Analyst Penn flips chip market forecast back up, remains cautious
Malcolm Penn, founder and chief analyst with Future Horizons, has raised his forecast for global chip market growth in 2024 to a range of 13 to 17 percent.
In a webinar Penn said he thinks the most likely outcome in 2024 is a global market of about US$606 billion, or 15 percent annual growth. This is in-line with most other analysts who are predicting 15 to 20 percent growth but is a big change from what Penn was saying in May 2024.
In May the analyst dropped his 2024 forecast from 16 percent to a range of 3.5 to 8 percent with a most likely scenario of a 4.9 percent rise. At the time he said this was because of unusually low 1Q24 market data.
In the webinar Penn said that the “train wreck” of 1Q24 had been immediately followed by the World Semiconductor Trade Statistics organization – the provider of chip sales data – making an upwards correction to the 1Q24 data and then reporting a strong 2Q24. While this goes some way to explaining the yo-yo-ing forecast, Penn continues to remain sceptical that AI will have the large and immediate impact that other analysts seem to think it will.
2025
For 2025 Penn is predicting chip market growth of between 5 and 11 percent with a most likely market size of US$654 billion, an increase of 8 percent. The slowdown for 2025 will result from continuing weaknesses that remain in some market sectors, such as automotive and industrial and a softening of prices in memory and potentially oversupplied mature process manufacturing.
For now logic chip sales are doing relatively well but other sectors such as analog and optoelectronics are weak and contracting. The growth that popped in 2Q24 was driven by an increase in average sales prices (ASPs) for some sectors rather than unit demand, which is weak and is likely to remain so for at least six months, Penn said
Penn asserted that the foundry chip manufacturers are running at manufacturing capacity utilizations of between 70 and 85 percent with the exception of Hua Hong, at close to 100 percent. This means there is still a great deal of overcapacity, with only area accepted being the leading-edge dominated by TSMC.
Penn added that with Chinese spending on chip manufacturing equipment has spiked reaching 46.5 percent of global capex in 2024. Chinese spending is up 37 percent compared with 2023 and is 7x what is was in 2012. This is likely to adversely affect European and Japanese chip makers. Because Chinese manufacturing is on 300mm wafer fabs it could have major impact making a number western fabs that use 200mm wafers have to consider upgrading.
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