This month, we are happy to share both the June semiconductor extract from Future Horizons, plus an exclusive discount of 10% on Future Horizons monthly update report. Quote ‘Napier’ in the order link to claim your 10% Napier discount.
Continue reading below to find out more about the market’s current outlook:
Executive Summary
Opto continued its upwards surge in April, showing flat monthly annualised growth vs. April 2023, up from minus 8.9 percent in March and minus 12.7 percent in February.
Not so in Discretes, where growth fell back to minus 13.0 percent in April, vs. minus 9.9 percent in March and minus 22.3 percent in February. The all-important Discrete sector is still bathed in red ink.
As we have mentioned several times before, nice as they are, it is important not to get blind-sided by these dizzy double-digit growth numbers as it is far from certain they are indicative of a real chip market recovery given the still stubbornly weak demand for IC units Analog and Discretes.
IC’s Leading The Way
April’s total IC sales were up 23.4 percent in value vs. the same period last year, with total Discretes down 13.0 percent and total Opto flat. The overall year-on-year total Semiconductor market grew 17.3 percent.
By comparison, the same datapoints for March were plus 15.7 percent for total Semiconductors, plus 22.1 percent for total ICs, minus 9.9 percent for total Discretes, minus 8.9 percent for total Opto.
The overall semiconductor year-on-year growth in value, at 17.3 percent, was the sixth consecutive month of double-digit growth since the market turned positive in September 2023.
Unit Sales Lagging
April was the sixteenth consecutive month where shipments were below the IC usage trend line, confirming our belief that the much-needed unit rebound is still a long way to go. On current trends, a second-half 2024-unit rebound is very unlikely.
With IC unit sales still 22.3 percent lower than their 2022 peak, and a significant amount on new capacity since added, the industry is likely to be in a sever excess capacity mode throughout 2025. It will take a long time before for the current installed production capacity to be absorbed.
To put that in perspective, during the July 2020-December 2022 period, accumulated excess IC unit shipments over and above the shipment trend line reached 108 billion units, represented by the area above the unit trend line. So far, only 44 billion of these have been compensated for, represented by the current period blow the trend line, only 64 billion more units to go?
Market Outlook
The overall semiconductor market may well still be showing a monthly annualised double-digit growth rate in value, but these numbers are still based off 2023’s falling revenue numbers and are thus exaggerating the true health of the market.
Watch these annualised sales value growth rate numbers start to rein back from June 2024 onwards once the market data starts to be measured against an increasing 2023 revenue base. We believe the month-on-month revenue and unit shipment numbers paint a much more realistic, picture.
Whilst not wishing to rain on the parade, we remain somewhat sceptical on the depth and length of the current ASP-driven recovery and await more datapoints, especially on IC unit demand, before signalling the beginning of the real market upturn.
Future Horizons will be hosting a IFS 2024 Autumn Update on September 20th 2024. For more information, click here.
