Europe shone as chip market fall slowed in April

Market news | June 7, 2023

By Peter Clarke

The global chip market showed signs it was reaching a turning point in April, with the European region showing year-on-year growth.

The latest figures from the from the Semiconductor Industry Association (SIA) report that the global chip market was worth US$39.95 billion in April on a three-month averaged basis, down 21.6 percent on the US$50.94 billion it was worth a year before. The percentage drop in market value was slightly more than the 21.3 percent recorded the previous month.

Europe was the only region that showed annual growth, probably a reflection of its lack of exposure to consumer electronics markets and being more focused on purchasing chips for automotive and industrial sectors. It climbed to be worth US$4.57 billion, up 2.3 percent on a year before.

China continues to be the biggest geographical market for chips and its market was worth US$11.43 billion in April. Its annual decline has been running exceptionally high but that has been reducing for the last two months to stand at 31.4 percent in April. This stands in comparison with 34.2 and 34.1 percent in February and March.

However, Asia-Pacific (excluding China and Japan) and the Americas region continued to see their market contractions exacerbate – by 23.9 and 20.5 percent respectively. Japan’s market contracted year-on-year by 2.3 percent.

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

It appears that the European and Japanese markets could avoid the fate of the rest of the world and avoid dipping into deep contraction later in 2023. This supports the possibility of an end to market contraction in 2H23 and a return to growth in 2H23. That growth could be strong driven by an AI boom that is starting to be reported by individual companies.

“The global semiconductor market remains in a cyclical downturn, exacerbated by sluggish macroeconomic conditions, but month-to-month sales ticked up for the second consecutive month in April, perhaps foreshadowing a continued rebound in the months ahead. The latest industry forecast projects a double-digit dip in global chip sales for 2023, followed by a strong rebound in 2024,” said John Neuffer, CEO of the SIA, in a statement (see WSTS lowers global chip market forecast for 2023

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.