Bottom in sight as chip market falls 21% in March

Bottom in sight as chip market falls 21% in March

Market news |
By Peter Clarke

The value of the global chip market continued to fall in March but there are signs of an approaching bottom to the market decline in the latest figures from the Semiconductor Industry Association (SIA).

The Semiconductor Industry Association (SIA) today announced worldwide sales of semiconductors totaled $119.5 billion during the 1Q23, a decrease of 8.7 percent compared to the 4Q22 and 21.3 percent less than the 1Q22.

However, the 3MMA sales for the month of March 2023 increased 0.3 percent compared to February 2023. This is the first uptick in sequential three-month moving average (3MMA) since May 2022. Also, the annual decline, while exceptionally deep, was only slightly worse than the 20.7 percent decline reported in February. The hope will be that in the spring months the situation will stabilize and that by 3Q23 the negative comparisons with a year before will start to wash through the system.

China, the biggest market for chips, continues to suffer but its annual decline in March of 34.1 percent was slightly less acute than it had been in February. Asia-Pacific (excluding China and Japan) was also flat with the previous month with a 22.2 percent decline. The Americas region continued to tumble down to a contraction of 16.4 percent.

Europe and Japan have fared relatively well through this market contraction being marginally down at 0.7 and 1.3 percent respectively. Europe and Japan have got of lightly due to lack of exposure to the consumer electronics markets and being more focused on purchasing chips for automotive and industrial sectors.

Three-month average of chip sales by geographic region for March and February 2023. Source: SIA/WSTS.

It is possible that the European and Japanese markets will go deeper into contraction later in 2023. Market analysts are generally predicting a return to annual growth for the chip market in 2H23.

“Semiconductor sales continued to slip during the first quarter of 2023 due to market cyclicality and macroeconomic headwinds, but month-to-month sales were up in March for the first time in nearly a year, providing optimism for a rebound in the months ahead,” said John Neuffer, CEO of the SIA, in a statement.

What remains to be seen is whether the market decline will be V, U or bathtub shaped.

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. The SIA and other regional semiconductor industry bodies opt to use averaged data because it evens out the actual data that typically shows troughs at the beginnings of quarters and peaks at the ends of quarters.

Related links and articles:

News articles:

Chip market falls 20% in February

China’s chip market drops by a third as global free fall continues

Americas’ chip market follows Asia’s into decline

Global chip market flat in 2022, Intel slumped

World’s chip market plunge accelerated in November

October global chip sales maintain that sinking feeling

Chip market crash arrives – worse than expected

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