We’re happy to share this month’s extract of Future Horizons September report on the semiconductor market. Continue reading to find out more about the current outlook of the market:
Executive Summary
The Discrete sector continued its 7-month long trawl in negative annualised growth territory, at minus 9.2 percent, compared with minus 12.3 percent in June and minus 13.8 percent in May.
In contrast, ICs, the powerhouse behind the industry’s current revenue growth, saw its eighth consecutive month of strong double-digit annualised growth, at 23.0 percent, up slightly from June’s 22.1 percent growth but down from May’s 30.1 percent number.
Excluding memory, however, the annualised IC market showed a more subdued single-digit 8.8 percent growth, reflecting just how strong an impact the memory rebound has been on the overall total IC and total semiconductor markets.
Analog ICs, the still worst-performing sector, saw its eighteenth month of negative annualised monthly growth, at minus 1.4 percent, vs. minus 1.3 percent in May and minus 9.2 percent in April. The Analog IC market is now down 16.5 percent in value from its June 2022 high.
July was also the nineteenth consecutive month where unit shipments were below the IC usage trend, confirming our belief that the much-needed inventory burn still has a long way to go. There is now little hope for a second-half-year IC unit rebound.
Excess inventory remains the industry’s number one problem, affecting not only unit shipments but capacity utilisation rates as well. Forcing customers to honour the Long-Term Agreements (LTAs) signed in the 2022-23 market boom has clearly frustrated efforts to liquidate stocks and rebalance supply with demand, pushing the unit recovery further down the road and elongating the historical 4-quarter inventory correction norm.
Several key broader-industry bell-weather sectors, such as Analog ICs and Discretes are still looked in a deep recession, whilst high-sticker priced nVIDIA GPUs are flying off the shelves in seemingly insatiable gay abandon.
Wafer substrate sales remain weak, with forward visibility unclear, as would be expected in a low IC unit shipment environment, but CapEx remains strong, driven by a massive China spending spree, accounting for around half of the global CapEx spend.
Sadly, the overall industry fundamentals remain stubbornly weak, with unit sales and the Analog IC and Discrete markets still gripped in recession.
A broader-based industry recovery is unlikely before mid-2025.
If you missed the industry update webinar, which took place in early September, you can now watch it here. You can also still receive a 10% discount on the full report by using the code ‘Napier’ in the order link.
