On November 29th, the World Semiconductor Trade Statistics Organization, composed of major semiconductor manufacturers, released a forecast that the semiconductor market will decline by 4.1% year-on-year to $556.5 billion in 2023. Compared to the previous forecast (a year-on-year increase of 4.6%), this is a sudden shift, as the previous forecast showed negative growth four years later. The demand for semiconductors in consumer goods such as smartphones and personal computers is decreasing, and the market for storage semiconductor "memory" is expected to significantly decline.
This spring, the World Semiconductor Trade Organization predicted a market growth rate of 5.1% in 2023, but it was lowered to 4.6% in August. Compared to the last revised forecast, this number has further decreased significantly. This is the first time since 2019 that the situation of the storage market deteriorated rapidly before the COVID-19, which was lower than the previous year for the first time in four years.
The biggest decline in 2023 will be in memory, accounting for over 20% of the market and expected to decrease by 17% compared to 2022. Regionally, the Asia Pacific region is expected to experience a negative growth rate of 7.5%. Japan, the United States, and Europe will experience positive growth, but the market will shrink more, mainly concentrated in China. The market size for 2022 is expected to be $580.1 billion, an increase of 4.4% compared to 2020.
The supply of chips is rapidly oversupplied. This is because, for example, the actual demand for smartphones and personal computers is decreasing, while the inventory held by related companies is turning into surplus, thereby reducing purchases. The decline in the semiconductor market in 2023 may be more pronounced than in 2019, when the chip recession last entered negative growth.
The inventory of companies that purchase chips, produce smartphones, and personal computers is growing.
According to the inventory of five Taiwanese electronic manufacturing service providers, including Peugeot United Technologies, it maintained growth in 2022. As of the end of June, the total transaction volume reached 2.1 months, 0.8 months higher than the average level in 2019.
Due to the supply chain disruption and demand recovery caused by the COVID-19, the company has been increasing its inventory. However, the current slowdown in demand has begun to suppress the increase in inventory, causing inventory levels to drop to 1.8 months at the end of September.
The inventory held by the market and the company has increased, indicating an oversupply of semiconductors. Especially, widely used storage chips are easily vulnerable to attacks.
Due to oversupply, large manufacturers have begun to suppress production. Micron Technology announced a 20% overall reduction in production of memory chips, while Armor Man announced a 30% reduction in production of NAND based memory chips.
De-stocking is expected to take a long time, and downward pressure on prices continues. According to Kazuhiro Sugiyama of Omdia, a British research firm, "inventory levels higher than in 2019 (when the chip recession broke out) will correspondingly increase the rate of decline," indicating that the deteriorating market situation will continue into the first half of 2023.
Due to the supply shortage caused by the epidemic, there is strong demand for industrial equipment and chips such as automobiles. However, from the perspective of the entire semiconductor market, signs of oversupply are strengthening.
In the context of the epidemic and subsequent government subsidies