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.
Photo: Reuters
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.
Additional reporting by Chen Cheng-hui
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to