There are increasing indications in market analyses and specialist publications, currently mainly from Asia, that demand for processors and memory chips has slowed significantly in the second quarter of 2022, which has just ended.
It is unlikely to continue its 2021 high, at least for the foreseeable future. The outlook for the quarters ahead and also for 2023 is correspondingly subdued and characterized by uncertainty. The simple reason: sales of smartphones as important end user markets have fallen significantly. They could slump by 5 to 10% this year instead of continuing to grow by around 3% as expected. China's pandemic-related restrictions in manufacturing and supply chains are also having a serious impact on sales of other electronic goods such as PCs, laptops and TVs.
In its ranking of the "Top 50 Semiconductor Companies in Asia" at the end of June, the Taiwan-based magazine DigiTimes stated that after the record result of a cumulative USD 349 billion with a growth rate of more than 29%, the second quarter of 2022 brought a certain disillusionment. According to DigiTimes, the top 50 Asian manufacturers dominate 39% of the global markets for semiconductor chips: Samsung, for example, is the largest supplier of memory chips, and TSMC is the leading foundry in terms of technology and sales. Including mainland China, 75% of total global production capacity is concentrated here.
According to DigiTimes, one bright spot on the customer side is the continued strong increase in global demand for semiconductors for electric vehicles and industrial automation. This has also led to capacity utilization among chip manufacturers in the second quarter of 2022. According to DigiTimes, this promises contract manufacturers such as TSMC an overall growth rate of around 20% for 2022. Even oversupply projections due to the rapid expansion of chip production capacities on all continents are making the rounds again, albeit dampened by the current supply bottlenecks at fab suppliers.
US analyst Semiconductor Intelligence (which is backed by TI veteran Bill Jewell) is particularly pessimistic about the situation. It forecasts a growth rate of just 9% for 2022 and even weaker growth of 3% in 2023. According to Semiconductor Intelligence, four of the leading chipmakers (Intel, Qualcomm, Nvidia and Texas Instruments) expect sales to fall in the second quarter of 2022 compared to the first quarter. However, six suppliers (including Infineon, STM and NXP) expect an increase in the order of 3% to 7% thanks to their automotive business. Memory chip suppliers such as Micron are better positioned in this market analysis with growth of 16% in June, albeit with a weaker outlook for the following quarters and 2023 as a whole. Similar news comes from Samsung, SK Hynix and Kioxia.
Malcolm Penn from British market analyst Future Horizons takes the bleakest view of the situation: growth of between 6% and 10% in 2022 and a drop of 23% in 2023 - in other words, a real crash. Overall, the industry is currently in a phase of rethinking and sectoral reorientation following the widespread narrative of global chip shortages and supply bottlenecks, including on the part of suppliers and users. This is accompanied by the political tug-of-war over government structural aid (US Chips Act and EU Chips Act) to expand the semiconductor manufacturing base in the USA and Europe. - wsch -
