Chip sales are set to cool more than previously expected as the global economy struggles under the weight of rapid interest rate increases and rising geopolitical risks, fueling fears of a recession.
World Semiconductor Trade Statistics (WSTS), a non-profit body that tracks shipments, lowered its market outlook to 13.9 percent growth this year from 16.3 percent. For next year, it sees chip sales rising just 4.6 percent, the weakest pace since 2019.
The market is still expected to surpass US$600 billion this year, WSTS forecast. Next year’s forecast growth would be the weakest since a 12 percent drop in sales at the height of the US-China trade dispute.
Chip sales are an important indicator of global economic activity as households and firms increasingly rely on digital devices and online services to consume and expand.
US President Joe Biden this month signed the so-called CHIPS and Science Act aimed at strengthening the US semiconductor industry as China races to expand its own chipmaking capacity.
Japan is likely to see the strongest sales growth at 5 percent next year, followed by the Americas at 4.8 percent and the Asia-Pacific region at 4.7 percent, WSTS said. Europe, where Russia’s invasion of Ukraine is reverberating across the continent’s economy, is likely to post an expansion of just 3.2 percent.
Based in Morgan Hill, California, WSTS includes among its members Texas Instruments Inc, Samsung Electronics Co, Sony Semiconductor Solutions Corp and Yangzhou Yangjie Electronic Technology Co (揚州揚傑電子科技), according to its Web site.
Separately, US-based market information advisory firm IC Insights yesterday said it has adjusted its global semiconductor capital expenditure forecast this year to grow 21 percent year-on-year to US$185.5 billion, compared with the previous estimate of a 24 percent increase to US$190.4 billion it made at the beginning of the year.
The downward adjustment came as the semiconductor industry faces soaring inflation and a rapidly decelerating worldwide economy, causing many semiconductor manufacturers to re-evaluate their aggressive expansion plans, IC Insights said in a press release.
“Several (but not all) suppliers — particularly many leading DRAM and flash memory manufacturers — have already announced reductions in their capex [capital expenditure] budgets for this year,” it said. “Many more suppliers have noted that capital spending cuts are expected in 2023 as the industry digests three years of robust spending and evaluates capacity needs in the face of slowing economic growth.”
Despite the downward adjustment, the revised capital expenditure forecast for this year still represents a new record high and would mark the first three-year period of double-digit gains in the semiconductor industry since 1993 to 1995, IC Insights said.
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