KUALA LUMPUR (Aug 16): With sequential integrated circuit (IC) sales declines beginning to moderate, the global semiconductor industry appears to be nearing the end of a downcycle and is expected to begin to recover in 2024, according to the US-based SEMI.
In the Semiconductor Manufacturing Monitor (SMM) released on Tuesday (Aug 15), SEMI, in partnership with TechInsights, said that in the third quarter of 2023 (3Q2023), electronics sales are projected to post healthy quarter-on-quarter growth of 10%, while memory IC sales are expected to log double-digit growth for the first time since the downturn started in 3Q2022.
It said logic IC sales are predicted to remain stable and improve as demand gradually recovers.
The report said headwinds will continue for the semiconductor manufacturing sector in the second half of the year.
Drawdowns of high inventory at integrated device manufacturers (IDMs) and fabless companies will continue to suppress fab utilisation rates to much lower levels than those in the first half of 2023.
The weakness is projected to extend declines in capital equipment billings and silicon shipments for the rest of the year despite stable results in the first half of 2023.
SEMI and TechInsights said market indicators point to a semiconductor industry bottoming at the end of the first half of 2023, and the industry has since started a recovery, setting the stage for continued growth in 2024.
All segments are projected to log year-over-year increases in 2024, with electronics sales surpassing its 2022 peak.
SEMI senior director of market intelligence Clark Tseng said the slower-than-expected demand recovery will delay the normalisation of inventory until the end of 2023, later than it previously anticipated, leading to additional reductions in fab utilisation rates in the short term.
“However, recent trends suggest that the worst is over for ICs. We anticipate semiconductor manufacturing will bottom in 1Q2024,” he said.
Meanwhile, TechInsights director of market analysis Boris Metodiev said while semiconductor markets have seen a sharp downturn the last four quarters, equipment sales and fab construction have been performing much better than expected.
“Government incentives have been driving new fab projects and strong backlogs have helped equipment sales,” he said.
The SMM report provides end-to-end data on the worldwide semiconductor manufacturing industry.
The report highlights key trends based on industry indicators including capital equipment, fab capacity, and semiconductor and electronics sales, and includes a capital equipment market forecast.
The SMM report also contains two years of quarterly data and a one-quarter outlook for the semiconductor manufacturing supply chain including leading IDMs, fabless, foundry, and outsourced semiconductor assembly and test companies.