A potential rebound is expected in the memory sector attributed to normalised oversupply and demand recovery.
The global semiconductor industry revenue declined by 8.8% in 2023, primarily due to reduced spending in enterprise and consumer sectors. The year brought significant shifts in the industry’s revenue rankings, with Intel regaining the top position from Samsung. Samsung was particularly affected by the downturn in the memory sector and a sluggish smartphone business.
The year was seen as a period of strategic adjustment for semiconductor companies, preparing for the anticipated surge in AI demand. Only six out of the top 20 global semiconductor vendors reported year on year (YoY) revenue growth. The memory sector faced considerable challenges, with a 43% YoY decline in revenue. AI emerged as a bright spot, particularly in the second half of the year. NVIDIA, benefiting significantly from this trend, along with AMD, showed strong growth in their AI-related businesses.
The top 20 global semiconductor vendors contributed 71% to the market, down from 76% in 2022, with a 14% YoY revenue decline. The top 10 companies alone accounted for 55% of global revenue.
Intel’s first place in semiconductor revenue came despite a 16% YoY decline, affected by shipment drops in the PC and server segments. Samsung, facing issues in both DRAM and NAND segments, reported a 38% decline in revenue. Other major memory market players like SK Hynix and Micron also saw significant revenue drops.
NVIDIA, on the other hand, stood out with an 86% revenue growth in 2023, marking its first-ever entry into the top-five ranking. This growth was attributed to its dominant position in general-purpose GPUs used in AI and high-performance computing.
A Counterpoint report anticipates AI to continue as a key growth driver in the semiconductor industry as AI PC and smartphones penetrate the market. Growing demand in the automotive sector is also adding to the growth. Infineon and STMicroelectronics saw substantial revenue growth from the automotive sector in 2023. A potential rebound is expected in the memory sector attributed to normalised oversupply and demand recovery.
The end of the inventory correction cycle and relatively stable client demand suggest that supply constraints might be a critical factor to watch. TSMC, the world’s largest foundry player, remains optimistic about its capacity usage in the coming quarters, reinforcing expectations of strong demand throughout the year.