Electronics

According to Huacheng Import and Export Data Observation, for the next trend of the global chip industry, which has been suffering in a cramped market environment for nearly a year, Gartner, a famous information technology research and consulting company, predicted that the global chip industry revenue will fall by about 2.5% in 2023, while the World Semiconductor Trade Statistics Association (WSTS) is more pessimistic, pointing out that the global chip market size will shrink by 4.1% to 557 billion dollars in 2023. The market downturn must be reflected in enterprise investment management. The International Semiconductor Industry Association (SEMI) believes that the capital expenditure of the global chip industry in 2023 will only be $138.1 billion, with a year-on-year decrease of 26%.

From 2020 to 2021, when the COVID-19 spread, home office stimulated the huge demand for mobile phones, computers, televisions and other consumer electronic products, which led to a sharp increase in chip shipments. Driven and supported by multiple powerful forces such as "core shortage", "price rise" and "demand exceeds supply", the global chip industry entered an abnormal high-speed growth track, recording a compound annual growth rate of 26.2% that year, and achieving an output value of $555.9 billion, And this high trend has been maintained in the first quarter of 2022. At the same time, the positive income for eight consecutive quarters has created the longest growth record of the global chip industry in history. Huacheng Import and Export Data Observation Report.

The inflection point appeared in the second quarter of 2022. According to the data released by Omdia, a market research company, the global chip market revenue in the quarter was 158.1 billion US dollars, down 1.9% month-on-month, and then converged to 147 billion US dollars in the third quarter, down 7% month-on-month. In this regard, the report released by the American Semiconductor Industry Association (SIA) stressed that the six-month decline in revenue has become the longest slowdown in global chip sales growth since 2018. Although the data of the fourth quarter of 2022 has not yet been released, the final sales situation is not optimistic. The latest forecast of WSTS is that the growth of the global chip market will slow to 4.4% in 2022, reaching 580 billion US dollars.

The rapid transition of the industry from prosperity to decline has made all chip companies feel cold and painful. According to Huacheng Import and Export Data Observation, in the third quarter of 2022, Samsung Electronics' profit fell by 31.39%, Intel's net profit fell by 85%, NVIDIA's net profit fell by 72%, AMD's net profit fell by 93%, SK Hynix's profit in the third quarter fell by 60% year-on-year, and Meguiar's net profit fell by 45%. Under the pressure of the sharp contraction of financial revenue, Samsung, LG, TSMC and other chip-head manufacturers slammed on the brakes, and many enterprises either passively compressed the annual capital expenditure plan, or had no choice but to "cut the bill", or cut wages and bonuses.

In fact, based on the strong demand for chips for two years and the market situation of chips in short supply, the chip manufacturing industry is still at full power to increase supply and expand capacity even after entering 2022; On the demand side, based on the panic and pressure of "lack of core", customers have also continued to place repeated orders and over-orders in the past year. This feedback to the supply side will inevitably stimulate manufacturers, and at the same time, actively carry out collective actions to fill inventory while more fully meeting customer order demand. However, when there is a turning point and contraction in demand, the consequences of the mismatch between supply and demand of the misjudgment of the actual demand of the consumer market will be immediately displayed, and the inventory backlog has become the heartache of the whole industry. Huacheng Import and Export Data Observation Report.

Supply and demand determine the price. Inventory hoarding will objectively impact chip prices. In order to clear inventory, manufacturers in the chip industry are forced to take price reduction actions. However, the price reduction has not only caused vicious competition in the industry and a sharp decline in revenue, but more importantly, on the premise that the weak demand side has not been fundamentally improved, even the price reduction is difficult to achieve the effect of promoting consumption and destocking. At the same time, universal prices have also virtually strengthened the purchase options of downstream and terminal sellers to take goods as needed and purchase in a reduced quantity, and accordingly, the willingness to place orders in advance and stock up has been significantly weakened, ultimately forcing upstream suppliers to maintain a high inventory level.

Compared with 2022, the market pressure faced by the global chip industry in 2023 is still not easy. On the one hand, the global economy has entered a downward cycle, and the probability of recession in major economies such as Europe and the United States has increased. It is still difficult for enterprises and individuals to effectively boost consumer demand; On the other hand, inventory digestion and clearing need time, and the situation of chip oversupply is difficult to be rewritten in the short term; Not only that, it will take more time to loosen the industry's overcapacity. Morgan Stanley predicts that the global wafer capacity utilization rate will decline to 70% - 80% by the second quarter of 2023, and will not recover to 90% until the second half of the year. The existence of the above series of factors will weaken the market's expectation of chip demand as a whole. WSTS stressed that the global chip market will remain negative in 2023. Huacheng Import and Export Data Observation Report.