Economic Headwinds Continues To Worsen
According to FutureHorizons Global Semiconductor Report for October, the economic headwinds continue to worsen. During September, inflation and interest rates continue to rise, increasing the threat of an inevitable global economic recession in 2023.
The impact on the global semiconductor market will deepen and prolong the extent of the current market bust. This is driven by the effects on discretionary spending and investment and, therefore, semiconductor unit demand.
The slowdown predicted back on March 22 continues. The forecast is still an overall 22 percent decline for 2023.
Memories are typically hit first in the cycle, and we have seen Micron and Samsung being hit. Other sectors are starting to show signs of weakness. However, other sources point to continued shortages in Automotive and Industrial. Volkswagen recently stated it no longer sees chip shortages ending in 2023. Q2 reports from STMicro, NXP, and Analog Devices all pointed to growth in automotive and industrial. Infineon guided growth in automotive and power control.
Given the typical three-to-four-month wafer fab cycle time, the unit shipment level will likely stay high for at least another two months before any downward adjustment in orders will have any effect.
The monthly shipment rate is starting to flatten as customers adapt to better availability, shorter lead times, and excessive inventory levels. However, it will worsen in the short term until the backlog adjustments take full effect.
Expect the overall downward trend in ASPs (average sales price) to dominate the agenda through the first half of 2023.