Chip Market: Major Downturn Looms Large

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  • The data released by the Semiconductor Industry Association estimates that 2023 will be one of the industry’s periodic recessionary years
  • Most Asian nations witnessed a contraction YoY; Europe and US grew as compared to the last year

Semiconductor Industry Association (SIA) recently reported the data figures for the third quarter of 2022, which showed that the global chip market started to contract year-on-year (YoY) in this quarter. The global semiconductor sales for the month of September 2022 were down 0.5% compared to August 2022 and 3.0% less than September 2021. As per the official statement released by SIA, the worldwide sales of semiconductors totalled $141 billion during 3Q22, a decrease of 3.0% compared to 3Q21 and 6.3% less than 2Q22.

Largely, Asia has witnessed the crash, while Europe’s reduced exposure to consumer electronics has kept it growing – for now. It is noteworthy that SIA reported figures that were compiled by the World Semiconductor Trade Statistics organization. The September sales data points out that 2023 will be one of the industry’s periodic recessionary years. But, it added, the dual macroeconomic pressures of inflation and recession worsened by the Ukraine war may take it to a new low.

It must be noted that September is a proxy for 3Q22 because monthly figures are based on three-month moving averages. The market fell by 6.3 per cent in comparison to the previous quarter. Generally, Q3 is the strongest quarter as different companies prepare for consumer sales in Q4 and sequential growth is normally up to about 10 per cent.

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China, which once accounted for over one-third of the global chip market, witnessed a Q3 chip market contraction of 14.4 per cent YoY. It is learnt that the rest of the Asia-Pacific, excluding Japan, fell by 7.7 per cent YoY. On the other hand, Europe and the Americas region grew at 12.4 per cent and 11.5 per cent respectively, as compared with a year before.

CEO of the SIA, John Neuffer stated: “Following strong growth through the first half of 2022, global semiconductor sales have slowed in recent months, decreasing in September on a year-to-year basis for the first time since January 2020 amid a range of macroeconomic headwinds.” He further added, “The long-term market outlook remains strong, however, as semiconductors continue to become a larger and more important part of our digital economy.”

Washington-based SIA is a trade association and lobbying group founded in 1977 that represents the US semiconductor industry. Monthly data is given by the SIA as a three-month average. Although the source of the data, World Semiconductor Trade Statistics, tracks monthly data.


 

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