International Data Corporation (IDC) has upgraded its semiconductor market outlook, predicting that it will accelerate to the bottom and resume growth next year.
In its new forecast, IDC raised its September 2023 revenue forecast from $518.8 billion to $526.5 billion. IDC believes that from a demand perspective, the U.S. market will remain resilient, while China will begin to recover in the second half of 2024 (2H24), so the 2024 revenue forecast has also been raised from $625.9 billion to $632.8 billion.
Looking back, the fundamentals have changed
IDC believes semiconductor growth visibility will improve as long-term inventory corrections subside in the two largest segments, PCs and smartphones.
As electrification continues to drive semiconductor content growth over the next decade, automotive and industrial inventory levels are expected to return to normal levels in the second half of 2024.
Technology and large flagship product launches will drive more semiconductor content and value across segments from 2024 to 2026, including the launch of AI PCs and AI smartphones next year, as well as much-needed improvements in memory ASP and DRAM bit volumes.
Wafer capacity pricing will remain flat next year as foundry suppliers gradually increase utilization rates and demand returns from core fabless customers. Capex is expected to improve in 2H24 as revenue shipments match end demand and regional ChipAct incentives spur investment across the supply chain.
Global semiconductor revenue will grow to US$526.5 billion in 2023, a 12.0% decrease from US$598 billion in 2022. That's higher than IDC's September forecast of $519 billion. IDC expects year-on-year growth of 20.2% in 2024 to reach US$633 billion, higher than the previous forecast of US$626 billion.
Due to improved inventory rationalization, enhanced channel visibility, and increasing demand from artificial intelligence server and terminal equipment manufacturers, IDC upgraded the semiconductor market outlook from trough to sustainable growth, saying that the adjustment has bottomed out. "
As the semiconductor market returns to sustained growth, we upgrade our market outlook to growth," said Rudy Torrijos, research manager, Worldwide Semiconductor Supply Chain Technology Intelligence at IDC. "While supplier inventory levels remain high, channel and key segment inventory levels remain high. OEM visibility has improved significantly. We see revenue growth matching end-user demand from 1H24. Therefore, we expect capex to improve as new investments are subsequently initiated in the cycle within the supply chain."
"Overall, IDC expects the overall semiconductor industry to decline 12% in 2023, which is an improvement from our September forecast. Revenue will continue to gradually recover and accelerate in 2024," said Mario Morales, vice president of the Semiconductor and Supporting Technologies Group.
At IDC, "The semiconductor market has bottomed out and is starting to grow sequentially. DRAM average selling prices are improving, which is a good early indicator, and IDC expects suppliers to continue to control capacity additions and utilization to drive a sustainable recovery." The accelerating demand for AI servers and AI terminal equipment will drive more semiconductor content from 2024 to 2026, driving a new upgrade cycle for enterprises. We expect that by the end of the forecast period, AI chips will account for nearly US$200 billion in semiconductors income."
Looking to the future, relying on emerging applications
The Taiwan Information Policy Council said that looking forward to 2024, although the first quarter is expected to face the traditional off-season conditions, it has performed better than the same period in 2023, out of the four consecutive quarters of decline compared with the same period of the previous year.
In the memory sector, as major international memory manufacturers continue to reduce production, short-term memory prices have stabilized, and supply and demand are expected to return to stability. As for the IC design and IC packaging and testing industries, due to their close relationship with terminal consumer electronics products, they have a significant impact on the economy. As the recovery is not yet clear, it will be difficult to achieve a better recovery performance in the next two quarters.
Compared with before the 2019 epidemic, the environment in the post-epidemic era is much more complex.
Pan Jianguang, industry consultant of MIC, pointed out that before conducting industry analysis or interpreting industry analysis reports today, one must understand that there are three parts that are unpredictable, namely the US-China confrontation, China's economy, and war and other factors. As for the confrontation between the United States and China, it is expected to last for several years and there is no way to end it in a short time. As for China's economic development, it is also difficult to predict. Regardless of whether China can develop a new model, it must face and deal with its economic problems. As for wars, it is also difficult to predict. From the Russia-Ukraine war to the Israeli-Palestinian conflict, it is difficult to predict whether one side will launch an attack.
Pan Jianguang said that if we look at 2024, in the next three to five years, there will be many external factors that will be enough to affect the global high-tech industry, and can even be said to have the greatest impact on the semiconductor industry. It can be seen from the statistics of the WTO, OECD, and IMF that the global GDP growth rate showed some signs of recovery in the first half of 2023, but at the same time, the forecast for 2024 was also lowered. Although the reduction was not large, it can still be found that economics Investors are not very confident about recovery expectations in 2024.
Pan Jianguang pointed out that when the external environment is full of uncertainties, it is difficult for people to believe that traditional mainstream electronic products will have stable growth or recovery; especially when our mainstream products include mobile phones, laptops, desktops, servers, etc. , when neither corporate investment nor private consumption is clear, the difficulties faced can be expected. These combined products are a key to the introduction of the most advanced manufacturing. Whether it is a 3-nanometer or 2-nanometer process, these combined products are the mainstay. But is there already overcapacity in the personal information product segment? This becomes a variable that manufacturers must measure.
Pan Jianguang said that looking at the global and Taiwanese semiconductor industry trends, the traditional mainstream market is mainly smart products, including smartphones, laptops, desktops, servers, automobiles, etc. The overall ups and downs are relatively gentle, and they are all facing the development dilemma of ceiling.
With the recovery and growth of the mainstream product market uncertain, the future growth momentum of the semiconductor market will rely on the stimulation of emerging applications such as emerging information services, energy and environmental protection, and technology integration. In particular, AI, new energy, and intelligent networking will become the main growth momentum. Among them, thanks to this year's AI craze and the promotion of automobile manufacturers in the United States, China, Europe and Japan, AI servers and electric vehicles have the opportunity to achieve multiple growth in 2027, becoming the main force driving the growth of semiconductors. On the other hand, wireless terminal devices are driven by the trend of digitization and intelligence and will expand from traditional product areas to vertical market applications.
Faced with the impact of the global political and economic situation, Pan Jianguang analyzed that in the short term, Taiwan's semiconductor industry and customers still need to retain sufficient flexible resources to respond to the risks of changes in the external environment; looking to the medium and long term, the stabilization of the external environment and the shift of traditional paradigms may become breakthroughs in corporate transformation. Opportunities, whether it is the development of AI chips in the cloud and terminals, the penetration of semiconductor chips in electric vehicles and autonomous driving, or the energy-saving demands to promote the application trend of third-category semiconductors, the global semiconductor industry will continue to add value and expand.
As the confrontation between the United States and China becomes protracted, the industries of the United States, Japan and Europe are also facing high competition in emerging fields. Southeast Asia and India are also hoping to rise in the semiconductor field. It is expected that the global semiconductor supply chain will form a more complex competitive relationship in the future.
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