q1 revenue grew 25% year-over-year, with its automotive products business growing a strong 35% compared to the same period last year.
Thus, even with weak demand for smartphones, computers and data centres, Infineon's earnings and revenue grew in the first quarter of fiscal year 2023 on the back of strong sales of automotive and industrial chips.
In addition, Infineon said that with the continuous development of electric vehicles and assisted driving technology, customers are now more willing to sign capacity reservation agreements or sign a long order to ensure semiconductor supply. And in fiscal year 2023, Infineon's automotive business product capacity has been fully booked.
ON Semiconductor first-quarter revenue of $1.96 billion, a slight increase of 0.76% year-on-year, better than analysts generally expected; net profit of $462 million, down 12.96%.
ON Semiconductor CEO Hassane El-Khoury said that even though the global economic environment is full of uncertainty, the first quarter results still exceeded expectations. Among them, silicon carbide-related revenue nearly doubled from a year earlier, mainly because production exceeded previous internal plans, while the year-on-year growth rate of ADAS and energy infrastructure business revenue was also as high as 50%.
In addition, ST and NXP's quarterly results similarly showed better-than-expected net income and continued strength in the automotive and industrial sectors. Continued growth in the automotive business made up for the decline in other businesses, driving their overall better-than-expected performance.
On the other side, ADI's Q1 2023 results continued to hit new highs, driven by its automotive and industrial businesses, which grew 21% year-over-year. Among them, the automotive business contributed 22% of ADI's revenue to $718 million, a new revenue high, and the 29% revenue growth rate was higher than that of the industrial, communications, and consumer sectors.
Not only is the traditional automotive chip makers, in several major main business successive setbacks in Intel, the only Mobileye benefited from the growth of the automotive terminal market to achieve record revenue growth, growth of 16%, becoming a rare touch of warmth in Intel's financial results for this quarter;;.
A quarter of Qualcomm's automotive chip business revenue grew 58% year-on-year, reaching $456 million. However, the car chip business volume is small, and ultimately still failed to make up for the mobile phone chip business revenue decline gap. But the strong growth of the new business at least let Wall Street see a little new light.
MediaTek, on the other hand, reiterated its diversification strategy, with its established automotive products showing strong growth over the past few years, and its recently announced Dimensity Auto platform targeting growth opportunities in the smart cockpit, Internet of Vehicles (IoV), smart driving platforms, and key component areas. Li-Hsing Tsai said at the press conference, "We will definitely shift our resources very quickly to the automotive and computing areas, as these areas will provide us with growth in the next three to five years."
From the financial reports of the above manufacturers, automotive electronics has great potential for growth, becoming one of the few growth tracks under the current semiconductor down cycle.
Morgan Stanley pointed out that in 2018 the global automotive electronics market of about 150 billion U.S. dollars, is expected to grow to 287 billion U.S. dollars in 2025 outbreak, mainly due to the continued increase in the penetration of electric vehicles, coupled with the increase in the rate of use of ADAS, is expected to be 2025 electric vehicle material costs, as high as 35% -45% of the electronic components for the car, is 2.5 times the traditional car, automotive chip demand overall Growth is expected.

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Summary of the current semiconductor industry