Semiconductor Market: Will End-Market Revive and Inventory Normalization Bring A Turning Point?
Gartner's latest research report predicts that the overall semiconductor industry will decline by 10.9% in 2023, of which discrete devices (often used in new energy vehicles) will increase by 6.7%, memory chips will decrease by 38.8%, optics will reduce by 1.9%, and analog chips will fall by 4.8%. Gartner predicts that the overall industry growth next year will be 16.8%.
The expected double-digit growth of discrete components next year is due to rising sales of electric vehicles. At the same time, memory chips and optical chips are still negatively affected by the cyclical nature of consumer electronics.
■ End markets witness rolling correction
Heading into 3Q23 earnings, Deutsche Bank anticipated a continuation of the rolling correction seen across many of the end markets, as some end markets continue to face macroeconomic headwinds and weak demand while others appear to have already found their respective bottoms and enter phases of recovery.
■ Inventories are normalizing
The 2Q data indicates that aggregate inventory levels continue to hover on the higher-end of the spectrum, albeit slightly below the high set in 1Q23. Inventory levels in general are still a cause for concern on an absolute basis as macro headwinds continue to cause underperformance in the majority of end markets, but a slight initial sign appeared that semis inventory levels may have already peaked and will continue to normalize from here.
DIOs (Days Inventory Outstanding) experienced mixed movement q/q depending on the product category, with q/q DIO increases seen in Comms IC and Wireless. The sharpest DIO decline occurred in MPU/GPU (-17% q/q), followed by Analog/MCU and Discrete.
■ How will generative AI impact semiconductor markets?
The GPU companies represented by NVIDIA are not the only areas that can benefit from generative AI. In fact, AI will benefit various sectors, from design tools to energy management components. Gartner noted that more advanced packaging technology and the application of high-bandwidth memory, etc., will continue to promote the industry's progress.
■ Appendix: Days Inventory Outstanding
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cryptoheadhunters : The expected double-digit growth of discrete components next year is due to rising sales of electric vehicles. At the same time, memory chips and optical chips are still negatively affected by the cyclical nature of consumer electronics.
■ End markets witness rolling correction
Heading into 3Q23 earnings, Deutsche Bank anticipated a continuation of the rolling correction seen across many of the end markets, as some end markets continue to face macroeconomic headwinds and weak demand while others appear to have already found their respective bottoms and enter phases of recovery.
■ Inventories are normalizing
The 2Q data indicates that aggregate inventory levels continue to hover on the higher-end of the spectrum, albeit slightly below the high set in 1Q23. Inventory levels in general are still a cause for concern on an absolute basis as macro headwinds continue to cause underperformance in the majority of end markets, but a slight initial sign appeared that semis inventory levels may have already peaked and will continue to normalize from here.
Source: Deutsche Bank
DIOs (Days Inventory Outstanding) experienced mixed movement q/q depending on the product category, with q/q DIO increases seen in Comms IC and Wireless. The sharpest DIO decline occurred in MPU/GPU (-17% q/q), followed by Analog/MCU and Discrete.
■ How will generative AI impact semiconductor markets?
The GPU companies represented by NVIDIA are not the only areas that can benefit from generative AI. In fact, AI will benefit various sectors, from design tools to energy management components. Gartner noted that more advanced packaging technology and the application of high-bandwidth memory, etc., will continue to promote the industry's progress.
Source: Gartner
■ Appendix: Days Inventory Outstanding
Source: Deutsche Bank
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